I'm brand new here and brand new to the wholesaling business. I want to begin by wholesaling other wholesalers deals just to get my feet wet and to make a little money to invest in bigger deals.
Like I said, I'm new and don't know a lot about this business just yet. So if I ask any dumb questions, please try to understand. I have come across other wholesaler deals (on Craigslist, etc.) that really look like good deals to me. I've called several and asked them if they work with other wholesalers to sell their deals. A few of them said yes.
But I noticed that they all are advertising these same deals on the same online classified sites that I would be advertising them on (Craigslist, Postlets, Vflier, etc.). At this time, I don't have a buyers list of my own.
So what other ways could I market their deals with little to no out of pocket money? Offline?
Another question I have is do I sign some kind of contract with them upfront to ensure that I will get paid if I bring the buyer who actually buys their property?
I'm sorry for the long post, but I'm a little confused about how to get this going and would really appreciate some feed back on this.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
Wholesaling is, for all practical purposes, the same job as being a real estate agent. Different channels of selling, since you don't get to list on the MLS. And trickiness around the contracts to avoid the legal complications around unlicensed brokering. But effectively you're an agent.
The advantage for sellers of working with a wholesaler vs. an agent is the wholesaler has a list of ready and willing buyers. The advantage (supposedly) for buyers is you find great deals. I say supposedly because I agree with the argument most wholesale deals aren't really deals. I've been sent some that are straight off the MLS, marked up by the amount the wholesaler wants. Even the non-MLS ones are rarely good deals. They're OK at best.
But you don't have a buyer's list and you don't have any deals. You really aren't offering any value. You just trying to get into the middle of a deal and extract a slice for yourself. Hence Jeffrey's suggesting of just getting a license. Even then, you will need to market yourself and offer something to buyers or sellers.
There are numerous ways to make money with real estate. All require work. Most require some investment of cash. Figure out where you want to invest your time and money and then WORK to make this happen. Just finding someone else' deal on craigslist and then reposting it at a higher price is not a path to making any money.
Real Estate Investor · Milwaukee, WI · Member since 2008 · 1k+ posts · 671 votes
15y
Most wholesale deals are not deals at all. If they are good deals someone is going to buy it right from them. I do not see you adding any value. Why not become a realtor?
Michael R., I am thinking this would be the easiest way for me to get started in wholesaling, especially since this is all so new to me. I think there's also that fear in me right now of not knowing enough about putting a deal together (finding the deal, prequalifying the seller, estimating repairs, making an offer, etc.).
What I'm trying to do here is to take baby steps in the beginning. But I definitely understand what you're saying about there not being enough meat left after the other wholesaler takes their cut, and of course I'd rather have my own deals marketing them to my own investor list. I'm just thinking that this would help me to get up and going.
Jeffrey K., please forgive me, but I'm not understanding why you're suggesting that I become a realtor.
Investor · Dallas, TX · Member since 2009 · 66 posts · 19 votes
15y
If Another Wholesaler Let You Market Their Deal... That Would Be A Great Chance To Build Your Buyers List... (Get Your FEET Wet) You Are New So Everything You Do CAN NOT Be About MONEY...
Real Estate Investor · Honolulu, HI · Member since 2010 · 28 posts · 12 votes
15y
Kim, I think your head is in the right place. I myself am solidifying relationships with local wholesalers, but with me being the one to bring in the deal as a seller lead. I also do have some marketing $$ to spend.
At the same time, I am trying to grow my buyer's list, which I can then leverage for working with wholesalers to sell their deals, with me not actually having to close them. These are viable strategies. Common practice where I'm at is to sign non-disclosure/non-circumvent agreement to avoid getting cut out of a deal. Bottom line is you should do some background work and build some trust before partnering w/someone.
As a beginner, hopefully you've started networking at your local REIA, in addition to reading everything you can find on wholesaling on this site. You need to get to know other investors, then at some point show you have started taking action, and get those more experienced investors to help you close a deal.
How to form a buyer's list with no $?
1) Network at REIA's (above)
2) Network on this, other REI sites, and venues like Yahoo groups, etc.
3) Go to foreclosure auctions & get to know who the cash buyers are & approach them to be on your list.
4) Call landlords on for rent ads or who put out for rent signs in your neighborhood and see if they want to buy more properties, etc.
Real Estate Investor · NY · Member since 2008 · 313 posts · 87 votes
15y
one issue I see is how are you going to advertise the house? If the other wholesaler has the house listed for 10k and you list it with your fee for 11k why would I buy from you? Plus it would make me suspicious that the same house is listed for sale for different amount by 2 people. I can see maybe partnering with a established wholesaler as a viable route but what do you as a new wholesaler have to offer someone who is experienced and established? Plus I can not see them wanted to give away their list of buyers that took lots of work to build so easily. Maybe your best bet would be to start would be to work as a bird dog for wholesalers in your area.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
Wholesaling is, for all practical purposes, the same job as being a real estate agent. Different channels of selling, since you don't get to list on the MLS. And trickiness around the contracts to avoid the legal complications around unlicensed brokering. But effectively you're an agent.
