“I like the idea of real estate, but I really do not want to take the responsibilities of being a landlord.”
“I would love to invest in real estate, but I do not have the money.”
“You can certainly make money investing in real estate; however, it is too slow and risky.”.
If you have ever said, thought, or heard these words, then virtual real estate wholesaling is for you. Wholesaling real estate is one strategy that can work in most markets. However, virtual wholesaling is a little better suited for a flat or upward market because there are more fix and flip buyers on the market.
There is more than one way to skin a cat when it comes to real estate investing, and virtual wholesaling is a great strategy as it allows you to leverage the power of the internet and a good deal to work for you and make money. And the best part is that with little to no financing, and no landlord duties or repair work you can make a lot of money within a few weeks, not months.
What is Virtual Wholesaling?
Virtual wholesaling involves putting a property under a real estate contract and then reassigning the contract to another real estate investor for a higher price. The profit you make as a wholesaler is the difference between the amount contracted with the property’s original seller and the amount that the buyer pays. It is worth noting that when virtual wholesaling a property, your aim is to sell the property before the closing of the original real estate contract with the homeowner.
The term virtual means you can buy and sell properties long-distance with ease, leveraging smartphones, computers, and fax machines, etc. So, if you are in Virginia, you can buy and sell properties in New York or Pennsylvania. Most of the time, the whole seller does not do any work or make any repairs to the investment property before reassigning their contract. Both experienced and novice investors like this technique, as virtual wholesaling requires no credit and little to no money.
Challenges of Virtual Wholesaling
These are some of the main challenges and risks associated with virtual wholesaling.
Lack of Market Knowledge and Understanding
Although you have to understand your market in traditional wholesaling, as a virtual whole seller, you have to be more careful as you will rely on a virtual tour of the property. You usually don’t visit the area in person and rely on internet data and your team’s expertise and experience to evaluate the suitability of a property. Keep in mind that buying the wrong property or even the right property in an unsuitable neighborhood may stick you with a home, you cannot sell to an investor. And this will suck up most of your profits selling in the retail real estate market.
Also, keep in mind that often, your most reliable buyers will be rental property investors. So, you have to know the neighborhoods and properties that work for them, and that also support a strong and robust rental market.
No Guarantee of Stable Income
Another downside associated with virtual real estate wholesaling is that it doesn’t guarantee you a steady income, which can be a deal-breaker for many people. Because of the nature of virtual wholesaling you cannot just get into virtual real estate wholesaling and easily expect to close a deal or two and get a hefty paycheck every two weeks. This is an important aspect to consider when getting into virtual wholesaling because most people expect a stable stream of revenue on their real estate investment, and virtual wholesaling may not yield that kind of return.
This is why you need to make sure that you have an emergency fund to serve you while you are working on your real estate deals. You will also have to learn to manage your finances well, and this can take some time, especially if you are new.
Deal Failure
This is one aspect of virtual wholesaling that is not completely in your control. As a virtual wholesaler, you will have to take into account the worst-case scenarios and prepare for them. It’s not guaranteed in this industry that you’ll be able to successfully close every deal that you put your hands on. And this uncertainty can get the better of you sometimes. Note that this is particularly true if you’re just starting in virtual real estate wholesaling. As a beginner in virtual real estate wholesaling, there’s a 50% chance that you will fail. As a result, you will have to be ready for it both mentally and financially. In addition, the reason for deal failure doesn’t always have to be you.
For example, one common reason is that a property buyer may back out all of a sudden. And in case you are wondering whether or not buyers have the right to back out of a deal, the answer is “Yes.”So, you should always have a plan B that you can act upon in case of closing deal failure.
The Instability in the Real Estate Market
It is no secret that the instability and uncertainty of the real estate market are one of the main challenges for every real estate investor, and this includes virtual real estate wholesalers. The increase in property prices is not in your best interest as well as it indicates a profit missed out for you.
Final Thoughts
As with any investment, there are some challenges associated with virtual real estate wholesaling. This is why to succeed in this lucrative real estate investment strategy, you will need to have good knowledge of it so you can make more happy trips to your bank with your virtual real estate wholesaling profits.