How do I enter into the contract flipping/wholesale industry?

Question

Hello!

I am interested in getting started in flipping contracts on rundown houses in the St. Louis, MO area and I’m looking for any help I can get! My basic understanding is to find deals on houses and find a cash buyer looking to rehab before I close on my initial offer on the property. I am very inexperienced and rather young so any assistance from more experienced people in the industry would be much appreciated!

Thanks!

Nick C. · Answer

I would give the same advice to any aspiring wholesaler- book and podcasts are important, but it can't beat experience. If you're serious about doing this, go work in real estate, for a wholesaler, brokerage, property manager, house flipper. Anything to gain real life experience, it will be extremely valuable when you're trying to flip a contract to know what you're doing.

Austin mentioned deals being easy to find. This is not true. Houses are easy to find, if it was easy to find, you most likely don't have a deal under contract you have a house under contract. Most aspiring wholesalers are so excited to get anything under contract and email blast it out, they don't care or know how bad of a deal it is. Then wonder why no one emails them back or picks up their phone calls anymore. 99% of email blasts are overpriced junk, you're not going to get many chances with buyers before they start ignoring you if you do this. This is where experience can help.

Joshua Durrin · Answer

@Nick C.

Amen to that Nick. Most wholesaler blast junk. I’d love to work with wholesalers anywhere. Cash isn’t always the king either. You just need a buyer that can close... hard money shouldn’t be discounted, private money, even conventional financing. None of that should be discounted.

I’ve written up contracts as myself “or assigned” as the buyer. Ive also explored the option to write in an LLC as the buyer and then sell the LLC to the next buyer (not done this yet though). I’ve also heard of double closings occurring. There are no special contracts for these, just write down your intentions and execute to the terms. The key to any of these for me was to work with my title and escrow company. Those people are the keys to making these types of transactions succeed. They control the timing and have direct access to all parties involved. They also do these kinds of things much more often than me. And some don’t do them at all... so don’t get stuck in that situation. Network with local title and escrow companies and they’ll advise you on how to make it work in your area.

Your success, however, is dependent on the deal you bring to your investor pool. Bring a DEAL and you’ll be successful. Bring crap and you’ll be left holding the bag.

Isiah Harvey · Answer

I'm looking to get into the wholesale business in California specifically in the bay area looking to meet wholesalers to co wholesale and shadow.

Joanne Eriaku · Answer

Study, learn, grow your knowledge, don't jump into it until you know what you are doing, why you are doing it and who for. Have a plan, don't just wholesale for the sake of wholesaling, it does not do you nor anyone else any good. Go through the Podcasts, Blogs, Webinars right here in BP, there is a lot to learn, put in the work

Austin Wallis · Answer

Joanne, I think many are looking for recommendations on the core of whole selling, not asking for an exact science.  For instance, there's many middle-middlemen who want to give a flat $10k per deal to basically steal you from your deal.  This is absolutely a scam and could be an easy tip folks give to help newbies.

Teddy, I'm in the same boat too though.  Finding comp's are easy. Finding the deal is easy.  Is there a standard contract folks use?  How efficient are using the local real estate associations (ie what % of wholesale deals occur with individual buyers, vs. associations)?  Is it considered a full real estate transaction, or paired down to only?  If no title transfer is involved who is the 3rd party dealer protecting both parties during the transction?

Danny Webber · Answer

Find a mentor, go to meetups

Teddy Schmitt · Answer

Josh and Nick,

Thank you for your advice! I definitely see the importance in being very selective with which deals I send out to potential buyers. My goal is to be as transparent as possible and find actually good deals that provide a Win/Win/Win situation for the seller, the buyer, and myself, so that I can build a strong reputation in my area. I’m still a ways away from beginning to execute my first deal, as I am just starting my education! Thanks again for your help and let me know anything you found helpful when you jumped into your first deal!

Teddy Schmitt · Answer

@Joanne Eriaku

Thank you! I’m definitely just scratching the surface but I got some books and a ton of links so I’m excited to get into it, and hopefully execute it once I have a firm understanding!

Teddy Schmitt · Answer

@Austin Wallis

I have a lot of similar questions and from what I’ve been looking into and talking with my Dad about this is that the contracts and terminology are extremely important in order to make sure you can minimize your risk and have an exit strategy in case you need to get out of the contract. I’m still at the very beginning stages but I think some of my first steps are going to be; looking for a wholesaler in my area that I can shadow/learn from, compiling a list of fix and flippers in my area, and working on finding the correct contracts and documents for my situation.

Also, to address your point about the 10,000 deal, I have seen that around as well and I’m making sure to be very wary of anything like that, I believe I have the skills to negotiate a deal myself, so I don’t want to be shorted out of any of my profit.

Thanks for replying and let’s keep learning!

Joycelyn Calloway · Answer

I'm following this for responses because I have the same question and I am currently in Norfolk, VA.

How do I enter into the contract flipping/wholesale industry?

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