Wholesale real estate is a business investment strategy where the investor doesn’t take title to the property. Instead, they assign the right to purchase the property before the contract closes. The gross profit comes from the difference between the initial purchase and the second purchase price.

North Carolina’s real estate demand has sky-rocketed over the last few years, making it one of the best places for investors to live out their wholesaling dreams. After all, property is the leading investment type, exceeding gold, and stocks.

Bradley Ransome details the following eight steps explaining how anyone can execute successful wholesale deals.

1 Understanding North Carolina Real Estate Wholesaling Contracts and Laws

Investors should start by reading North Carolina’s real estate license law — Chapter 93A of the General Statutes of North Carolina.

Section three details the North Carolina Real Estate Commission, which enforces and creates the state’s licensing laws. To keep consumers safe, the Commission necessitates all real estate practitioners to be licensed.

2 Getting to Grips with the Market

Over 116,000 real estate brokers and firms were licensed by the state this year, and roughly half of them are members of the North Carolina Association of Realtors — the largest professional agency in the state.

As of June 2022, North Carolina homes had a median price of $364,900, exhibiting a growth of 14% over the same time in 2021. Rental prices also rose (and continue to do so), making real estate an even more enticing investment in the area.

3 Crafting a Cash Buyers List

Wholesaling requires a network of capable and willing buyers. Usually, cash buyers are “fixers and flippers.” In other words, they want a distressed property to upgrade or renovate for consumers.

Potential purchasers can be acquired and connected with from social media and digital platforms, alongside investment meetups.

4 Finding Sellers and Rundown Properties

Dilapidated properties are wholesalers’ bread and butter. Coincidentally, they’re often owned by financially hard-up, motivated sellers.

Potential deals can include foreclosures, rental homes, and even multi-unit properties. Wholesalers give homeowners an avenue for a quick sale without conditions or restrictions.

5 Putting Distressed Properties Under Contract

Investors must define acceptable criteria to determine a property’s potential. The most common are:

• The 70% rule dictates that wholesalers shouldn’t pay over 70% of the ARV value (i.e., the projected value after renovations).
• The Maximum Allowable Offer considers the costs of repairs needed to make a livable property.

6 Assigning the Contract to the Cash Buyer

An Assignment of Contract lets the wholesaler transfer the equitable interest (i.e., the marketable asset given to the purchasers once the contract is executed) to a new buyer.

7 Closing the Deal

North Carolina wholesalers usually follow the assignment exit strategy as it’s the most cost-effective and straightforward. The wholesaler’s assignment fee equals the difference between the first contract and the price found in the Assignment of Contract.

8 Double Closing If Necessary

If an assignment exit strategy doesn’t work, they move to a double closing, wherein they become the seller when closing the second contract. It requires additional closing costs but also adds a touch of legal protection since the wholesaler wouldn’t need a North Carolina real estate license in this instance.