“They’re real estate wholesalers.”
ok. but i still wonder where they get their capital from.
maybe a doctor/lawyer collective with spare cash sloshing around? or the rich chinese with deep pockets?
Huh? I thought I explained this the first time.
The wholesaler signs a contract to purchase with you. Such contracts normally give the 'buyer' 30 days to come up with payment in full. The wholesaler then has 30 days to procure a true buyer for your property, or buy it themselves. If they've struck a good bargain with you, it won't be hard for them to locate a willing buyer.
When the wholesaler finds a buyer, they legally transfer the contract to purchase to the buyer for a fee - usually $3,000 to $5,000. That's how they make their money.
Wholesalers are already advertising to a list of active buyers who are always in the market for investment properties. Essentially, they sell the contract to an investor, who becomes the actual buyer of your property.
In a nutshell, wholesalers do the grunt work of locating and securing good real estate investment opportunities for those who have the cash to buy, but don't have the time to find the deals.
There are several different ways that wholesalers do this. The most common technique is the 'bandit sign'. These are the cheesy little signs you see on street corners that say, "I buy houses for cash". People who want to unload distressed properties that aren't suitable for the normal retail market see these signs and dial the number.
Another method is to knock on doors of obviously distressed homes to see if the owner would be willing to sell. That's a lot of work, but it's often very effective.
A third method is to put out cards or flyers offering to pay cash for homes. It's an energy intensive way to find deals, but it does work.
Bottom line -- if you own a distressed property, you can expect to have wholesalers showing up to make you offers for it.