Getting Started in Wholesaling

[William Silva]

Good day ladies and gentleman,

I'm getting started in wholesaling and have some idea of what to do to get started but I'd like some input from someone who does 2+ deals a month.

I've been told that Automate REI will be used to generate a list of potential sellers. After I've acquired that list, I will use a 3rd party Skip tracer to get 2-3 phone numbers per seller. Next, I will send a blast text to all those phone numbers, not exactly sure which SMS software is the best, most cost effective but I believe I heard Batch can do the job (input here would be lovely!) Once I get someone interested in speaking, I will set up a time to speak with them to discovery pain, property, etc. Then make a fair offer. Once I get a property under contract I'll send someone to take pics using craigslist for about 30-40 dollars, I will again use automate REI to locate the cash buyers in that area and then again, send out a SMS to all the potential buyers with pictures of the property, details, ARV, etc. The gray area for me is once I have the contract, the buyer who I'll assign contract to, what title company do I use? Is there such thing as closing virtually? Do I send a mobile notary?

I'd love some input on the strategy I've written, how you can tweak it to make it better and any overall suggestions would be much appreciated. Thank you!

[Wale Lawal]

@William Silva

While wholesaling real estate doesn't require a large amount of money, it does require that a wholesaler do the necessary property research, the networking to find the right investors, and the work to craft a financial deal that the investor will accept.

Here are the steps involved in real estate wholesaling.

1. Conduct Research
Learn about the wholesaling laws in your jurisdiction. In addition, look into the locales and neighborhoods where you want to buy property.

2. Locate a Distressed Property
Look for properties that may be listed below market value and owners who are motivated to sell. Owners of homes that are being foreclosed or have liens may be open to selling for less than what the house is worth. These resources may help you find such properties:

Multiple Listing Service (MLS)
Networking organizations, online real estate auction sites
Social media platforms
Foreclosure sites
3. Do the Math and Due Diligence
Once you find a property that fits your criteria, make sure your wholesale real estate transaction will make financial sense. To do this, first find out the property's fair market value. Looking at comparable properties sold in the area, occupancy rates, and cash-on-cash returns can help. Then determine what any required repairs will cost.

This information will allow you to calculate the after repair value (the fair market value after repairs are done). With that, you can calculate a maximum allowable offer (the highest price you can offer for the distressed property and still make a profit).

4. Contact the Seller
Explain your role as a real estate wholesaler and how working together may be an ideal way to sell their property. Clearly describe how the wholesale real estate transaction would work. Wholesale real estate transactions are perfectly legitimate (as long as state laws are followed) and there's nothing to hide.

5. Obtain a Property Contract
Present your offer to the seller and get the property under contract. Be sure your contract includes the right to assign the contract to another party. Also, include in your contract a contingency that allows you, as the wholesaler, to withdraw from the deal if unable to find a buyer before the contract expiration. This limits your risk.

6. Find a Cash Buyer
Once you’ve found the right property and have a wholesale real estate contract with the seller in place, you need to market your contract to potential cash buyers.

Use your networking skills, both online and off, to connect with potential investors. You might also contact local realtors and ask about cash purchases made over the recent past.

7. Reassign the Contract to the Buyer
Now's the time to close the deal with the investor who fits your wholesale real estate transaction best. Both of you have to agree to terms and conditions. Of course, as the real estate wholesaler, you want to be paid for the work you did to find the distressed property and to put the deal together.

All the best!