Did you know that some investors wholesale real estate properties without ever leaving their home? In this article we discuss what is virtual wholesaling real estate, the tools you need to get started and how it is done. In addition, we will talk about real estate as an investment and how to get started buying and profiting from real estate.
What is Virtual Wholesaling Real Estate?
In order to learn more about what is virtual wholesaling real estate, we must know who the wholesaler is. The wholesaler is the person who makes the deal. A real estate wholesaler looks for under priced properties. Once the wholesaler finds a property, he or she contracts with the seller to buy it. Then the wholesaler finds a buyer for the property at a profit. The wholesaler then contracts with the buyer to complete the deal.
The virus pandemic that struck the world in early 2020 changed everything. Students can attend school virtually from their home. Businesses around the world conduct meetings from their living rooms. In addition, many other businesses are no finding that virtual work is not only possible, but it is also efficient and good for everyone involved. Virtual wholesaling real estate is an example of a business that can be conducted 100% from home.
Historically, wholesaling has been conducted primarily by phone. Wholesalers would find a deal by driving around a neighborhood or by going door-to-door. The deals were conducted by phone and email. Then, a closing date was arranged. However, in 2021, most businesses can now conduct business 100% virtually. Many tools and software have come to the forefront for use in virtual businesses. For example, virtual conferencing software such as Microsoft Teams and Zoom have made virtual meetings relatively easy and cheap.
Virtual Technology Used by Wholesalers:
- Virtual Meeting Software: Zoom, MS Teams, etc.
- Mobile Tools for Tours/Communication: Apple Facetime, Google Duo, etc.
- Virtual Signature Software (Ex.- DocuSign)
- Note Taking Software (Ex.- One Note)
- Virtual Scheduling/Calendars: Google Calendar, MS Outlook
- Social Media for Sharing: Instagram, Twitter, FB, etc.
- Plus, Endless Apps available for communicating, sharing, invoicing, etc.…
The advantage of learning about virtual wholesaling real estate is that it requires little or no money up front and can be done from your home. Moreover, the wholesaler simply contracts with the seller with no money up front. An no money changes hands between the wholesaler and the seller. In addition, many wholesale contracts have clauses or caveats that allow the wholesaler to walk away from the deal if it doesn’t work out.
In a way, determining what is virtual wholesaling real estate simply means that the person making the deal is an agent. The agent is independent of any realtor or broker requirements. In fact, real estate wholesaling doesn’t require any training or credentials. Anyone can be a real estate wholesaler.
Example: What is Virtual Wholesaling Real Estate?
Person A has a property that he owns that he has been unable to sell. The property needs some improvement and Person A is unable to complete the improvements. Person B, the wholesaler, contacts Person A and makes him a cash offer to buy the property. Person A agrees to the offer of $50,000. Although the wholesaler (Person B) doesn’t have any money, he locks the property up in a contract with Person A. Person B then begins contacting potential investors and eventually finds a buyer (Person C) at a price of $65,000. Person B (the wholesaler) then assigns the existing contract to Person C. The wholesaler then nets a profit of $15,000 after the deal closes.
The Challenges of What is virtual wholesaling real estate
Executing Virtual Wholesaling Real Estate Can Be Hard Work, Time Consuming and Frustrating
Finding candidate properties for virtual wholesaling real estate can be frustrating. Getting leads and determining what is virtual wholesaling real estate can require significant work, time investment and sales skills. Wholesalers can spend much of their time on the phone trying to make deals. You have to be prepared for getting doors slammed in your face, much like a telemarketer would.
Second, you need to understand a little bit about contracting law and real estate sales. You will be responsible for creating contracts between yourself and potential buyers and sellers. You will also be dealing directly with title companies.
Finally, there may be virtual wholesaling real estate that you contract that does not work out. After spending hours or days preparing a deal, writing up contracts and traveling back and forth to complete the deal, it may fall through. Sometimes investors get cold feet, buyers change their mind or other issues come up.
Other Real Estate Investing Options
Passive Income and Long-Term Income
Earning income in ways that very little or even no effort to maintain is called passive income. Moreover, with passive income, you earn money while you sleep or vacation. Although this idea may sound impossible, it is a secret that millionaires and billionaires have utilized for hundreds of years to become wealthy.
