Wholesaling 101: How to Wholesale for Beginners

[Chris Piper]

Here is my guide to Wholesaling for Beginners. A lot of gurus will have you believe wholesaling is easy and you can make a ton of money doing it with very little effort. It is true that it’s not difficult to do if you know what you’re doing, and you can make a lot of money. However, deals aren’t going to just fall into your lap. You will need to put in the work and find the deals in order to be a successful wholesaler.

RULES I ALWAYS FOLLOW IN MY WHOLESALING BUSINESS

1. Be honest with people

Don’t lie to people about anything in your wholesaling business, and never try to screw anyone over. Karma will find you. Be honest, be kind, and be understanding. The sellers you will be talking to will typically be in a bad situation which is causing them to have to sell their house, and at a big discount. Sympathize with them, and try to help them get out of their current situation.

1. Have accurate numbers

ALWAYS have an accurate ARV(after repaired value) on a property, and ALWAYS have accurate repair costs. If those two things are accurate on every deal, you'll make more money and be able to sell your deals to cash buyers MUCH easier.

1. ALWAYS intend to close and NEVER put anything under contract you don’t already have sold

When you make an offer on someone’s house who is in a bad or desperate situation, ALWAYS plan to close. Don’t make an offer knowing you may not be able to sell the property to a cash buyer. These people are counting on you. Don’t fill your purchase agreement with the seller full of “Weasel Clauses.” These are clauses that let you weasel out of your contract if you aren’t able to sell it in time. That is a very dishonest way to operate your business, and will get you a bad reputation and lose you money. Just don’t do it.

You should have a buyer’s list built up, know what and where they want to buy PRIOR to putting anything under contract. And ONLY put things under contract that match your buyer’s lists buying criteria. If you’re buyers like to buy 3 bedroom 2 bath houses in a certain neighborhood or zip code, go look for 3 bedroom 2 bath deals in those areas. That way, when you do get one under contract, and if your numbers are accurate, selling it will be easy since you already know you have what your buyers are looking for.

Let me first answer some Frequently Asked Questions

WHAT IS WHOLESALING?

The short answer is being a middleman between a buyer and seller and you keep the difference in price. Example: You find a house and the seller needs $100,000 for it. You get it under contract for $100,000. You then find a cash buyer/real estate investor to buy it from you for $120,000. At closing, the title company cuts you a check or wires you $20,000 for being the middleman. Sounds easy right? There's a little more to it as I'll explain below.

HOW MUCH MONEY DO YOU NEED TO START WHOLESALING?

Technically you need $0 to start wholesaling. However, there are SEVERAL tools and things you need that will make wholesaling MUCH easier and MUCH faster to start making money.

WHAT DO I NEED TO GET STARTED WHOLESALING?

Computer or Smartphone, an internet connection, a blank Purchase and Sales Agreement, and Assignment Contract, an investor friendly title company or lawyer(depending on which one your state uses for closings), a bank account.. That’s it……..LITERALLY. It helps and makes things easier if you have a car, as well as some money to invest into your wholesaling business, but they aren’t necessary to start wholesaling.

WHAT IS THE AVERAGE PROFIT ON A WHOLESALE DEAL?

The average profit on a wholesale deal is $10,000. This will vary greatly depending on how good you are at negotiating, how accurate your numbers are, the seller’s motivation level, the area you are wholesaling, etc. I’ve done deals for as little as a $2,000 profit on up to $80,000 profit. There are a lot of things that will affect the profit on each deal.

HOW QUICKLY CAN I MAKE MONEY WHOLESALING?

It depends. You COULD make money in as little as 1 week, or it could take a couple of months. It depends on how much time you have to put into wholesaling, how motivated and dedicated you are, and if you have any money or not to put into your wholesaling business. I would say the average when you’re starting out is 30-60 days to get your first check or wire transfer.

DO I NEED CREDIT, AN AGENT, OR A MORTGAGE COMPANY TO WHOLESALE?

NO, NO, AND NO. Credit doesn’t matter in wholesaling. You aren’t technically putting any property into your name. You are getting a seller to sell to you at a certain price, marking it up, then selling your “Interest” in a property to a cash buyer and keeping the profit. You are strictly a middleman. NEVER use an agent unless you absolutely have to. It will just add expensive fees to your deal that you don’t need. You don’t need a mortgage company since you are never buying and closing on a property in your name. The cash buyer is the one closing for you essentially.

