Investors often discuss these buying/selling techniques without knowing the differences. Especially when they discuss them together, investors can get quite confused. Let’s clear that up.
What is Wholesaler?
With wholesale, you buy a property for a low enough purchase price that you can mark it up and sell it to an investor who can rehab it and resell it on the retail market for their own benefit. The skill here is learning to negotiate your purchase price low enough that there is room for the next buyer to make money as well.
Normally, you do nothing with a wholesale property after you buy it, other than sell it to the next buyer, without fixing or repairing.
What is Wholetail?
Wholesale is much like wholesale, but it does a bit of work on the property to make it more attractive to rehabbers. This includes things like:
- cleaning up the trash
- replace a leaky roof
- make sure the property is structurally sound
With a whole, you may want to upgrade it to meet FHA purchase requirements, which means it must be functional – all mechanical systems must work. The FHA requires that the HVAC, electrical and plumbing systems work and that some life remain on the roof. But, you don’t do the interior details like the carpeting, paint, or plumbing fixtures, so it’s still not sold to the typical retail buyer.
What is Assignment?
With both a wholesale and wholesale sale, the purchase transaction is very similar to any retail purchase in that you close on the property with an attorney and obtain title.
With an assignment, you don’t lock in the property; you don’t buy the property, you never own it. You deal only with the sales contract, which is the document you are assigning. You, as the assignor, simply transfer the signed contract to the assignee. You sign a contract to buy from the seller, then find someone who will buy the property for more, and assign them the contract for the higher price.
Wholesale – buy at a really low price, mark it up a bit, resell it to someone who is going to renovate it, and sell it on the retail market
wholesale – same as wholesale but you do a small amount of work before you sell it to the rehabber
assignment – you don’t buy the house, you just deal with the contract, the purchase and sale agreement – you hire it and assign the contract to someone for more than what you agreed to pay for the house
affairs? As? Do you use these strategies?