Wholesaling Foreclosures: Safest & Most Profitable Real Estate Investing Strategy?

Why has wholesaling foreclosures really emerged as the safest and most profitable strategy for cashing in on the real estate market?

Many assume that as the real estate market is rebounding, they simply can’t go wrong with any real estate investment but that’s a dangerous assumption to make. So why is wholesaling (aka flipping homes) considered the smartest strategy by savvy investors, who is it for and what’s the secret to turning it into a million dollar payday?

All the Risk Associated with Real Estate Investing is Gone, Right?

Investors are right to be confident in the housing market. We are clearly on the verge of a new, extended period of growth that is expected to push home values well above their previous highs during the next decade. However, while there may not be any other sector offering the fantastic combination of returns and security, being realistic there is no form of investment which is 110% risk free. Well, perhaps with the exception of certain forms of wholesaling foreclosures.

There are two main types of risk that face those investing in houses today…

1. Holding Properties

Any period of time a property is held means exposure to risks. There are risks from vandalism, natural disasters like hurricanes and earthquakes and of course the daily battles that come with property management as well as balancing debt and liability associated with a variety of potential, malicious lawsuits.

2. Rehabbing Horror Stories

Both new amateur investors attempting wholesaling for quick cash like Than Merrill on reality TV as well as super-sized hedge funds are rushing in to snap up ‘cheap’ distressed property ‘deals’ only to find themselves the proud new owners of the classic money pit. There are reasons so many properties are being sold so cheap. Financial analysts estimate that over 90% of REOs aren’t in livable conditions and need rehab work. This can quickly turn a $10,000 home into a $100,000 fixer upper with no equity and heavy carrying costs.

Why Wholesaling is Considered So Safe

Wholesaling foreclosures means you get in, get out, get paid and get on to the next deal…

It can be done with no cash, no credit and no handy man skills. If investors aren’t heavily invested into homes with their own cash, or even with a big loan in their names, they have little or nothing to lose. Properties are turned over instantly meaning zero holding time and don’t require fixing up, eliminating all of the risks mentioned above.

Plus, perhaps most importantly, this variation of flipping houses provides multiple exit strategies. If a deal isn’t sold, contracts can be dropped. If the deal is really that good, it can be held, fixed and retailed or even rented for cash flow until sold later on.