I’m new to wholesale real estate, but have done bird dogging and gave away $5,000 to the agency because they ripped me off. I brought in so many homes only to get $0. I knew then two things:
(1) I LOVE real estate,
(2) I dislike bird dogging like that
Finding motivated sellers was not an issue for me, so I had 5 lined up at a time. I am now looking into getting started with wholesaling, but need to know what to do (step by step if possible) to get started today, if I chose to. Any assistance?
pretty much all you need is buyers once you have your motivated seller lined up put the house under contract and proceed to finding a buyer by marketing your property on craigslist, contacting property management companies letting them know you sell discounted property and asking if they can run the property by theyre clients and offering them some type of incentive if a client buys from you, joint venture with another wholesaler and split the profits, get a agent you can work with and have them send the property out to all the agents with sold listings close in area and description to yours just to name a few… :beer
The sticky part is not the finding of distressed sellers or even buyers, it is handling the contracts (remember you are not a licensed agent and you are not selling real estate - big legal problems here). Wholesaling is selling your legal interest in a contract.
That means that you get your seller into a purchase agreement with you as the buyer for the lowest price they will accept (need to know your market and make sure you can “resell” it for more). A standard purchase agreement is needed.
Depending on how you plan to close will dictate how you write the agreement. If you will take the simpler approach of assigning the contract then you need to put “and assigns” after your name as the buyer or put a statement in the addendum stating that you have the right to assign the contract to another buyer. Your end buyer will also sign a contract with you stating they will pay $X as a “finders fee” or something similar. This works well when your profit margin is low.
The other option is to handle a double close. You close with the buyer and using either transitional funding or having the title company double close, you then close with your end buyer. This creates two separate transactions. The difference between what you purchase the property for and what you sell it for is your profit - less closing costs of course. The key here is to find a title company that will handle the double close, before you even sign the contract.