DO I NEED EARNEST MONEY FOR MY DEALS?

I can't say you NEVER will, but I have never put a single dollar of earnest money down on a wholesale deal. If someone INSISTS they want earnest money, I would try to keep it no more than $100. If it's a high dollar home, then no more than $1,000. Never offer earnest money. I always make my offer and include a POF(proof of funds) letter showing the seller that I have the funds to close. That will usually satisfy them and they won't care or even mention earnest money since they know I can close.

STEPS TO WHOLESALING

1. RESEARCH AND CHOOSE YOUR WHOLESALE MARKET

Wherever you live is typically the best place to start wholesaling. However, If you live in a small town or a rural area, you may need to choose somewhere else to start. Ideally, if you can’t start in your town, try to choose the closest town to you with a larger population. That way, in case you need to go take pictures or meet with a seller, it’s not too long of a drive for you. In the event that your real estate market or the next closest town’s real estate market are cold or cash buyers just aren’t buying there, you can choose another town, area, or state if need be.

In order to find a good market to wholesale in, type the following phrase into a google search: “median home price in tulsa oklahoma”

Obviously Tulsa, Oklahoma is just what I used for this example. Change the city and state to whatever city and state you want to search for. When Google brings up the search results, usually the first result will be from Zillow or Trulia. Click on that result, and it will show you a map of the area you searched for, the average home price, the 1-year change, 1-year forecast, and the market temperature. These things will tell you if you have chosen a good area to start wholesaling in. The simplest way is to base it on the market temperature of whatever city you’re researching. If the market temperature is “VERY HOT” then you have found a good city to start wholesaling in. “HOT” is fine as well, but anything less than hot, keep looking for another city.

FIND AN INVESTOR FRIENDLY TITLE COMPANY

Depending on your state, you will need either a title/escrow company or an attorney to handle the paperwork and the closing on your deals. Google real estate closing company and your state to find out what type of place handles closings in your state. Once you have found a few with good reviews, call them and tell them you are a wholesaler and ask if they are familiar with the process. You just want to find a good company that understands the wholesale process. You aren’t closing on any deals yourself, but instead you are selling your interest in a property you have under contract to a cash buyer.

CONTRACTS AND FORMS

You only need 2 contracts. A Purchase and Sale Agreement and an Assignment Contract. The Purchase and Sale Agreement is the contract that you and the seller sign which allows you the option to purchase the property at the agreed upon price. The Assignment Contract is what gives the cash buyer the right to purchase your interest in the property for the price agreed upon in the Purchase and Sale Agreement, as well as the profit you are charging the cash buyer to buy your right to that property.

Occasionally, you may have an issue where you need an Addendum. This is simply a one page form that you and the seller need to sign when there are any changes that need to be made to the original contract. You can use the Addendum instead of filling out an entirely new Purchase and Sale Agreement. Here is a link to all 3 forms you will need: https://www.biggerpockets.com/files/user/ventekrealty/wholesaler-documents

IDEALLY, BUILD A CASH BUYER’S LIST

It’s always best to build a cash buyer’s list BEFORE you start putting properties under contract. That way, when you DO get a deal, you already have people to sell it to. You CAN start with getting leads instead of starting with building a cash buyer’s list first, but it will take longer and be more difficult to sell you deals without a list.

In the event that you don’t have money to build a cash buyer’s list first by using bandit signs or pulling lists and contacting potential cash buyers, you have two other options:

Option 1: Attend local real estate meetups and or your local REIA meetings. At your local REIA(real estate investors association) meetings, you will always meet cash buyers, land lords, etc.you can use to start a buyer's list.

Option 2: You can partner up with someone who already has a cash buyer’s list. This would be partnering up with another experienced wholesaler in the area you are wholesaling, or finding an agent who has a good cash buyer’s list of investors they’ve built up.

The standard cost for another wholesaler finding you a buyer is 50% of the profits from a deal. It seems like a lot, but it’s well worth it to be able to move a deal quickly. Realtors who have a cash buyer list will vary in how much they charge you. They may want you to list the property with them, or they may just be willing to charge you a flat fee or a percentage for bringing you a buyer. Again, still well worth the cost when you’re just getting started to know you can move and close deals quickly. As time goes on, you can build your own list and then you won’t have to give away 50% of your profits, but in the beginning, that is probably the best way to get started.

