Hey Sherman Ragland of RealInvestors®. So, one of the questions we just gotta ask, by the way, you can ask me questions 24/7 at askarealinvestor.com And feel free to submit your questions 24/7.

So, one of the questions we just got in, is, "Sherman, real estate wholesaler? What's a real estate wholesaler?"

And a lot of people get confused on this point. In fact, they oftentimes confuse wholesaling with Bird Dogging. They're two completely, entirely different things. Bird Dogging is much more like being a real estate agent. And that's the reason why Bird Dogging is technically illegal in many states, unless you have a real estate license.

Wholesaling, though, is completely different because wholesaling is you actually owning real estate. And let me start off by saying that real estate and real estate ownership typically has three phases. There's an acquisition phase, there's an ownership phase and there's an exit phase. In other words, how do you get outta the deal.

Anytime you're talking about an ownership position in real estate, you really want to think about all three of those things. Too many people only think about the acquisition, and they never think about the actual ownership period. And unfortunately they rarely think about the exit. And that's how they, quite frankly, wind up getting stuck.

So the reason why they get stuck with bad deals, is because they don't spend enough time thinking about that exit phase of the deal.

So wholesaling, back to wholesaling. So if there are three phases to real estate, the actual acquisition, the ownership, and the exit, wholesaling is just simply an accelerated, some might even say abbreviated, but you still go through all three of those things.

Like, take for instance this beautiful island, out here in the middle of the Caribbean, nestled amongst the British Virgin Islands. Let's say that I somehow acquired this island. So I have this island.

There's no water, there's no sewer right now, but I could own this island. I could invest in getting a water line, a sewer line, like, from maybe the neighboring island. And I could like, maybe sell huts, or maybe set up a bar and I could collect rents, while I own the island.

Now, everybody kind of understands that part of buying real estate or acquiring real estate. Owning it and renting it, and then of course, ultimately deciding to sell it or refinance it, or maybe pass it down to my kids. That would be traditional sort of long term ownership of real estate.

But when we are talking about wholesaling, everything is abbreviated. So I could literally say, you know, maybe I'm over here at this restaurant over here in this other island. And somebody says, "Hey, you wanna buy my island over there?" And I'm like, "Sure, how much?" and guy says, "Okay, I'll take $10 million for it." And I say, "Well, can, you know, will you offer seller financing? Can I buy it on terms?" And the guy says, "Yeah, I'll consider it."

So we write up a contract, literally at the bar, on the back of a napkin. And I agree to buy the real estate, this piece of real estate, this island for $10 million. And I say to the guy, "Hey, before we finalize the contract, is there a boat driver who can take me over to the island?" He says, "Yeah, my buddy will run you over to the island."

And so I hop on the boat, and as I'm standing on the dock, somebody says to me, "Hey you're Sherman Ragland, the RealInvestor. What are you doing down here?"

And I say, "Well, see that island over there? I just bought it." And the guy says, "You just bought it? I was about to go see the guy inside the restaurant to see if I could buy it." I say, "Well what are you willing to pay for it?"

He says, "Oh, 12 million." I say, "Well, I tell you what, come on along with me let's go take a look at it together." And we come over together and look at the island and he's like, "Yeah, I'd buy it for 12 million." I said, "Well, tell you what, I have it under contract. Why don't I assign you my contract? Why don't I wholesale you the deal?"

And he says, "Well, how much?" I say, "12 million." So I basically take the contract I signed with the owner, who sold it to me, Sherman, on the back of a napkin. If it's in writing, if it's in writing it's a valid real estate contract, if it's got the right terms and conditions. Doesn't matter what piece of paper it's on. And I literally take the contract, that I'm buying the property for 10 million, and I wholesale the deal to somebody else.

And if that were to happen, I would never get the chance to put in the water, the sewer, the huts, the bar. I just simply had a very short-term interest in the property. That's wholesaling. And that's very different from being a real estate agent. That's very different from being a real estate broker. And it's certainly different from being a Bird Dog. Because in that context, I actually owned the property.

That was what's called a contract purchaser. I had a contract to purchase the real estate and I basically assigned, or wholesaled, my contract to somebody else. But all three phases of real estate investing are there. I had an acquisition phase. I had an ownership phase. I had an exit phase.

Now, granted, my ownership phase was only the 15 minutes over on the boat, the 15 minutes back, if that. If we've got a boat like this, it's basically two minutes. But the two minutes over, the two minutes back, and maybe the 30 minutes we spent together on the island. And of course, then I write up a contract to my contract purchaser that says, "I'm selling you my contract to purchase this island. And I'm selling it to you for 12." And at the settlement table, the title company takes both contracts, puts 'em together and say, "Hey, there's a $2 million difference. Sherman, here's your check for 2 million." Because you had it under contract to buy it for 10, you assigned it to somebody else to sell it for 12, for them to buy it at 12. And basically you made the spread. That's wholesaling.

The key to wholesaling, is you're taking an ownership stake. Even if the ownership stake is only very, very short, some might even say temporary or abbreviated. But the bottom line is, all three parts of the real estate investment are there.

There was an acquisition phase, there was an ownership phase, albeit abbreviated, and of course there was an exit phase, me assigning or selling my contract to somebody else. That's what wholesaling's all about.

If you'd love to learn more about wholesaling, go ahead and check out our other videos on how to wholesale. I'd also strongly recommend that you go through our training program. We have a 21 day training program called the "21 Day Challenge", the links are below, where you can literally learn how to wholesale deals and make quick cash.

Because that's the main reason why people do wholesale properties, is to make quick cash. Check out the link below and be a part of the RealInvestor family, and learn how to do this real estate investing thing the correct way.

So as always, Sherman Ragland, the RealInvestor, 10 Minute Real Estate.

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Be a part of the RealInvestors' family. Sherman Ragland the RealInvestor, 10 Minute Real Estate, where you get your questions answered in 10 minutes or less. Talk soon, bye.