Wrapping my head around Wholesaling

Danni Catambay · 2019-10-24T05:15:48-07:00

In trying to make sure I know everything about my options, I've been trying to figure out what wholesaling is all about. I get the basic premise: buy a dirt cheap house and then sell it for less than dirt cheap to someone else so quickly that you are never the legal owner and you get your cash investment and return almost immediately. Lather rinse repeat...But how exactly does this work? Where do wholesalers find these amazing deals that are so cheap that they can sell them to other investors who would still find them profitable? And how does one go about analyzing a wholesale deal?and for me, perhaps most importantly, how do you find a wholesaler and convince them to work with you as a buyer?I've done quite a bit of keyword searching here on bigger pockets and these basic questions remain elusive. Any wholesalers around here who could shed some light on this process for me? Opinions on what kinds of buyers you look for when you're closing a wholesale deal?

Tamara Deering

Real Estate Agent · Austin, TX · Member since 2019 · 235 posts · 194 votes

6y

@Danni Catambay

Wholesalers find their deals by doing the hard work many of us don't want to do. Cold calls, research, marketing and networking over and over again. They knock on doors and get a lot of them slammed in their faces. They will take 100 phone calls to make one deal.

The way that a wholesaler will work with you is if you close on a deal. You will need to buy one of there base hit deals first to show that you can perform. The home run deals are given to their clients who have proven they can perform and close a deal. You won't get that sort of preferential treatment until you show that you won't be wasting all their time and effort by not being able to close on the property in the time frame given.

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Danni Catambay

OP

Member since 2019 · 35 posts · 8 votes

6y

Originally posted by @Tamara Deering:

The way that a wholesaler will work with you is if you close on a deal. You will need to buy one of there base hit deals first to show that you can perform. The home run deals are given to their clients who have proven they can perform and close a deal. You won't get that sort of preferential treatment until you show that you won't be wasting all their time and effort by not being able to close on the property in the time frame given.

This language right here -- what does it mean? What is a "base hit"? And what does "perform" mean?

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Tamara Deering

Real Estate Agent · Austin, TX · Member since 2019 · 235 posts · 194 votes

6y

@Danni Catambay

I'm sorry, a base hit is a flip that gives you $10,000 - $20,000 in profit, it's not going to make your year. If you are going to hold a property as a rental a base hit would cash flow $100 or so a month. Perform means actually bring your cash and/or financing to the closing table a complete the purchase of a property. If a lender talks about performing they mean a note/loan that is being paid mostly on time and is current. A non-performing loan in lender terms is one that the borrower has stopped making payments on.

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Ray A Delfi

Rental Property Investor · Poughkeepsie, NY (Hudson Valley Area) · Member since 2019 · 188 posts · 102 votes

6y

@Danni Catambay the key to wholesaling is finding properties off market (properties that aren’t listed or represented by a listing agent). This is done by finding certain key traits in a home, Vacant, owner that lives out of state, pending foreclosure, etc, these are most likely owned by motivated sellers (people who would do just about anything to get out of the property). The whole dealer finds these properties through several resources, but too many to list here, however almost every “Guru” on YouTube explains where they find these properties but really don’t show you how, it’s something I learned myself being computer literate and awesome at google. One way I found interesting was going to the town municipal office and request a list of properties that had their water shut off (most likely vacant). Find their owners through public records and skip tracing sites that you would pay for them find their contact information. Send them letters, or call them and negotiate a deal. Then sign a contract with them and assign that contract(or sell to a buyer who doesn’t have the time to chase and dig for these leads. It may sound easy but it is really hard and rather reach out to a experienced wholesaler for my leads. There is a guy “MaxMaxwell” that I followed for a really long time you can watch some of his videos, they are pretty dry, but he literally walks you through some wholesale deals he made from start to finish. Besides the art of finding deals and tracking down owners, you really need to know everything realestate, the language, the process, and what makes a good deal to be at all successful.

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David Bokman

Real Estate Investor/Wholesaler · Philadelphia, PA · Member since 2015 · 757 posts · 318 votes

6y

It's all about Marketing and Sales and Less to do with real estate. Wholesaling is being a master at finding deals through marketing. If you don't have any sales and marketing skills it's going to be a challenge. I don't care what people say it's NOT for everyone.

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Danni Catambay

OP

Member since 2019 · 35 posts · 8 votes

6y

Thanks for the replies. I was lucky enough to meet some new investors at my local REIA meeting last week and they have chosen wholesaling for their start. Personally, I think that's jumping in to the hardest part butt first, but they were really comfortable in their choice. Works for me, I told them to send me deals!

But basically, we had a dude (guru?) come in and tell us to call people listing rentals off of Craigslist and ask them how much they wanted to sell their property for. And he told us the typical negotiation tactic he uses to get seller financing at 0% interest. And I think, after reading these comments, that wholesaling is basically doing that and other off market search techniques, but instead of buying and holding, you contract and "sell" to an actual buyer who wants to do something like flip or rent the property and you take a commission or a finder's fee. Did I understand it right?

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Ray A Delfi

Rental Property Investor · Poughkeepsie, NY (Hudson Valley Area) · Member since 2019 · 188 posts · 102 votes

6y

@Danni Catambay that’s basically it in a nut shell, you can create it into your own thing. The key is to be honest and be awesome in sales or hire people who are...lol.

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Danni Catambay

OP

Member since 2019 · 35 posts · 8 votes

6y

Thanks to those who have helped me wrap my head around wholesaling just a bit more. I'm still trying to figure out what my best approach is, and a local (guru?) investor told me his strategy is cold calling plus offering $X cash and Yx$1000 monthly payments. It's a formula he's apparently used successfully for several years and I'd like to try it.

...BUT! Where I get caught up is here: you have to call 50 places to get 4 people to be willing to talk further and then how many of those can you close? If you have millions in cash/equity to draw from, I imagine you can close on any deal that passes your analysis filters, but I'm working with $20K cash available and no disposable income. Is it still worth trying to search this way? What do I do if I find a great deal that requires more cash than I have on hand to close? Is there a window between getting a contract and closing that I can go find more money? or a buyer? Or do I have to have all of this arranged before I make my purchase offer?

I'm mostly trying to understand the logistics of how people do this. If other investors could share their experience with me that would be most helpful.

Thanks

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Wrapping my head around Wholesaling

Wrapping my head around Wholesaling

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