You can also go to a nationwide wholesaler and have them bring you a buyer. You can go to dealulator.com and partner up with a guy called "Flip Man." You go to their website, enter all the details of your deal(you have to have the deal under contract and it CANNOT be listed with an agent in the MLS), and someone will contact you in a day or two to ask you some questions. They'll find you a buyer, and you guys split the profit 50/50.

GET LEADS: You do this by using free methods such as driving for dollars or networking if you don’t have any money to spend. If you do have money to invest in your wholesaling business, then you can pull lists from Prop Stream or List Source and skip trace them, use bandit signs, social media advertising, Google/Bing ads, Direct Mail, etc. More details on marketing later in this post.

FIND GOOD DEALS: Once you have your leads, now you start contacting them by text or phone. You pre-qualify them by asking questions about their situation and the property. It’s VERY important to find out if the seller has a mortgage, if so how much. Find out if they owe any back taxes. Find out if there are any judgments or liens on the property.

WALK-THROUGH AND/OR GET PICTURES: If you are looking at a potential deal, you need to have pictures or walk-through the property. If you are wholesaling and talking to sellers in your own area, then you can set-up a time to meet them at the property to walk through and take pictures. Get pictures of every room, the electrical breaker box, water heater, furnace, each side of the house, the roof, the basement if there is one, inside and outside of the garage if there is one etc.

If the seller doesn’t want you to come do a walk-through and take pictures due to concerns over COVID-19, then have the seller take pictures and send them to you. It’s always better if you can take the pictures, but if not, then have them do it. If you are virtually wholesaling, meaning wholesaling in an area that isn’t near where you live or in another state, then you have two options to get pictures: One, the seller takes them and sends them to you. Two, you hire someone in that area to take pictures for you. You can post an ad on Craigslist to find someone to do that. Usually it will cost you about $50 for someone to take pictures of a property for you.

RUN YOUR NUMBERS: Now that you have talked to the seller, you understand their situation and the details about the property, you have your pictures, now it’s time to run the numbers and see if it’s a good deal. First, figure out your repair costs based on the information the seller told you as well as the pictures of the property. If you don’t know how to estimate repairs, I would recommend using a tool like Blue Hammer. It’s actually built right into Prop Stream if you’re using that. If not, I believe it’s free to use just google it. You just put in the info and Blue Hammer will give you an estimate of repairs on that property based on repair costs specific to your area.

Now that you have your repair costs figured out, now you can plug that into your formula and see what the numbers look like. In this example, we will use the following numbers: ARV $100,000 - REPAIRS $40,000 - ASSIGNMENT FEE $10,000

ARV(after repaired value) $100,000

Cash Buyer’s Profit X70% = $70,000

REPAIRS -$40,000

=$30,000

ASSIGNMENT FEE -$10,000

MAO(max allowable offer)=$20,000

MAO is the MAXIMUM price you can offer to a seller. If you offer more than your MAO, you may not be able to sell the property to a cash buyer, your profit may be reduced, or you may not make any money on the deal.

I typically make my initial offer at 75% of my MAO. If my MAO is $20,000, then my initial offer would be $15,000. Then you can negotiate with the seller from there, but NEVER go over your $20,000 MAO based on the numbers in the above example.

The price you will sell your deal to a cash buyer for is the ARV times 70% minus the repairs. From the above example, let's say your ARV is $100,000 times 70% equals $70,000 minus $40,000 in repairs means the selling price to your cash buyer is $30,000.

Your MAO from the above example is $20,000. You offer $15,000 initially, and let's say the seller accepts $18,000. Your price to a cash buyer would be $30,000. Because you negotiated with the seller and got it under contract for $2,000 less than your MAO, now you will make an extra $2,000 in profit. This is of course assuming that a cash buyer makes an offer of the price you're asking. A lot of time they will offer less. You have to determine if their offer is acceptable to you or not. Some will try to low ball you and keep every possible dollar for themselves. Most cash buyers are reasonable, and since you've already built in a 30% profit for them, will usually offer close to your asking price.

MAKE YOUR OFFER AND GET IT SIGNED

Now that you have your numbers and MAO figured out, now you can open up Adobe Acrobat PRO DC and start filling out your Purchase and Sale Agreement. Everything should be pretty self explanatory in regards to filling it out. I personally ALWAYS use 30 days as the time frame to close in. Typically you will close sooner than 30 days, but this way if there are any issues or anything that slows down the closing, you have some additional time to close still. Always let the seller know verbally as well as include it in the Purchase Agreement that they WILL be responsible for Title insurance and any related fees, as well as any back taxes owed. Aside from that, the seller pays nothing else. ALL closing costs will be paid by the cash buyer. Make sure the title company knows this when you talk to them or email them your Purchase Agreement with the seller.

