How to Legally Wholesale Real Estate in Florida
Wholesaling real estate in Florida is a great way to get your foot in the door of the real estate investment world. While it requires patience, focus and plenty of networking, real estate wholesaling requires little initial financial investment from you. As a wholesaler, you essentially act as the middleman, matching a seller with an end investor.
Casting our attention to the Sunshine State, Florida is an excellent place to start wholesaling real estate. Investment activity in the state is booming meaning demand for wholesale properties is extremely high. This is being fueled by Florida’s growing economy and labor market, favorable tax policies, and metro areas such as Miami-Dade which have long been attractive investment destinations.
In this article, we’ll discuss how you can start wholesaling real estate in Florida, as well as what to look out for and the legal considerations to be mindful of.
Familiarize yourself with Florida laws
Before getting into wholesaling, you must complete your due diligence. One of the most important aspects of this is checking the relevant laws and regulations governing this activity. While wholesaling rules can vary across the country, Florida actually has very favorable regulations making it a great place to get into wholesaling.
The first thing to know is that you don’t actually need to be a licensed realtor to wholesale real estate in Florida. However, you will need to be read up on the legal proceedings and know how to complete the process correctly.
In fact, the only US states that currently require you to be licensed in order to wholesale real estate are Illinois and Oklahoma. However, in order to be transparent during a wholesale deal in Florida, you must state whether you are a licensed real estate agent or not.
There are also some key guidelines that you must adhere to in Florida. For example, Florida state laws dictate that you can’t market a property unless you are the seller or contracted agent. So that means as a wholesaler, you can’t actually put For Sale signs outside the property unless you have the legal title or a representation agreement.
Start growing your network
Once you’ve got to grips with the local laws, now you can start building a network of real estate investors that are looking for deals. Networking is a huge part of the wholesale process, and having a good list of investors on call will help you become a successful wholesaler.
Real estate investors would consider using a wholesaler to reduce their workload when it comes to searching for their next investment opportunity. So, you want to establish yourself as a reputable player who knows exactly how the process works and can spot a good deal.
Working alongside experienced wholesalers and asking them for advice can be a great way to learn the ropes. Furthermore, attending local events and connecting with real estate agents and investors in the area will broaden your contact list even further. There are also plenty of real estate associations in Florida which you might consider joining. Based on your location, there’s the South East Florida Real Estate Investors Association (SEFREIA) and the Central Florida Realty Investors (CFRI) to name a few.
Find a distressed property
There are actually plenty of tried and tested methods that wholesalers swear by when it comes to finding the right property. From driving for dollars to cold calling, each will require some work and dedication. Usually, a wholesaler will find a distressed property - for example one in pre-foreclosure - to approach in an attempt to contract it for a lower price.
You should certainly familiarize yourself with the local area in which you are operating before attempting to find a property to wholesale. As with many real estate successes, location is very important and external factors may determine whether you proceed to contract the property.
Once you have located a good property, you also need to complete a title search before completing any paperwork. This will help you confirm that there are no hidden costs or liens, and the person you are working with has the legal right to sell.
Decide your strategy
While your exit strategy will be to secure an end investor who wants to buy the property, you need to decide whether you will complete this with a double close or an assignment contract.
An assignment contract is when the property owner and the wholesaler agree to a contract which allows the right to buy the home. The wholesaler will then sell that contract (or their right to buy) onto the end investor. The contract will also be sold for a higher price (known as the assignment fee) which is how the investor can make a profit.
On the other hand, a double close means that the wholesaler actually becomes the legal owner of the property. They then sell the property quickly afterward without doing any work to the property. What this means is that they’re essentially closing two deals at once - hence the double close.
Close the deal and repeat!
As we mentioned earlier, you can’t legally market a property in Florida unless you are the seller or contracted agent. However, a wholesaler can market their contract and then charge their assignment fee on top.
Once you’ve contracted the property and identified the end investor, you can now proceed to close the deal. Usually, if the process has been done right, you can earn anywhere from $1,000 to $100,000+ when you close a wholesale deal.
One takeaway that prospective wholesalers should consider is whether you can save yourself some hassle by getting your real estate license. This might open up more avenues and make you look more reputable in the industry.
Either way, as you can see, wholesaling is actually a fantastic way to immerse yourself in the real estate world and kick start your career in real estate. From there, you can continue wholesaling properties and eventually start flipping houses.
To find out more, speak to one of our advisors today.