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how to start up wholesaling
Hi so from my understanding correct me if I am wrong is to whole sale you have to get a beat up home under contract from a seller, sell it for a higher price to a buyer and you pocket the difference. So for example I get an ugly house under contract for $5000 but sell it for $15000 I take $10000 right? So where I'm i supposed to find these beat up properties in my area? ( Ottawa Ontario Canada) I know i'm all over the place sorry but still little confused.
@Mohamed Hersi This is easily the most discussed and controversial topics on BP. Start with the Wholesaling Forum:
https://www.biggerpockets.com/forums/93-wholesalin...
And i would suggest reading these posts in their entirety:
https://www.biggerpockets.com/forums/12/topics/380162-went-bankrupt-trying-to-wholesale-heres-my-sage-advice
https://www.biggerpockets.com/forums/93/topics/583...
A question for you:
- In your example, how do you plan on explaining to the seller, who you led to believe their house was only worth $5k, that you've sold it for 3x that much and are personally profiting twice what they are..for a house you don't own. I know its just an example, but it's a question most "wholesalers" don't consider until a deal blows up at the closing table..and that will happen.
-How do you plan on marketing your wholesale deals if you don't own them? Understand what you can, and more importantly CAN'T do when attempting to assign a contract, as well as the repercussions of brokering without a license.
The answer to both of these is simple. Don't wholesale. If you can find a deal that great, buy it and then do whatever you want with it. If you can find great deals that you can "wholesale", you can just as easily find HML's and private lenders that will fund those deals and you can make a hell of a lot more than you would by "wholesaling"
My last nugget of wisdom. Don't buy off on the guru non-sense, and dont act on advice from people on BP without consulting a RE attorney.
Speaking of attorneys! lol After you've read all the forum posts, write down every question you can possibly think of, go find an investor friendly attorney in your area, pay their hourly rate to sit down and have your questions answered by someone who understands REI/creative financing/contract law etc. Well worth the $$. If you don't think so, ask yourself, "Is the newb on BP that i took advice from going to show up in court when i screw this up?" .. probably not
@Mohamed Hersi So, you have the concept down. You find a property at an extreme discount and you find a buyer who is ready, willing, and able to buy that property at a slightly less of a discount that you bought it at.
As to finding these buyers. There are a few free ways that you can utilize. I would first start by driving around in your local neighborhood, and looking for homes that seem to be distressed. Gather a list of those houses. I'm sure you can get a list of 30 or more houses in just a few hours. Find out the owner address, and send them a letter indicating you want to buy their property.
Another way you can find properties, is searching your local craigslist. That is a plethora of buyers and sellers.
Hope those tips are helpful. If you have any questions please feel free to reach out.
Jabbar forgot to mention in his post that to do so without a real estate license in Florida is illegal. There are plenty of realtors that will write up the paperwork for you for a flat fee instead of a commission, if your going to do it either get a license or get someone on board that has one.
double close and the seller will not know you are profiting. The house doesn't have to be a dump. Any house where the end buyer can turn a profit after you get yours is one that can be wholesale if you get it under contract.
Wholesaling DOES NOT mean finding a beat up property. It means getting a property under contract and selling it for more than your contract. @Elizabeth Shelby It is NOT ILLEGAL to do wholesaling in any state as long as you have what is called 'equitable interest', meaning you are the one that has a contract on the property.
Surely if you never actually own the property that constitutes acting as a broker without a real estate license, right?
@Mohamed Hersi
Hi Mohamed! Here's an awesome blog I read about wholesaling. It gives you all the step by step details you need to get started. Best wishes to you!
I'm sorry to tell you that you've just stepped on a landmine. Unfortunately every new inquiry about wholesaling brings out the agents and trolls that will tell you it is all a crock, a sham and a crime. Even this comment is going to bring a wave of seething disdain.
I hope to be the wheat separated from the chaff in this thread. The idea of wholesaling is that you are NOT, I repeat you ARE NOT selling the house. You are selling the CONTRACT for the purchase of the house. Just like Rogers and Bell pay a company to service your utilities and those companies sell those contracts out to independent operators or smaller companies.
The tricky part for you, however, is that you live in Ontario. The land of privacy and inexplicable trust in realtors. There is a considerably higher portion of houses sold privately in the US compared to Canada. Here the general public vastly prefers to use a realtor, and as a distant second will use a FSBO service. Very rarely are properties sold totally privately. Also, you simply can't create lists of likely sellers like you can in the states because we have privacy laws. You can't pay a few bucks for a list of all people in your area that are behind on their taxes, behind on their mortgage, recently inherited a property, own a house that they don't live in, own a house that they have no mortgage on, are continually fined by the Cities for bylaw infractions, etc etc etc etc etc... all of the tools that American wholesalers use are not available to you.
With that said, you CAN wholesale here. All you need to do is find people willing to sell their property below market value. Notice that I didn't say find properties; this is a people business. You'll just have to be a lot more creative about it. Some ideas that I've had are to search MLS for listings that are nearing 6 months old, and when the listing disappears you send a letter to the address. Or, perhaps you could work with a bankruptcy agent, a probate agent and work on referral.
There has been multiple calls out to the people of BP to step up and say hello if you are a successful wholesaler and so far there have been zero. I've spoken to guys that are getting it done by calling the "We buy houses" ads that are on Kijiji and just having a chat. Perhaps you can try that for some experienced advice.
Oh, and you can't buy a decent car in Canada for 5k. You aren't going to get a piece of land, never mind a house for that price. I'd suggest that you could start with paying 50k for a house that a flipper would be willing to pay 55k for so they can put in 30 and sell for 100. So search areas where comps are 100k and target the dilapidated houses. The other realm for wholesalers is the upper crust neighborhoods where people don't seem to realize that their neighborhood has become upper crust. Put a house under contract for 300k that a flipper will pay 325k and put in 100k to sell for 500k+.
I think that any flipper in Ontario would agree that the one thing holding up their business is lack of inventory to flip. This is a classic market niche like any other successful business. Find houses that those flippers will want to buy. Contact the flippers and ask them what areas and price ranges they are looking for.
Also, if you think my advice constitutes a legal opinion you are not cut out for this or any other business.
Good luck.
You are actually offering your contract for a consideration amount NOT Selling the property
It's the agreement or paper you are offering for investors, rehabbers, end buyers to step in as the buyer. You are not selling the property BUT assigning your contract to the person or entity that will come to closing with purchase amount (plus) your assignment consideration
@Account Closed Regarding part of your comment: as well as the repercussions of brokering without a license. License??? (in Oklahoma)