I had a friend who introduced me into wholesaling, but right now I’m in my research phase :eyecrazy( trying to grasp what exactly I will be doing). Since I have never actually sold a home to an investor what are some things I need to be preparing myself for in this line of work as far as my first sale is concerned?? I hope this makes sense and thank you in advance. :help
The best part about wholesaling is that it is risk free to get started. As a wholesaler you need to build an extensive list of investors that you can present your deals to. You will need to find out their buying criteria as well as how they fund their deals. The more buyers you have the more comfortable you will be in making your offers. If you are not 100% comfortable when you start I suggest that you start out with options just to protect yourself in case you make a mistake.
I have been working as an investor for about 3 months and closed my first wholesale deal today. Here is how I did it:
- I joined 2 local REI clubs and began networking with rehabbers and landlords to build my buyers list.
- I used my county tax records to build a list of absentee owners and started mailing to them using yellow letters.
- I followed up each call I got until I found a seller with a fixer upper that they were willing to sell for cheap.
- I estimated ARV, visited the house and estimated repairs, and figured out my max purchase price (.7*ARV - repairs - desired assignment fee). I was able to meet the seller’s asking price and I put the house under an assignable contract. I used an assignable sales contract instead of an option since I felt pretty confident in being able to find a buyer.
- I contacted buyers on my buyers list and started showing the house. As it turned out, I had grossly underestimated the cost of repairs, so my numbers did not work for my buyers. Fortunately, I was able to talk my sellers into reducing their price, and then find a buyer who could make the new price work. Also, being part of my local REIA came in handy as my buyer came not from my list but from a mass email I sent out to the club.
- Once I found my buyer, I assigned my contract to him for a fee (the fee being the difference between what he agreed to pay for the house and what the sellers agreed to accept for it) and today, he and the seller closed, and I collected my assignment fee.
So some steps you need to take are:
- Start building your buyers list
- Start marketing for motivated sellers
- Get your paperwork in order, i.e. assignable sales contract with a study period contingency so you can cancel it if you don’t find a buyer in time, or a option contract, and an assignment contract to start.
As a side note, I did not have money for any courses, so I did not take any. I also do not have much patience. I spent about 2 weeks researching feverishly, then started my marketing campaign and joined my local REIA. I did a lot of learning on the job, so to speak. And 3 months later I closed my first deal.
The thing that really got me started and got me a good base on the whole idea of wholesaling was Sean Terry’s Flip2Freedom. He has a free eBook and also a free podcast that he puts out each week. Nobody explains wholesaling better or more genuine than he does. If you’re just starting out, or even if you’ve been doing it for a while. I HIGHLY RECOMMEND him. I wouldn’t be where I was right now without him.
I got started in real estate investing a few years ago by reading all the free info on this website. You can attend local REIAs and network with other real estate investors and listen to speakers.
There are several ways to invest in real estate. Most people start out either Landlording, buy/fix/resell, wholesaling, or private money lending. To determine which one is best for you, you need to have a plan. Think about your investing goals - what are they? One of the things you’ll need to think about is exactly how much time and how much money you want to dedicate to investing. Some people have more time than money, and vice versa.