The Real Estate Industry

The real estate industry is one of the largest in the United States, employing millions of people in a wide variety of jobs. Of course, there are real estate agents – brokers and salespeople whose job it is to bring buyers and sellers together. But there are many others involved as well: lawyers, appraisers and inspectors, for example. There are also developers, architects and builders, lending, institutions and mortgage brokers. Even real estate agents have begun to specialize, creating new niches in the profession: transactional brokers and buyer’s brokers.

The real estate industry helps individuals and companies buy, sell, lease, manage, and evaluate property. Often people have the idea that real estate agents are concerned only with buying and selling homes and condominiums. And they are right at least up to a point. Real estate agents help others buy and sell residential, agricultural, commercial, and industrial properties; lease and manage office buildings, shopping centers, and apartment buildings; oversee real estate on behalf of banks, pension funds, and publicly traded real estate companies; and evaluate properties for individuals, banks, and insurance companies

Real estate agents come into two flavors: those you can work with and those you cannot. You are looking for an agent you can work with – someone with whom you can establish good chemistry and who will bring you a steady stream of properties to inspect and make offers on.

Real estate agents play a fundamental part in the use and exchange of one of this country’s most important resources – real property. The real estate industry offers a wide variety of opportunities to men and women of all ages and backgrounds. Real estate brokers and sales agents must be licensed by the government in which they work.

Perhaps no single factor has had a more significant change on the real estate industry than computerization and the use of the internet to transfer information. Developers and builders of real estate can transfer building structures and tenders via the web to save time and money in the construction process. Real estate agents now can access home listings from an internet service on their laptops or even on their personal digital assistances, and then e-mail housing information to clients.

Real estate franchising is determines with few industries accounting for most of the market. Franchises provide smaller real estate brokers with many of the same advantaged enjoyed by national and regional firms. Franchises are talented to manage to pay for larger nationwide publicity budgets so that their name becomes well identified. Franchises put forward members training in management and sales techniques that can help them run their companies better. Many franchises also buy supplies such as contracts in quantity and pass the savings along to their members. Franchises have helped many smaller brokers who might otherwise have been unable to compete with large local firms. But the rapid growth of franchises has also resulted in many franchises taking as members firms that are fruitless and troubling their successful members with these not very competent coworkers.

Which Is A Better Real Estate Investing Strategy, Wholesaling Or Rehabbing?

This topic has been one of heated debate for quite some time now. You have the “Die Hard” Wholesalers, your Rehabbers, and Landlords that all feel that their strategy is the best.

Probably the best way to describe where everything fits in, it’s best to think of a triangle. If you look at Real Estate like a triangle you’ll see that on one side we have Rehabs, on another side we have Rental Property and on the last side of the triangle we have wholesaling.

I consider wholesaling to be the bottom side of the triangle, the foundation. Wholesaling is the foundation that quickly injects large chunks of capital into your home buying business. This is the capital that you’ll be using to grow your business and purchase long term wealth vehicles like Rental Properties. I personally wouldn’t recommend trying to do any of the other real estate investing strategies until you’ve had a few wholesale deals under your belt.

Wholesaling, or “Flipping” properties is by far the easiest way for a new real estate investor to go from zero to $20,000 in 30 – 45 days. It won’t take you long to get to the point where you’re making $10,000 to $20,000 checks each and every month only working a few hours a week. That’s probably one of the greatest benefits that you’ll find when wholesaling Real Estate.

Who wants to worry about fixing junk properties..or unclogging toilets? This is a strategy that you can put on auto pilot if you put the appropriate systems in place. If done properly, you should only need to show up to Close The Deal & then to pick up your check at the title company. Remember that time is your most valuable asset!

Once you’ve created your investor list (which we will discuss) it won’t be hard for you to move these deals in a short amount of time, normally within 10 to 15 days. Your buyers will be paying with All Cash and financing is not an issue.

This is much easier than selling to an “End Buyer”. In a slower Real Estate Market, it may literally take two to three months for you to find a qualified buyer who wants to buy the property. Remember that the keyword here is “QUALIFIED BUYER”. When you’re dealing with other investors you know that they either have cash or hard money, and financing isn’t a big issue. When you’re dealing with “Joe Q. Public” you’re going to get interested buyers with various financing issues and you’re the one that has to worry about getting the deal closed. Once you find a buyer, you’ve got to get their loan approved, then you’ve got to get the loan taken care of, get the appraisal and all the other things that come with a regular retail buyer, and so it may take anywhere between three months to eight months to close a deal on a rehab, going from purchase – rehab – resale.

That brings me to another reason why I prefer wholesaling real estate over rehabbing. When you buy, fix and resell real estate, you’re committed to the property. Once you close on that baby it’s yours…The Good And The Bad! If some unforeseen problem arises (It always does), you’re going to be the one that carries the expense. If you’re rehabbing a property, you’ve got to start by hiring a contractor or handyman. You’ve got to get him to do all the repairs to the property, market the property, go through the process with the end buyer. All of this may take a long time, and you are the one carrying the costs. Every day that this property remains in your possession, money is pouring out of your wallet.

In a wholesale deal, all that you are really doing is getting control of the property. You would simply take the same property that you would normally buy and rehab, and get it under contract. Then, you’re taking that contract, marketing it and selling it to other investors that want to take on the project. There are investors out there that prefer doing rehabs. These are investors who have the cash to pay and who don’t mind waiting six months to do a rehab. There are also investors that want to do a deal, but are horrible at talking to sellers and would not be able to secure the pricing that you can. These Rehabbers have no problem paying you an “assignment fee” (the amount that you pocket when you sell your contract) because they understand that it is a cost of doing business for them.

The Rehabber will generally net more than a wholesaler, but look back at all of the risk and time associated with doing a rehab. The average, depending upon your location is between $25,000.00 to $40,000.00. and at times even more. But most wholesale deals are going to net you anywhere between $10,000.00 and $20,000.00. Usually about half of what the average Rehabber makes per deal. However, unlike the rehabber, as a wholesaler, you have more control of the amount of money you earn. The best part of wholesaling is that your pay is directly proportionate to your ability to put deals together and not how much time or physical labor you have in a deal. As you get better at negotiating, you’ll be getting properties under contract for less and less, allowing you to sell the contract for more and more.

I would personally rather do four wholesales and spend less time than to wait six to eight months for a single rehab to cash out. Even if you’re in a position to wait that long, is it really worth the risk? That’s the question that you need to ask your self when deciding which real estate investment strategy you want to take on. Exactly how much risk are you willing to accept?