Wholesaling is another REI avenue that looks simple on the surface: get a property under contract at a great price, sell the contract to another person at a higher price, and profit.

While it might sound simple, wholesaling contains its own particular set of joys and headaches. On the positive side, wholesalers tend to usually not close or take possession of actual properties, so they avoid a lot of the headaches that house flippers or landlords might face. They simply get a property under contract, assign that contract to someone else, and cash the check they get paid for the difference. Wholesalers a bit more immune to price fluctuations up and down in various real estate markets, as they’re in and out of deals very quickly so they usually avoid being stuck with a property in a plummeting market (but they also tend to miss out on big spikes upwards in prices, too).

That said, wholesalers aren’t typically dealing with a huge potential profit margin per deal, as it’s rare to get a property under contract at a price tens of thousands of dollars less than what another investor will pay for the right to buy the property instead. So wholesalers tend to make a thousand bucks here, a few thousands bucks there, and so on, relying more on sheer volume to pile up profits than from hitting it big on any single deal.

For some people, that’s actually a positive, as much of the success in wholesaling really boils down to your ability to network and market, as successful wholesalers usually develop a network of buyers over the years that they can quickly turn to once they get a property under contract. If that fails, then they have to put on the marketing hat and pursue the normal channels (bandit signs, newspaper ads, Craigslist, etc.) to find a buyer to unload the contract to.

Wholesalers will also occasionally be forced to actually close on and take possession of a property, so you have to be willing to embrace that possibility if you leap into the wholesaling game.