My 9 Step Wholesale Plan

[Tony Schreiner]

Good morning BP,

I have searched all through the wholesale forums, along with the "flipping contracts" discussion topic and put together a 9 step plan to wholesale contracts while Driving for Dollars, from what I learned. Can I please get some feedback on what flaws and holes I need to fix in this plan? I put the few questions in parentheses.

Thank you,

Tony

Plan:

possibly start out with small, unimproved/vanant land

1)Find buyers and make a buyers list

--Market your wholesaling business

---Using bandit signs "I sell houses dirt cheap"

---Business cards

---Internet

---Real estate meet-ups

2)Find a lawyer that can help make a contract

--due diligence clause

--option agreement

--allow both parties to know who you are representing to avoid legal disputes (buyer & seller)

3)Find my target area where I will do my house searching

--Using the County Appraisal District

4)Find distressed properties

--Tall grass

--Piled up mail

--Boarded up windows

--Take a pen & paper, take notes and pictures of the property

5)Create an excel spreadsheet of the property

--Owner-occupied?

--Address

--Appraised value

--Condition of home

--Ect...

6)Send a formal, typed letter to the owner (what address do we send the letter to?)

-- Make sure a picture of the house is in the body of the letter and the top left of the envelope

-- Ask if they want to sell their house

-- Include your name and business info

7)**When you get a response**

-- Do a walkthrough inspection

-- Find holding costs, rehab costs, insurance, taxes, and other fees (is there a never-ending list of fees?)

-- Use 70% rule (30% off appraised value)

-- Take the contract and discuss the deal on the house (do I really need a downpayment?)

8)Access your buyer's list and push the house until an investor buys it

-- Market your wholesaling business

-- Possibly make a website for buyers to see your criteria of properties to sell

9)**When an investor signs the contract**

-- Charge an Assignment Fee

-- Get your deposit back (if you needed one) and make a profit 

[Nadia White]

Hi Toni,

Congratulations on your new endeavor! 

You have thought of a lot of things for your wholesale business.

Here are a few suggestions:

1. make sure that you know what your buyers want. When creating your buyers's list (and your Excel spreadsheet), include the sq footage, price range (both buying and ARV), number of bedrooms, bathrooms, acreage, etc... for each buyer

2. Get to talk with 2 or 3 real estate agents to get to know your area VERY well. It is critical that you know the exit plans your buyers have for their acquisitions and consequently in which areas you can find those deals. Therefore, you must know every single neighborhood where you will work.

3. When you select an attorney, be very open and tell them everything you are going to do from a contract perspective. Meet more than one attorney. Try to keep your contracts as simple as possible. Too much legalese will turn down the sellers. (Our contracts are just one page long)

4. I don't understand your statement "allow both parties to know who you are representing..." Can you clarify that?

5. Excel spreadsheet of the property: this is where your knowledge of the neighborhoods will come into play. You probably will never find the appraised value of the property, but you can be very accurate in the ARV by pulling comps. Or you do it yourself (it takes some time to get the hang of it, but it is not impossible) or you use a real estate agent. But, if you use an agent, chances are they will want to get compensated and I an't blame them.

6. VERY IMPORTANT: you must get familiar with repair estimates. If you want to become respected in your RE community, it is imperative that you become accurate with those estimates and that you honestly tell your buyers about the list of repairs.

7. Address of owner: should be found in the tax records. I don't know how it works in your state, but that is usually where you find the addresses. However, sometimes it is not accurate and you will need to become creative to get it. 

8. A typed letter is not necessary. In my opinion (and take it for what it is), a subdued hand-written letter works better. The picture of the house on the envelope? I've never thought of that... if you have enough leads, I'd suggest to do an A/B test.

9. Yep, down payment is a must. You are a business person, right? So, you'll have to show that you are serious. 

10. If you wholesale, you need a title search to make sure that your buyer is going to get a clear title too.

11. I never work with assignment fees, although I think it's perfectly legal. But it makes everybody mad, because everybody knows your numbers. I always buy the house and sell it 30 minutes later, at the same attorney's office. You an use private money to do that. If you work y our deals the right way, the small amount of interest you will pay is worth the peace of mind.

I wish you lots of success!