Once you fill it out, upload the file to Hello Sign. Add the seller’s name and email as an email recipient, edit the contract to add in a signature box for the seller in the appropriate spot on the contract. Make sure that the highlighted signature box corresponds with the correct signer on the right side of the page.

It will show whose name is being used currently whenever you add anything. Next, click on your name on the right side(“Sign Now”), then click and drag a signature box onto the contract where YOU will need to sign and it will automatically put your name in the signature box in print. Click Finish and send it. It will send it to the seller, they will sign the contract, and you will be notified via email they signed the contract.

SEND YOUR PURCHASE AND SALE AGREEMENT TO THE TITLE COMPANY

Once you have gotten the contract signed by the seller, email it immediately to your title company, escrow company, or attorney so they can start the title search. How long it takes to close will vary with each title company or attorney. Some can close in as little as a day or two, some will take 3 weeks. It just depends. If you find after your first deal or two that a title company or attorney is slow at closing, look for a better one. You can switch title companies whenever you need to. A closing that takes 2 weeks or less is ideal.

GET THAT PROPERTY SOLD ASAP!!!

If you have your own cash buyer’s list, email and text it out to all of them immediately! If you don’t, then it’s time to start contacting the wholesaler(s) whose cash buyer’s lists you will be utilizing, any agents who have cash buyer’s lists, or fill out the form online and partner up with the Flip Man.

Ideally, you want to get a cash buyer and have them sign the assignment contract within 1-3 days after getting a property under contract. If you’re using your own cash buyer’s list of cash buyers that you have already worked with before, then you’re good to go. If these are new cash buyers you’ve never worked with before, or you are using someone else’s list, then you need to include a NON-REFUNDABLE Earnest Money Deposit in your assignment contract. Typically $2,000-$5,000 is acceptable. If you’re wholesaling in an area where home prices are high, then you can ask for an even higher earnest money deposit. You do this so that in case an investor flakes on you or can’t close, then you still get to keep their deposit, but now you have to work quickly to find another buyer before your purchase agreement expires.

TIME TO CLOSE AND GET PAID!

Now that you have your buyer, you just have to wait for the title company or attorney to finish the title search. Once they get it back and it has a clear title, meaning no liens, judgments, etc, they should contact you to let you know you’re clear to schedule the closing. Make sure at this point, you let the title company know if you want a check or a wire transfer for your profit. Make sure you give the title company your banking info if you are getting a wire transfer. Typically, within a few hours the money will be wired into your account. If you are getting a check, they should have that available for you to pick up within a couple hours as well.

Now it’s time to contact the cash buyer and seller and find a date and time that works for both of them. In some cases the title company may do that for you, but you’ll have to ask them. The closing will now be scheduled by either you or the title company. On the day of closing, the seller and the buyer will both be at the closing, unless for some reason one of them can’t get there and the title company can send a mobile notary to that person’s location and have them sign. Usually closing will take 1 hour or less. Now, either wait for your wire to hit your account, or go pick up your check! Woo Hoo, you did your first deal and got paid! Now, wash, rinse, repeat and do it again and again.

AN EXAMPLE OF HOW A WHOLESALE DEAL WOULD GO

(This example is based on one of my most recent wholesale deals)

I found a deal. I did this by running Facebook ads. A seller saw my ad, messaged me on Facebook about a house she had and needed to sell. I used my list of pre-qualifying questions to find out more information about her situation and the property.

She needed to sell because she REALLY wanted to move and was just tired of the house. It needed a pretty good amount of repairs in order to make it retail ready. I asked her how much she needed to get out of it. She told me she needed $30,000 just to pay off the mortgage so she could move into another house. I verbally offered her $30,000 and she accepted. I sent her a purchase and sales agreement, she signed it, and I now had the property under contract.

I then contacted my cash buyers list about this deal. I got a buyer for $36,000 pretty quickly. I filled out an assignment agreement, sent it to the cash buyer to sign, and they signed it. We closed in about 2 weeks, and the title company wired me my profit of $6,000 and the deal was done.

WHAT REAL ESTATE TOOLS DO I NEED TO WHOLESALE?

