Wholesaling Real Estate: Getting Started in Real Estate Investing-Try Wholesaling

“How should I get started with real estate investing?” The question varies slightly, but the core of it is always the same. And, for a new real estate investor, I think it is an important question to ask.

Years ago, when I began speaking at our local real estate group, I used sit down with each person, usually over lunch, and try to determine their knowledge level of real estate markets, financing techniques, sales skills and other critical knowledge areas before recommending how they should get started investing in real estate.

After doing a dozen of these meetings, it occurred to me that the answer I gave was the same regardless of their experiences, skills and knowledge.

Without fail, I encouraged them to start out wholesaling.

What is wholesaling?

Wholesaling, is finding great real estate deals. Then putting the house under contract and finding another investor or retail buyer to buy the contract to buy the house from you for a profit above what you agreed to pay the seller.

For example, you by at a big discount and sell that discount to someone else for a fee.

Why wholesaling?

I recommend wholesaling to starting real estate investors for several reasons.

First, it is a very low risk way of getting involved in real estate investing. When you put a house under contract, you are putting up as little as $10 and ideally no more than $100. Beyond your time and some marketing expenses, that is all you should have invested in your business when starting out.

Second, it is an exceptionally excellent way to learn your market. As a new investor, you might think that $10,000 below a refinance appraisal value is a good deal on a house. Your market will likely teach you otherwise and better to learn that lesson from trying to pass of this type of deal with only $10 invested in a binder deposit rather than try to sell this house while you are making mortgage, utility, taxes and insurance payments on a house you actually bought.

Third, you will get to know other investors and can learn from them. As a wholesaler, you should be finding what other investors want and are looking for in deals. Some will be helpful and will want to share information and time with you. Many will not; do not take it personally. There are good and bad folks in this industry just like there are good and bad lawyers, doctors and accountants.

Fourth, you can generate quick cash. A challenge common with many real estate investors is cash flow. Learning wholesaling is learning how to generate quick cash. Master the ability to generate quick cash and you have solved a lot of problems.

And finally, you can find great buy and hold deals for your portfolio. Inevitably, as you look for wholesale deals you will find exceptionally good long term buy, rent and hold properties for your own portfolio. I strongly suggest that you do half a dozen or more wholesale deals before you consider buying a long term rental. By then, you should have a much better idea of what a really good deal is than you did on your first day as a real estate investor.

Wholesaling Real Estate: Getting Started in Real Estate Investing-Try Wholesaling

“How should I get started with real estate investing?” The question varies slightly, but the core of it is always the same. And, for a new real estate investor, I think it is an important question to ask.

Years ago, when I began speaking at our local real estate group, I used sit down with each person, usually over lunch, and try to determine their knowledge level of real estate markets, financing techniques, sales skills and other critical knowledge areas before recommending how they should get started investing in real estate.

After doing a dozen of these meetings, it occurred to me that the answer I gave was the same regardless of their experiences, skills and knowledge.

Without fail, I encouraged them to start out wholesaling.

What is wholesaling?

Wholesaling, is finding great real estate deals. Then putting the house under contract and finding another investor or retail buyer to buy the contract to buy the house from you for a profit above what you agreed to pay the seller.

For example, you by at a big discount and sell that discount to someone else for a fee.

Why wholesaling?

I recommend wholesaling to starting real estate investors for several reasons.

First, it is a very low risk way of getting involved in real estate investing. When you put a house under contract, you are putting up as little as $10 and ideally no more than $100. Beyond your time and some marketing expenses, that is all you should have invested in your business when starting out.

Second, it is an exceptionally excellent way to learn your market. As a new investor, you might think that $10,000 below a refinance appraisal value is a good deal on a house. Your market will likely teach you otherwise and better to learn that lesson from trying to pass of this type of deal with only $10 invested in a binder deposit rather than try to sell this house while you are making mortgage, utility, taxes and insurance payments on a house you actually bought.

Third, you will get to know other investors and can learn from them. As a wholesaler, you should be finding what other investors want and are looking for in deals. Some will be helpful and will want to share information and time with you. Many will not; do not take it personally. There are good and bad folks in this industry just like there are good and bad lawyers, doctors and accountants.

Fourth, you can generate quick cash. A challenge common with many real estate investors is cash flow. Learning wholesaling is learning how to generate quick cash. Master the ability to generate quick cash and you have solved a lot of problems.