The advantage for sellers of working with a wholesaler vs. an agent is the wholesaler has a list of ready and willing buyers. The advantage (supposedly) for buyers is you find great deals. I say supposedly because I agree with the argument most wholesale deals aren't really deals. I've been sent some that are straight off the MLS, marked up by the amount the wholesaler wants. Even the non-MLS ones are rarely good deals. They're OK at best.
But you don't have a buyer's list and you don't have any deals. You really aren't offering any value. You just trying to get into the middle of a deal and extract a slice for yourself. Hence Jeffrey's suggesting of just getting a license. Even then, you will need to market yourself and offer something to buyers or sellers.
There are numerous ways to make money with real estate. All require work. Most require some investment of cash. Figure out where you want to invest your time and money and then WORK to make this happen. Just finding someone else' deal on craigslist and then reposting it at a higher price is not a path to making any money.
Real Estate Investor · Chicago, IL · Member since 2011 · 44 posts · 12 votes
15y
I like to start at the beginning and work my way up. As a new wholesaler my focus is on marketing for sellers and getting a property under contract. Once I have that I may consider working with more established wholesalers to leverage their buyer's list but I tend to agree with most that just jumping into an existing deal does not sound like adding value.
Bring a deal to the table and then working with more established wholesalers could prove to be more advantageous.
Real Estate Investor · San Antonio, TX · Member since 2011 · 57 posts · 16 votes
15y
Kim,
I totally see where you are coming from. I remeber when I was I new and in your positon and how nothing seemed as easy as everyone made it out to be (at least at that time).
And before I chime in here, I want to let you know that I agree with some of the other posters...you need to move into the wholesaler osition as fast as possible...so learn ASAP.
Here is what you need to do:
1. Research the wholesaler you are thinking of working with. A lot of them are not legit...I'll just leave it at that. Mainly you want to see a track record. Once you determine they are legit, call them and tell them what you would like to do. My recommendation is not that you "mark up" the property but ask them is you can market their properties and if you bring a buyer they pay you from the proceeds. If they agree, then you just have to be a better marketer than they are. Consider yourself their new marketing department. If you do a good job, they may even higher you as their property marketer...just a thought. ***If you can, get them to sign a contract agreement with you so that you have something in writing; however, I am not sure how much luck you will have with that. If they have been around a while, they are probably good to go. Bad investors usually don't last long (our community is not that big).
2. Start marketing for buyers and building a list.
1. Bandit signs with general advertising.
ATTN: Investors
Buy Homes half priced
Needs work!
555-5555
2. Craigslist Ads
3. Networking
4. Classifieds
If you start building a list and then you can work something out with a wholesaler...you should see some paychecks.
You also have to be prepared for someone possibly not being fair with you...just know the space you are aboutto play in.
I own a wholesaling company and I would allow someone to bring me a buyer and I would pay a commission on it. I cash checks when my properties sale and I'm ok with people bringing me buyers.
An apprasier here in town has his list of buyers and he just tells them he will bring them good deals and he may tack on 1-2K per deal and they are ok with him doing that....I like full disclosure.
Lastly Kim, here is a little nugget for you...in addition to the homes we post, here is an ad we run as well to build our own buyers list...just to give you an idea...and I practice what I preach:
[LINK REMOVED]
(I hope I can post this link without breaking rules....it's just an example for others to learn from)
Do these things and I truly wish you the best of luck. Hang in there and master this game. It's the best!!!!
Amigos,
Mark
P.S. As you build your list...protect it...now you have an asset to your business...and as Jon said...now you have something of value.
Thanks Guys for all your input. I am currently building my buyers list slowly (about 3 buyers so far). And in the meantime, I'm going to still try and find a few seasoned wholesalers to work with.
I went out to the store today and decided to drive around some neighborhoods today to locate vacant/run down properties, and actually came across about 10 that either had Code Enforcement signs that also looked trashed and vacant and those that looked really run down and vacant. Got the addresses to all of them.
Now I have to figure out how to find the owners of those properties. It wasn't as difficult finding these them as I thought it would be.
Real Estate Investor · San Antonio, TX · Member since 2011 · 57 posts · 16 votes
15y
Originally posted by Kim Miller:
and actually came across about 10 that either had Code Enforcement signs that also looked trashed and vacant and those that looked really run down and vacant. Got the addresses to all of them.