As I said, you don't HAVE to pay for any tools if you can't afford it, but it will take a lot longer and be more difficult to start making money. That being said, here are some tools I would highly recommend if it's in the budget for you:

1. Prop Stream $100/mo: Prop Stream is by FAR the best software you can utilize for real estate investing and wholesaling. It allows you to pull lists of potentially motivated sellers nationwide, and you can make your search as specific as possible. You can then export those leads into a list. These lists will contain property details and the owners name(s), but will not include their contact info(cell phone, home phone, email). Next, you need to skip trace those lists which will get you the property owner's contact info.

You CAN skip trace the list from within Prop Stream, but there are cheaper and better alternatives out there I discuss below. Once you have your list of potential motivated sellers, and you've skip traced them, now you can start contacting them via text or phone and find out more details and if you have a potential deal.

Additionally, Prop Stream can pull tax history, if there are any liens or judgments on a property, it can pull Comps which is VERY important, and much more. You NEED to have accurate comps on any property you consider putting under contract.

2. Less Annoying CRM $10/mo: A CRM is a software that keeps your contacts and leads organized. Less Annoying CRM is one of the cheapest options and it works pretty well. Obviously, there are a lot of other CRM’s out there that you can use if you choose to.

3. Hello Sign $15/mo: This is a software that will allow you to upload your purchase agreement and assignment contract and add in signature boxes, date boxes, etc. You don't have to use Hello Sign, but it's what I prefer personally.

4. Adobe Acrobat Pro DC $16/mo: This software is so you can take your blank purchase agreement or assignment agreement and edit it. Most contracts are in a PDF format, and this software will make your life a LOT easier when you need to quickly edit a contract. Again, there is other software, this is my preferred software.

5. Lead Mining Pros (Pricing Varies): You will want to use this place for your skip tracing. It only costs $0.07 per lead to skip trace. Most other places cost $0.15-$0.25 or more per lead, so this will save you a lot of money. Additionally, they offer some AWESOME services such as: SMS MANAGEMENT(they will text your leads and communicate with them for you, then send you the details of their discussion for you to close the deal with the seller), COLD CALLING(If you're not good on the phone, they will cold call your leads and get the info you need, then you just call them and close the deal), and they offer more services as well.

Now that we have some questions answered and you know what tools will help make wholesaling a lot easier for you, let's run through wholesaling step by step:

FINDING MOTIVATED SELLERS

Depending on how much money you have to invest, will determine how you are going to be finding your deals. If you literally have NO money, then you need to drive for dollars.

FREE ADVERTISING/MARKETING/NETWORKING

DRIVING FOR DOLLARS

That is where you drive around neighborhoods looking for vacant properties and writing down the addresses. Look for no window coverings, overgrown grass, mail or newspapers piled up, etc. Once you have a decent sized list of addresses, then you have to skip trace them to get the owner's contact info so you can call them. Ideally, I'd recommend using Lead Mining Pros to skip trace your list, but if the list isn't big enough(think their minimum is 100) or if you have NO money, use this website and skip trace them yourself one at a time 100% FREE. fastpeoplesearch.com

LOCAL MEETUPS/REIA MEETINGS/AGENTS

You can find other wholesalers, real estate investors, cash buyers, etc. at local meetups and your local REIA(real estate investor association) meetings. As always, be honest when meeting people. Let them know you're a new wholesaler just learning the business. If you're talking to a cash buyer, ask them if you could get their contact info and let them know when you get new deals. They will almost ALWAYS say yes. If talking to another wholesaler, ask them questions and see if they are willing to help you from their knowledge and experience. A lot of them are happy to help new wholesalers.

Sometimes, real estate agents can be helpful as well. They may know of some deals that aren't listed in the MLS(multiple listing service), or know someone looking to sell, etc. the more people you know and the bigger your network of people, the easier things will be.

PAID ADVERTISING

BANDIT SIGNS

A lot of people hate bandit signs, but I can say from experience THEY WORK. If you want your phone ringing with motivated sellers, use bandit signs. Keep in mind, a lot of cities frown upon them and they are even illegal in some places. Check your local ordinances for regulations in your area. Now, WHAT IS A BANDIT SIGN? They are those 18"X24" all yellow or all white signs usually that you see all over town saying "WE BUY HOUSES."