And finally, you can find great buy and hold deals for your portfolio. Inevitably, as you look for wholesale deals you will find exceptionally good long term buy, rent and hold properties for your own portfolio. I strongly suggest that you do half a dozen or more wholesale deals before you consider buying a long term rental. By then, you should have a much better idea of what a really good deal is than you did on your first day as a real estate investor.

About Real Estate Investing - Are You Prepared To Pay The Recapture Tax

If you’re a real estate investor, and you’re planning to sell an income property owned for more than one year, you’re probably aware you will pay a capital gains tax. What you might not be aware of is the depreciation recapture tax you will also pay, and may be in for an unpleasant disappointment.

This was suggested to me recently by an real estate investor who never saw the recapture tax coming. Only to discover it later when his federal tax obligation computed higher than he originally anticipated, and the proceeds he expected to receive computed lower. This is not a good thing. So it seems appropriate to mention it as a bit of income property advice to the new real estate investor.

Depreciation recapture tax occurs when depreciable real estate is sold after one year of ownership. Property sold one year or less is classified as a short-term gain and gets taxed as ordinary income; so it’s irrelevant. Capital gains and the recapture tax only apply to a property held for more than one year.

In real life, here’s how it works. When you sell an income property and have a recognized gain, the feds want to tax you for the capital gain, plus they want to tax you for the accumulated depreciation you’ve taken during the years you owned the property. Because the current capital gains tax rate is 15% and the recapture tax rate is 25%, you wind up paying more tax (thus, get to keep less) at the sale of your property than you would have by having to pay just the capital gains tax alone.

For example, if you realize a gain of $300,000 of which $100,000 is attributable to depreciation, your taxes might compute this way:

1. Your accumulated depreciation of $100,000 gets taxed at 25%. Hence, you owe $25,000 recapture tax. 2. The $200,000 remainder (300,000 - 100,000 = 200,000) gets taxed at 15% (the current capital gains tax rate). Hence, you owe $30,000 capital gains tax. 3. Your tax obligation for real estate capital gains totals: 25,000 plus 30,000. Hence, you owe $55,000.

Now suppose you had no knowledge of depreciation recapture tax. You would probably assume when you sell that your full gain will be taxed as capital gains. In your mind, the full $300,000 gain gets taxed at 15%, and thereby conclude that you owe the IRS $45,000. Imagine the shock when you learn that you owe $55,000; a whopping $10,000 more tax than expected; hence, $10,000 less proceeds than expected (say goodbye to the wide-screen television).

The bottom line? Real estate investing requires sound real estate investment tax strategies. So you should always consult a tax specialist before you sell rental income property, and maybe think about investing in a good real estate investment software program. It might keep you from getting blindsided at tax time, and likewise prevent unrealistic expectations that result in an unpleasant disappointment later.

Start Your Real Estate Investing Career Off Right With Smart Marketing

Sure, it would be easy for you to step into your new real estate investing career with a pocket full of cash ready to plug every marketing avenue and make money hand over fist. However, it is not this easy for everybody involved, most of the people entering the real estate investing arena looking for the big bucks are forced to start by being frugal and intelligent. Don?t spend money in the areas where it is not going to come back to you in a big way, but how is this done? Read on and take a few tips back to the bank with you!

Use the charm and hard work approach by walking door-to-door in the neighborhoods that either resemble the houses you are trying to sell or are in the same area as the houses you are trying to sell. You don?t have to talk to someone or even introduce yourself to a single soul, just put flyers on doors with your message to get your name in the right place. Sure, this may take a little bit of work and you may get a little bit of exercise, but worse things have happened! You might just find some properties that make sense for you!

Take out page ads in every paper that is used in the area where you are trying to buy or sell in your real estate investing career. Don?t put something simple like your name and a brief message, but take a bold stand that will make people want to buy from or sell to you. Tell them that you buy houses with cash or you have something to offer that can make this process much easier for you. Continue to tweak your messages in each publication until you find something that works, but when it works ? stick with it! Don?t fix the unbroken tool!

These are two inexpensive, but effective ways to get your name out and in the area where you are hoping to begin your real estate investing venture. Neither will break the bank, but neither will get you the results you want if you don?t put the required work out front in the interim. Work hard with these two strategies and you can achieve everything you hope to in this lucrative real estate investing world!

