You may already be aware that several "infomercial
gurus" talk about wholesaling (assigning) real estate by selling a
purchase agreement contract to another buyer. And while there is a good
case to be made for wholesaling, there are risks - and costs, cited below, but there does not have to be either risk or costs, as explained later.
Let's start with the cost of typical wholesaling. No seller is going to agree to a purchase contract without 1) checking your credit, and 2), getting a substantial earnest money deposit. Assuming, however, you are able to overcome those things, once you have a contract you can end up locked in if you are not really careful - if you cannot sell the contract to an end buyer in the time available, you could get stuck having to buy, and that is a serious risk.
That said, a good "contingency clause" like the one in "The Simple Man's Guide to Real Estate" can overcome that, but even that may not completely eliminate all risk.
But what if I were to tell you there is another way to wholesale, without the cost or the risk. A much simpler way, developed by the author of "The Simple Man's Guide to Real Estate". A successful investor who started in 1969, Bill has developed several of the methods now being promoted by "the gurus", and soon they will likely be promoting this one, too.
Simply put, everything is the same as wholesaling a purchase contract except that the investor would be wholesaling an option agreement. You see, with an option there is a right to buy during a specified time frame, but in contrast to a purchase agreement there is no obligation to do so. Because you are not actually buying at this time, there need not be any credit check UNTIL the option is exercised, at which time your end buyer would be having a credit check done, not you. And because you are not yet buying, there is no need to put up a substantial earnest money deposit - in most instances a small payment for the option is all that is necessary. In fact, under the law it could be as little as one dollar, and the option agreement could stipulate a more substantial earnest money payment to be made upon exercising the option - a payment your end buyer would make.
What if the seller objects
because he does not want to tie up his property if another buyer should
come along? Simply offer to put a "kick out" clause in the agreement -
if another buyer comes along, seller would give you, say, 30 days to
exercise the option and buy, and if you cannot, he can cancel the option
and sell to his other buyer. He has nothing to lose.
Using the option method simplifies wholesaling and eliminates all risk. An investor could not ask for more.
It is important to note, however, that any form of wholesaling real estate does require a complete understanding of the process, in detail, and being aware of any caveats and how to avoid them. And that's where "The Simple Man's Guide to Real Estate" becomes your most valuable resource, not only because it provides all that, but because it also comes with free mentoring if you need help.
If you have ever considered becoming a real estate investor, you owe it to yourself to check it out. It costs nothing to look, but can cost you a fortune if you do not.