You see them all the time because like I said, they work. The best place to get them from is dirtcheapsigns.com. They're between $1-$2 each I believe. I'd recommend ordering at LEAST 50 signs to start. Put up at least 25 of them to start in high traffic areas where cars will be sitting, such as stop lights at busy intersections. Don't put them up in spots where there is high traffic but cars are just whizzing by as no one will see them. Keep in mind too, a lot of your bandit signs will get taken down by landscapers, business owners, other wholesalers, or the city.

That's why you always have extras on hand to put back out when they get taken down. It's just how it goes, and no way to avoid it really. Also, NEVER put your personal cell phone number on the bandit signs. If your city does frown upon them, they can find you from your cell number and possibly fine you. ALWAYS use a separate phone number that rings to your cell phone, like a Google Voice number or some company that offers a phone number. Usually you can get one for around $10 a month, but Google Voice is free.

WHAT TO WRITE ON A BANDIT SIGN

Here is what most people write or something to the effect:

WE BUY HOUSES

AS-IS

ALL CASH

FAST CLOSING

Call (555)555-5555

SOCIAL MEDIA ADVERTISING

In my opinion, this is the most cost effective form of paid advertising. I ONLY advertise on Facebook. I’ve done Facebook and Instagram, but Instagram produces almost NO results. That’s why I only advertise on Facebook.

When you create an ad for Facebook, in the VERY beginning where you choose the type of ad you want to run(you want to run an ad for “Lead Generation” or “Lead Form”), at the top of the screen somewhere, Facebook will ask you if this ad will be for housing, credit, or something else. This ad WILL be for housing, so you have to check the box and let them know that it is. If you don’t, Facebook will figure it out and probably deny your ad and it will never run.

Even though you will naturally want to advertise in your area only, that is a mistake. When you run a housing ad on Facebook, for some reason, Facebook DRASTICALLY reduces the audience size you can advertise to. That means, you need to make sure your reach equals out to a large enough audience size regardless of the distance from where you WANT to target. A good example is that the area I live in is Mishawaka, IN right next to South Bend. My audience size is so small here, that in order to get a big enough group of people to advertise to, I had to choose the WHOLE state of Indiana instead of just my local area.

You may live in a huge city and it may not be an issue for you depending on what area you are wholesaling in, but if that happens to you, expand your area or choose the whole state. ‘

As you are creating your ad, you will at some point need to choose to create a new lead form. This will be the form that people are sent to when they see your ad and click on it. I’m not going to get into all the specifics of setting all this up as that would take FAR too long. I can set-up Facebook ads for a fee if you don’t have the time or the knowledge to do so. Send me a message if you would like to have me set that up for you. Also, you can use a company like Lead Mining Pros or Dash Clicks to set-up and run your Facebook Ads. I believe Lead Mining Pros charges $200 a week plus however much you want to spend with Facebook to run the ads. Dash Clicks charges $500 a month plus a $350 set-up fee plus whatever you want to spend with Facebook to run the ads. As you can see it can get pretty expensive.

Once your ads are running, you will need a way to get the leads sent to you. Facebook will collect the ad form submissions from people interested in selling their house to you, but you still need a way to get those submissions so you can contact them. I use an app for my phone called Privyr. It’s around $20 a month. You can connect your Facebook Ads account to the app, and when a new lead comes in from Facebook, you will get a notification from the app. It will have whatever information you told Facebook to collect from that motivated seller when they filled out your lead form. It’s VERY easy to use and makes everything a lot simpler. Again, there are a lot of other tools you could use for this, but this is what I personally use.

PPC/GOOGLE ADS/BING ADS

If you don’t know what you’re doing with PPC ads, I would advise not using them initially. You could waste money if your ads are bad, and PPC ads can get VERY expensive.You could always get a digital marketing agency in your area or anywhere to run PPC ads for you as well if you have the money to do so. You can use a company like Dash Clicks for your PPC advertising as well. They charge $500 a month plus a $350 set-up fee plus whatever you spend with Google or Bing to run the ads.

DIRECT MAIL

If you have a pretty healthy budget to spend, then direct mail might be a good choice for you. With direct mail, you would get a list from somewhere like Prop Stream or List Source. Then you would mail each person on that list a postcard or letter saying “We Buy Houses” etc. Direct mail DOES work still. It is effective but VERY expensive. You have to hand write each letter or postcard, hand write each envelope or postcard, hand stamp each one of them, and take them to the post office. VERY VERY time consuming. You can also use a company online that will use a machine to “hand write” your letters or postcards, fill out the envelopes or postcard addresses, and apply the correct postage to them. Obviously, this is a lot more expensive than doing it yourself, but it is MUCH faster and easier all around.