Wholesaling Real Estate: Getting Started in Real Estate Investing-Try Wholesaling

“How should I get started with real estate investing?” The question varies slightly, but the core of it is always the same. And, for a new real estate investor, I think it is an important question to ask.

Years ago, when I began speaking at our local real estate group, I used sit down with each person, usually over lunch, and try to determine their knowledge level of real estate markets, financing techniques, sales skills and other critical knowledge areas before recommending how they should get started investing in real estate.

After doing a dozen of these meetings, it occurred to me that the answer I gave was the same regardless of their experiences, skills and knowledge.

Without fail, I encouraged them to start out wholesaling.

What is wholesaling?

Wholesaling, is finding great real estate deals. Then putting the house under contract and finding another investor or retail buyer to buy the contract to buy the house from you for a profit above what you agreed to pay the seller.

For example, you by at a big discount and sell that discount to someone else for a fee.

Why wholesaling?

I recommend wholesaling to starting real estate investors for several reasons.

First, it is a very low risk way of getting involved in real estate investing. When you put a house under contract, you are putting up as little as $10 and ideally no more than $100. Beyond your time and some marketing expenses, that is all you should have invested in your business when starting out.

Second, it is an exceptionally excellent way to learn your market. As a new investor, you might think that $10,000 below a refinance appraisal value is a good deal on a house. Your market will likely teach you otherwise and better to learn that lesson from trying to pass of this type of deal with only $10 invested in a binder deposit rather than try to sell this house while you are making mortgage, utility, taxes and insurance payments on a house you actually bought.

Third, you will get to know other investors and can learn from them. As a wholesaler, you should be finding what other investors want and are looking for in deals. Some will be helpful and will want to share information and time with you. Many will not; do not take it personally. There are good and bad folks in this industry just like there are good and bad lawyers, doctors and accountants.

Fourth, you can generate quick cash. A challenge common with many real estate investors is cash flow. Learning wholesaling is learning how to generate quick cash. Master the ability to generate quick cash and you have solved a lot of problems.

And finally, you can find great buy and hold deals for your portfolio. Inevitably, as you look for wholesale deals you will find exceptionally good long term buy, rent and hold properties for your own portfolio. I strongly suggest that you do half a dozen or more wholesale deals before you consider buying a long term rental. By then, you should have a much better idea of what a really good deal is than you did on your first day as a real estate investor.

About Real Estate Investing - Are You Prepared To Pay The Recapture Tax

If you’re a real estate investor, and you’re planning to sell an income property owned for more than one year, you’re probably aware you will pay a capital gains tax. What you might not be aware of is the depreciation recapture tax you will also pay, and may be in for an unpleasant disappointment.

This was suggested to me recently by an real estate investor who never saw the recapture tax coming. Only to discover it later when his federal tax obligation computed higher than he originally anticipated, and the proceeds he expected to receive computed lower. This is not a good thing. So it seems appropriate to mention it as a bit of income property advice to the new real estate investor.

Depreciation recapture tax occurs when depreciable real estate is sold after one year of ownership. Property sold one year or less is classified as a short-term gain and gets taxed as ordinary income; so it’s irrelevant. Capital gains and the recapture tax only apply to a property held for more than one year.

In real life, here’s how it works. When you sell an income property and have a recognized gain, the feds want to tax you for the capital gain, plus they want to tax you for the accumulated depreciation you’ve taken during the years you owned the property. Because the current capital gains tax rate is 15% and the recapture tax rate is 25%, you wind up paying more tax (thus, get to keep less) at the sale of your property than you would have by having to pay just the capital gains tax alone.

For example, if you realize a gain of $300,000 of which $100,000 is attributable to depreciation, your taxes might compute this way:

1. Your accumulated depreciation of $100,000 gets taxed at 25%. Hence, you owe $25,000 recapture tax. 2. The $200,000 remainder (300,000 - 100,000 = 200,000) gets taxed at 15% (the current capital gains tax rate). Hence, you owe $30,000 capital gains tax. 3. Your tax obligation for real estate capital gains totals: 25,000 plus 30,000. Hence, you owe $55,000.