Chicago, IL · Member since 2012 · 1 post · 0 votes
14y
I know this is an old post but I am so glad that Kim asked this question. I am a new to wholesaling as well. There is an out-of-state wholesaler There is an out of state wholesaler who has a contract on a property here in my area. I was curious how it would work with me assisting him on finding a buyer for the property. I am actively seeking my own deals but would be interested in assisting with finding a buyer. I do have a small buyers list...very small, but I do have some buyers so I progressing. I received some good advice from everyone on this thread, especially about using the non-disclosure and non-circumvent agreement so I'm not cut out the deal. Any other advice would be appreciated.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y
It's likely illegal for someone to be marketing another wholesaler's deal. In most states, you are not allowed to market-for-sale real estate without either being licensed or having a legal interest in the property.
If you aren't licensed and you don't have a contract on a property, you are likely breaking the laws of your state by marketing the property...
Wholesaler · Chicago, IL · Member since 2011 · 219 posts · 38 votes
14y
I agree with Robert Pickett in that marketing other wholesalers deals can give you a chance to build your buyers list. You could offer to take a smaller % of the deal to get started.
I also agree with Kobus De Villiers here. Since you don't have a buyers list yet, focus on getting deals locked up and then leverage other wholesalers buyers list. This is a great way to get started and can really cut down the learning curve by working with these other wholesalers.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
14y
Right again Jason!
In fact, if you have an option on a property you still can not legally list it for sale as that requires title, you market the option to buy the property at a certain price, if it is listed, hopefully below that listed price.
Paying a commission to an unlicensened agent, besides an attorney or an estate officer, is also illegal. Any fees paid outside of settlement of residential properties not disclosed on the HUD-1 is another violation of federal law.
If you are a principal, inside an LLC for example and that company buys and you found it, you can get paid as a member. Most all other arrangements I have heard of in the forums are not compliant to be paid a fee for finding a property purchased. I know some sell lists with possible deals on the list, that's not facilitating a sale, you could sell a list...and walk away.
Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
14y
There are many ways to legalize your activities with another wholesaler, but I would do a little research on them before I committed to working with them.
Many lack any true character, they are just in love with their wallet and want to transfer the contents of yours to theirs. But I personally had generally good results in joining with other wholesalers but in a few cases I wished I had checked them out a little bit first.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y
Originally posted by Brian P:
There are many ways to legalize your activities with another wholesaler, but I would do a little research on them before I committed to working with them.
Other than getting licensed or somehow getting an equitable interest in the property being sold, what are some ways to "legalize your activities" when wholesaling other people's deals?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y
Originally posted by Steve Babiak:
Jason,
How about a "(conditional) release from contract" ... or substitute the word "option" for "contract" depending.
If I understand you correctly, wouldn't that require the wholesaler who actually has the property under contract to give up control (via an option) to another wholesaler? Why would a wholesaler do that, when all it will do is limit his options to resell?
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
The wholesaler gets paid to do the release, so he is paid already and no longer has to be involved - so no need to have any further control. The "beneficiary" of that release should be a substitute buyer (or wholesaler) who paid for the release; I mentioned "conditional", because the release should have some conditions to it to assure the new buyer and the seller enter into a purchase agreement.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y
Okay, so basically, the new wholesaler is buying the deal from the original wholesaler for a fixed fee; if he can sell above the contract price + fee, he makes a profit; if not, he loses his fee.
That makes sense, but I imagine most of the wholesalers who want to start out wholesaling other investor's deals are doing so because they don't have any cash and/or don't want to risk any cash...this doesn't solve that issue.
But, it's still something I hadn't really considered and a good idea for a wholesaler who likes another wholesaler's deal enough that he's willing to take a risk...
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
Jason,
Remember the challenge you raised earlier was to do so without being a "broker" ... that method accomplishes the result, although there will be some limitations that might not make it so desirable to do.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y
Originally posted by Steve Babiak:
Jason,
Remember the challenge you raised earlier was to do so without being a "broker" ... that method accomplishes the result, although there will be some limitations that might not make it so desirable to do.
Absolutely...I wasn't knocking your example whatsoever...I honestly had never considered that option before...
Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
14y
It's called daisy chaining.
Just find a wholesaler who is willing to do daisy chains and hook up with them.
Make sure the title company knows how to handle a daisy chain and is willing to.
In a daisy chain you sell a contract that gives the buyer permission to buy the first whole saler's contract to buy the house.
So you are in the business of buying and selling contracts, not the house. Just a technicality to get around brokerage requirements.
Someday the national real estate lobby will lobby congress to make this activity illegal. I am not saying it should be, but it will make life more profitable for those who took the time and money to get licensed.
Like lease options, I predict there will be certain states where it is legal and certain ones where it is not.
Usually whole salers are dealing in delapitated old bottom feeder crap (including the house I bought from a wholesaler to rehab and rent!) that most agents and the retail market don't care about - which is likely the reason they haven't alread lobbied state and federal congresses.