Exit Strategy For Wholesale

[Chris Tarashuk]

As someone with very little capital to work with I am looking at getting into wholesaling to build a base to start my rental portfolio. My biggest worry is getting a house under contract and not being able to find a buyer. What are some exit strategies to safely exit a contract since I would not be able to buy? I'm in NJ if this helps.

[Michael Plaks]

Here comes an unpopular opinion. While you are understandably concerned about your protection, I'm just as much concerned about the seller's protection.

When you take a property under contract, you contractually promise the seller to buy the house. In your head, it's just a maybe: maybe I will be able to sell your house, and maybe not. If not - then oops, sorry, your problem now. For the seller, it's a promise. When you do not follow up on this promise, you screw him over, simple as that. Sometimes, the damage from a wholesaler's default on the contract is huge, such as losing their house to a foreclosure.

The most ethical wholesalers NEVER put a property under contract if they intend to walk away from it when no buyer is found. They plan to close on this property themselves, not walk away undamaged. 

FWIW, it's not personal towards you, just a general wish of improving the ethics in our business.