Multifamily real estate is a complex industry with multiple players involved in the process. Two such players are wholesalers and brokers. While both wholesalers and brokers deal with the buying and selling of real estate, they differ in several ways. In this article, we will discuss the key differences between the two and explain why using a brokerage service like Residential Investment Advisors (RIA) is better than finding deals through a wholesaler.
Table of Contents
- What is a Wholesaler?
- What is a Broker?
- Which is Better?
What is a Wholesaler
Wholesalers are individuals or companies that purchase properties at a discounted price and then sell them to investors or other buyers. Wholesalers typically work with distressed properties or those that require a significant amount of renovation. They make their money by buying properties at a lower price and then selling them to buyers at a higher price. In the multifamily sector, wholesalers may focus on finding apartment buildings that need significant repairs or are in financial distress.
What is a Broker
Brokers, on the other hand, act as intermediaries between buyers and sellers. They help buyers find properties that meet their investment goals and assist sellers in finding buyers for their properties. Brokers make their money by charging a commission on the sale of a property. In the multifamily sector, brokers may specialize in finding apartment buildings that meet the specific needs of buyers, such as those with a certain number of units, in a particular location, or with a specific cap rate.
Which is Better?
The primary difference between brokers and wholesalers is that a broker never takes ownership of the property during the transaction. This means a broker is never invested into a property personally which means if the deal doesn’t look good, they can walk away and find another property for you that makes more sense. Wholesalers own the property they are trying to sell you which means they may not have your best interests in mind. While both wholesalers and brokers can be valuable resources for investors, there are several key differences between the two that investors should be aware of.
Brokers have access to a broad range of properties.
First, wholesalers typically focus on distressed properties, while brokers may be able to provide a wider range of properties to choose from. This means that investors who work with brokers may have access to a broader range of investment opportunities.
Brokers have a deep understanding of the Multifamily market.
Second, wholesalers may not have as much experience or expertise as brokers when it comes to multifamily real estate. Brokers typically have a deep understanding of the market and can provide investors with valuable insights into the trends and opportunities in the sector as well as help investors properly assess the pros and cons of each property. This knowledge can help investors make more informed decisions and find better investment opportunities.
Good brokers know people and know how to get things done.
Third, using a brokerage service like RIA can provide investors with a more comprehensive and streamlined experience. RIA specializes in multifamily real estate and has over 17 years of experience in the industry. RIA can also provide HIGH QUALITY referrals to a range of additional services, such as tax attorneys, financing, and property management. These connections can save investors months of work and potentially prevent costly mistakes that happen through trial and error.
A good brokerage firm should not have mixed motives.
Finally, working with a brokerage service like RIA can provide investors with a more professional and transparent experience. RIA is committed to transparency and integrity and has a strong reputation in the industry. A good broker understands that the most profitable deal happens when you get a lifelong client. You will want to find a brokerage firm that puts the long term profitability of their clients over the short term gains of a shady deal. When brokerages behave this way, this means that investors can trust that they are getting the best possible service and advice when working purchasing a multifamily property.
In conclusion, while wholesalers and brokers both play important roles in the multifamily real estate industry, there are significant differences between the two. Using a brokerage service like RIA can provide investors with a more comprehensive, professional, and transparent experience and can help them find better investment opportunities. If you are interested in investing in multifamily real estate, consider working with a brokerage service like RIA to help you achieve your investment goals.