Now suppose you had no knowledge of depreciation recapture tax. You would probably assume when you sell that your full gain will be taxed as capital gains. In your mind, the full $300,000 gain gets taxed at 15%, and thereby conclude that you owe the IRS $45,000. Imagine the shock when you learn that you owe $55,000; a whopping $10,000 more tax than expected; hence, $10,000 less proceeds than expected (say goodbye to the wide-screen television).

The bottom line? Real estate investing requires sound real estate investment tax strategies. So you should always consult a tax specialist before you sell rental income property, and maybe think about investing in a good real estate investment software program. It might keep you from getting blindsided at tax time, and likewise prevent unrealistic expectations that result in an unpleasant disappointment later.

About Real Estate Investing - Are You Prepared To Pay The Recapture Tax

If you’re a real estate investor, and you’re planning to sell an income property owned for more than one year, you’re probably aware you will pay a capital gains tax. What you might not be aware of is the depreciation recapture tax you will also pay, and may be in for an unpleasant disappointment.

This was suggested to me recently by an real estate investor who never saw the recapture tax coming. Only to discover it later when his federal tax obligation computed higher than he originally anticipated, and the proceeds he expected to receive computed lower. This is not a good thing. So it seems appropriate to mention it as a bit of income property advice to the new real estate investor.

Depreciation recapture tax occurs when depreciable real estate is sold after one year of ownership. Property sold one year or less is classified as a short-term gain and gets taxed as ordinary income; so it’s irrelevant. Capital gains and the recapture tax only apply to a property held for more than one year.

In real life, here’s how it works. When you sell an income property and have a recognized gain, the feds want to tax you for the capital gain, plus they want to tax you for the accumulated depreciation you’ve taken during the years you owned the property. Because the current capital gains tax rate is 15% and the recapture tax rate is 25%, you wind up paying more tax (thus, get to keep less) at the sale of your property than you would have by having to pay just the capital gains tax alone.

For example, if you realize a gain of $300,000 of which $100,000 is attributable to depreciation, your taxes might compute this way:

1. Your accumulated depreciation of $100,000 gets taxed at 25%. Hence, you owe $25,000 recapture tax. 2. The $200,000 remainder (300,000 - 100,000 = 200,000) gets taxed at 15% (the current capital gains tax rate). Hence, you owe $30,000 capital gains tax. 3. Your tax obligation for real estate capital gains totals: 25,000 plus 30,000. Hence, you owe $55,000.

Now suppose you had no knowledge of depreciation recapture tax. You would probably assume when you sell that your full gain will be taxed as capital gains. In your mind, the full $300,000 gain gets taxed at 15%, and thereby conclude that you owe the IRS $45,000. Imagine the shock when you learn that you owe $55,000; a whopping $10,000 more tax than expected; hence, $10,000 less proceeds than expected (say goodbye to the wide-screen television).

The bottom line? Real estate investing requires sound real estate investment tax strategies. So you should always consult a tax specialist before you sell rental income property, and maybe think about investing in a good real estate investment software program. It might keep you from getting blindsided at tax time, and likewise prevent unrealistic expectations that result in an unpleasant disappointment later.

About Real Estate Investing - Are You Prepared To Pay The Recapture Tax

If you’re a real estate investor, and you’re planning to sell an income property owned for more than one year, you’re probably aware you will pay a capital gains tax. What you might not be aware of is the depreciation recapture tax you will also pay, and may be in for an unpleasant disappointment.

This was suggested to me recently by an real estate investor who never saw the recapture tax coming. Only to discover it later when his federal tax obligation computed higher than he originally anticipated, and the proceeds he expected to receive computed lower. This is not a good thing. So it seems appropriate to mention it as a bit of income property advice to the new real estate investor.

Depreciation recapture tax occurs when depreciable real estate is sold after one year of ownership. Property sold one year or less is classified as a short-term gain and gets taxed as ordinary income; so it’s irrelevant. Capital gains and the recapture tax only apply to a property held for more than one year.

In real life, here’s how it works. When you sell an income property and have a recognized gain, the feds want to tax you for the capital gain, plus they want to tax you for the accumulated depreciation you’ve taken during the years you owned the property. Because the current capital gains tax rate is 15% and the recapture tax rate is 25%, you wind up paying more tax (thus, get to keep less) at the sale of your property than you would have by having to pay just the capital gains tax alone.

