Before we get into talking about the role of wholesaling in the world of real estate investing it would be fruitful to look at the real estate investor’s role in the bigger picture. It wouldn’t be unreasonable to say that real estate investors act as a floor for real estate prices, and in a way a recycling center for run down houses. On an economic scale we provide a demand where others aren’t with a particular specialty in renewing property and people. The first natural need a human has is shelter and with so many people in the population the numbers alone will inevitably lead to complications. Where those complications arise, an investor is equipped to step in and create a win-win-win situation to liquefy an otherwise viscous asset.
Real estate investors come in many, many forms, essential a form for each complication and a combination of the sort. Investors work together to create efficiencies to allow investors who have a comparative advantage to focus on those advantages and succeed in flushing out new leads to bring to the real estate investor community. The real battle that investors face is turning sellers and buyers onto the idea of creative financing and alternatives to foreclosure.
Wholesalers are the investors who go out to the frontlines and convince a motivated seller that they have alternatives, that their problems can be solved. So they break the ice with investors, negotiate a deal and return to the investor community to wholesale the deal. From there you can imagine that the wholesaler begins running the deal pass their buyers list and their rehabbers.
For the sake of simplicity you can look at it as a necessary function in the economy that arises out of the numerous complications that occur when the entire population needs shelter. The investors who rehab, rent, and retail in the ever so many fashions make up the core by adding value and putting the properties back up to par. The role of the wholesaler is to stock the core with leads from the public at large and without the wholesalers out there focusing on saving properties all the investors that specialize in the core won’t be able to get as much done.
Investors at the core would have to widen their operations to include acquisition which can be a timely process for an investor who has to divide their attention away from their main role in the community. Some investors go the extra mile and go into acquisitions as an extra facet to their business, but having the option to simply rehab and sell (or rent) when that’s all you want to focus on is a liberty granted by the wholesaler.
Finally, on the flip side of the coin wholesalers have and should take advantage of building their buyer’s list with details so when you look at a property you have a handful of names in mind of buyers who would be interested and what their criteria and price ranges are. All of this is done in the name of efficiency and keep a smooth flow through the pipeline which is something that each and every real estate speaker, guru, expert, and professional will agree with.