Keep in mind, when you do direct mail, you need to mail to the same person 5-7 times to get a response. The response rate in direct mail is similar to sending out cold emails to people. Very low response rate, but it still works.

MY RECOMMENDATION TO GET STARTED

#1 Way to Get Leads: Facebook Ads

If you can afford to run Facebook ads, it has worked VERY well for me. Plus, it gets people coming to you looking to sell their house instead of you chasing them. The cost to run Facebook ads depends entirely on what you can afford. You can spend as little as $5 a day, or as much as you want to. I ALWAYS just set a daily budget and let the ad run continuously. I never set a start and end date.

I always run at least 2 different ads when I start an ad campaign. I usually use one image for both ads, but use different text in each ad. I also let Facebook optimize the ads for me. That way, Facebook will run both ads, and if one is doing well and the other isn’t, it will start spending all of your daily budget on the ad that is doing well and stop spending money on the ad that isn’t doing well.

#2 Way to Get Leads: Bandit Signs

They can be a hassle sometimes, take a lot of work, and it does get irritating when they keep getting taken down by the city, but they work very well. They are definitely the fastest way to get your phone ringing with motivated sellers.

If you don’t want people to see you putting out the signs or don’t have time, just run an ad on Craigslist for someone to do it for you. People typically pay people $1 per sign to put them out. You want to put out at least 25 signs and up to maybe 200 depending on the size of the area you are wholesaling in. You can either staple them to telephone or light poles, or you can get wire H-Stakes when you order your signs. You slide the sign onto the stake and then stick the stake into the ground. Using stakes will probably double your cost of signs, but if you don’t have a lot of wooden light poles or phone poles in your area then you may need to use the stakes.

#3 Way to Get Leads: List Pulling and Skip Tracing

This is another FANTASTIC way to get leads, and you can get a LOT of them quickly. Of course this may not be cheap, but it’s very effective. You can pull a list of 1,000 people from Prop Stream or List Source in just a few minutes. Then, you get them skip traced either within Prop Stream or from a 3rd Party website such as Lead Mining Pros or batchskiptracing.com

Once you get your skipped list back, you can start texting or calling your leads. Keep in mind that most skip tracing companies get contact info for about 70%-80% of the leads you send them. No company can get you contact info for EVERY lead you send them on a list.

If you aren’t big on the idea of calling or texting all those leads, then just use someone like Lead Mining Pros to do it all for you. All you have to do is contact the person and close the deal. They will get all the info for you from the seller on the property and such, you just have to negotiate and lock in the deal. It’s a HUGE time save if you can afford to spend the money to pay them to do it for you.

FINDING CASH BUYERS

BANDIT SIGNS

You can use bandit signs to find cash buyers. You write something generic like:

“Investor Special

3/2 1,500ft

$35,000 ALL CASH ONLY

Call (555)555-5555”

Just like when you’re looking for motivated sellers, you put these up in heavy traffic areas where people will see them like at stoplights. You can use a generic sign like the one above, or if you will utilizing someone else's cash buyer's list, STILL put several bandit signs up but write them about the specific deal you're trying to currently sell. This way, you'll already get a cash buyer from the wholesaler you're partnering up with to sell the deal for you, but you can also start collecting your own list of cash buyers too. And, you may get a cash buyer from one of your bandit signs and be able to sell it to them instead of having to use another wholesaler's cash buyer. Then, you'd get the whole assignment fee and not have to split it with another wholesaler.

LISTS

You can pull lists from Prop Stream or List Source and either text, call, email, or direct mail them. This is a great way to build a cash buyer’s list quickly.

REAL ESTATE FORUMS

Find people on Bigger Pockets and Connected investors who are cash buyers in the area you are wholesaling in and connect with them. When you get a deal, message all your cash buyers and hopefully you will sell it quickly.

REIA MEETINGS

Look online for local REIA meetings in your area and go to them. You will surely meet flippers, landlords, etc there who are always looking for good deals.

Well this ended up being WAAAAAAAAAY longer than I expected. Hopefully this will help some of you new people looking to start wholesaling or those of you who have been struggling but haven’t been able to complete any deals yet. It can definitely be done and almost anyone can do it. All you need is the ability to put in some effort and to be consistent. Good luck everyone!