For example, if you realize a gain of $300,000 of which $100,000 is attributable to depreciation, your taxes might compute this way:

1. Your accumulated depreciation of $100,000 gets taxed at 25%. Hence, you owe $25,000 recapture tax. 2. The $200,000 remainder (300,000 - 100,000 = 200,000) gets taxed at 15% (the current capital gains tax rate). Hence, you owe $30,000 capital gains tax. 3. Your tax obligation for real estate capital gains totals: 25,000 plus 30,000. Hence, you owe $55,000.

Now suppose you had no knowledge of depreciation recapture tax. You would probably assume when you sell that your full gain will be taxed as capital gains. In your mind, the full $300,000 gain gets taxed at 15%, and thereby conclude that you owe the IRS $45,000. Imagine the shock when you learn that you owe $55,000; a whopping $10,000 more tax than expected; hence, $10,000 less proceeds than expected (say goodbye to the wide-screen television).

The bottom line? Real estate investing requires sound real estate investment tax strategies. So you should always consult a tax specialist before you sell rental income property, and maybe think about investing in a good real estate investment software program. It might keep you from getting blindsided at tax time, and likewise prevent unrealistic expectations that result in an unpleasant disappointment later.

Start Your Real Estate Investing Career Off Right With Smart Marketing

Sure, it would be easy for you to step into your new real estate investing career with a pocket full of cash ready to plug every marketing avenue and make money hand over fist. However, it is not this easy for everybody involved, most of the people entering the real estate investing arena looking for the big bucks are forced to start by being frugal and intelligent. Don?t spend money in the areas where it is not going to come back to you in a big way, but how is this done? Read on and take a few tips back to the bank with you!

Use the charm and hard work approach by walking door-to-door in the neighborhoods that either resemble the houses you are trying to sell or are in the same area as the houses you are trying to sell. You don?t have to talk to someone or even introduce yourself to a single soul, just put flyers on doors with your message to get your name in the right place. Sure, this may take a little bit of work and you may get a little bit of exercise, but worse things have happened! You might just find some properties that make sense for you!

Take out page ads in every paper that is used in the area where you are trying to buy or sell in your real estate investing career. Don?t put something simple like your name and a brief message, but take a bold stand that will make people want to buy from or sell to you. Tell them that you buy houses with cash or you have something to offer that can make this process much easier for you. Continue to tweak your messages in each publication until you find something that works, but when it works ? stick with it! Don?t fix the unbroken tool!

These are two inexpensive, but effective ways to get your name out and in the area where you are hoping to begin your real estate investing venture. Neither will break the bank, but neither will get you the results you want if you don?t put the required work out front in the interim. Work hard with these two strategies and you can achieve everything you hope to in this lucrative real estate investing world!

Start Your Real Estate Investing Career Off Right With Smart Marketing

Sure, it would be easy for you to step into your new real estate investing career with a pocket full of cash ready to plug every marketing avenue and make money hand over fist. However, it is not this easy for everybody involved, most of the people entering the real estate investing arena looking for the big bucks are forced to start by being frugal and intelligent. Don?t spend money in the areas where it is not going to come back to you in a big way, but how is this done? Read on and take a few tips back to the bank with you!

Use the charm and hard work approach by walking door-to-door in the neighborhoods that either resemble the houses you are trying to sell or are in the same area as the houses you are trying to sell. You don?t have to talk to someone or even introduce yourself to a single soul, just put flyers on doors with your message to get your name in the right place. Sure, this may take a little bit of work and you may get a little bit of exercise, but worse things have happened! You might just find some properties that make sense for you!

Take out page ads in every paper that is used in the area where you are trying to buy or sell in your real estate investing career. Don?t put something simple like your name and a brief message, but take a bold stand that will make people want to buy from or sell to you. Tell them that you buy houses with cash or you have something to offer that can make this process much easier for you. Continue to tweak your messages in each publication until you find something that works, but when it works ? stick with it! Don?t fix the unbroken tool!

These are two inexpensive, but effective ways to get your name out and in the area where you are hoping to begin your real estate investing venture. Neither will break the bank, but neither will get you the results you want if you don?t put the required work out front in the interim. Work hard with these two strategies and you can achieve everything you hope to in this lucrative real estate investing world!

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