Common examples of passive income include owning commercial real estate investing rental properties. Of course, there are other examples of passive income, like stock dividends, high-yield savings accounts, annuities, and real estate investment trusts (REITs) as well.
Unfortunately, although passive income may seem like easy money, it is not. Generating passive income requires upfront work that lays the groundwork for future income. It is not a get-rich-quick scheme. In addition, it may require some additional work as you move forward. For example, if you own a commercial rent property, you will be required to pay for property maintenance, improvements, taxes and insurance on your investment.
Long Term Investment Income (Portfolio Income)
Portfolio Income from long term investments is earned is made by capital gains. Assets can be examples of portfolio income. For example, if you own stocks, bonds, property, etc., you have portfolio income. When you sell your assets, hopefully they have increased in value while you held them. As a result, during the sale you incur capital gains.
For example, let’s say you bought $1,000 worth of stock in 2018. Now, in 2020, you decide it’s time to sell the stock. The stock is now worth $1,500 in the market. When you sell the stock, you will realize a $500 capital gain or profit ($1,500-$1,000 = $500). Capital gains from assets like stocks and bonds are how Wall Street traders make money.
Commercial real estate investing can also become portfolio income. Even if you own a commercial property for which you collect rent, you can still realize capital gains as well. For example, if you decide to sell your commercial real estate investment, you may profit from the sale (assuming the property is sold for more than you paid for it).
Real Estate Investment Trusts (REITs)
A REIT is a Simple Investment Like a Stock that Requires Less Capital and Less Risk
A REIT, or real estate investment trust, is a company that owns and manages real estate assets. REITs take advantage of special tax savings, allowing them to incur minimal corporate income tax. In addition, a REIT pays dividends, a type of passive income for commercial real estate investors. Historically, many REITs have paid increasing dividends each year, which means your passive income stream might grow with little effort.
However, with any investment comes risk. Some REITs are inherently riskier than others. For example, a REIT fund that contains a large number of commercial real estate investing assets will be less risky than owning one REIT stock with less diversification. In addition, determining which REITs to invest in can require significant time for a business analysis of each business’ records.
Another risk with REITs is reduced dividend income. Historically, during economic downturns such as the real estate market crash of 2008, REITs lose significant value. When this occurs, dividend income can be slashed or removed completely.
Never before has investing in real estate been easier. Today, anyone can purchase investment houses for generating passive income. In addition, you can use the “BRRRR” method to leverage multiple properties so that larger passive incomes are generated from your investment houses.
You are probably wondering how the big real estate investors acquire so many properties in just a few years. Well, the secret to buying more investment houses in real estate is using the “BRRRR” strategy. So, what is BRRRR and how will it help in buying more investment houses?
The BRRRR Real Estate Strategy for Rental Properties
BRRRR stand for buy, rehab, rent, refinance and repeat. The BRRRR investment strategy has worked for many successful real estate investors. It allows you to build a portfolio of investment houses quickly. In addition, it requires using less personal capital. Let’s breakdown this step-wise process to understand the details and the order of this strategy. See our article called “Investment Houses” for more information.
Getting Started with Investment Real Estate
Buy Where There is Growth and Population Movement – The South and West United States
One rule that smart real estate investors use is to buy properties where populations are growing. Population growth and population movement tend to drive prices up in real estate markets. Basic economics tells us that when there are more people demanding housing, supply cannot keep up with demand. As a result, prices go up, which is good for landlords.
For many years, there has been growth in the South and Western United States. For example, a United States Census Bureau 2019 Article states that of the 15 cities in the US with the most growth, eight of them were in the South, six were in the West and one in the Midwest. Popular cities include places like Phoenix, Arizona, San Antonio, Texas and Jacksonville, Florida.
What is Virtual Wholesaling Real Estate Wrap Up
Hopefully this article has helped you understand what is virtual wholesaling real estate. The person beginner wholesaler is simply a salesperson who contracts property and connects buyers and sellers. It can be a great way to earn money while investing little of your own cash. However, it is also time consuming, frustrating and requires some knowledge and patience.
It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.
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