Where to start with Wholesaling

Question

Hello everyone I am new to Wholesaling. I have been in the Insurance Industry for going 6 years. I live in Harford County Maryland. I am looking to expand in new business. I like the fact in Wholesaling you don't need to use your own cash or credit. I am looking at a few Wholesaling course such as, Mark Whitten from Baltimore. If anyone can point me to the right direction or where to start would be appreciated.

Greg Dickerson · Answer

Wholesaling is a great way to get started in the business especially if you have limited resources. Wholesaling is traditionally defined by the investor community as "the assignment of a contract" but some people define it as buying a property and reselling without doing any work at all or very little which is also known in the investor community as “wholetaling” which is simply retail real estate. There is no dictionary, official or legal definition for flipping, rehabbing, wholesaling or wholetaling. These are just industry slang terms that have been invented by real estate investors. Some states have defined certain wholesaling activities as brokering and are requiring licesnes so you need to check the laws in your state to make sure you are in compliance and do things the right way. I would not recommend flipping, or using hard money if you’re just starting out especially if you have limited funds. Hard money Is very expensive, you will need a larger down payment if you’re just starting out and you need reserves to pay for your mistakes and cost overruns. The interest carry will eat your profits fast especially if you struggle to get the project done and sold quickly. You are better off finding private investors and doing a JV structure. One of the best ways to get started is by wholesaling (which is the assignment of a contract) Once you have done several deals, gained some experience and have set aside some cash you could try a flip or other strategies. For now I recommend you focus on getting really good at finding cash buyers and finding good deals and solving sellers problems. First step is to make sure you understand the laws in your area regarding wholesaling. While wholesaling is legal in most states, several states have passed laws defining wholesaling as brokering and are requiring a real estate license to wholesale property. You should talk to a real estate attorney that works with investors in your area to ensure you are in compliance with any laws. They will also have the proper contracts as well. If you are considering staying in this business long term I recommend getting your license. This will elevate your stature as a professional and open up a lot more opportunities for you to monetize deals you can’t buy or wholesale. Either way you need to operate with honesty and integrity and look to serve others by helping them solve their problem and not try to take advantage of anyone. Next you need to educate yourself on the business and your market. You really need to immerse yourself and learn all you can. Attend REI groups and meetups and network with other experienced investors. Start with finding cash buyers. You want professional legitimate cash buyers so you know you can close on the deal and do what you tell the seller you will do. I can’t emphasize this point enough. You do not want to contract a property unless you know you have a buyer who can close it or take it down yourself. Different types of cash buyers are flippers, buy and hold, subject to and lease option. You need to find several of each of these types of buyers and learn what they are looking for. You will learn a lot about the business and the market by talking with cash buyers. Best way to find cash buyers is networking at local REI meetups, masterminds, Facebook groups, Realtors, title companies, closing attorneys, property management companies, auctions, Craigslist, google search, billboards and bandit signs. Some companies also run TV and Radio ads. You can search real estate transactions in your tax database. Look for entities and individuals that have bought multiple properties with cash. You may need to search by the address of the buyer as they may change their name or the name of the entity on each purchase. You can also buy lists from companies like list source and there are some REI software companies that have a cash buyer search feature. Some of best ways to find motivated sellers is to purchase lists from companies like listsource and or compile lists from city and county like 60-90-120 days late on mortgage, pre-foreclosure, delinquent taxes, water cutoff, code violation, probate, divorce, evictions for tired landlords etc. Then you can mail or cold call or both. Other cheap or free methods are driving for dollars, craigslist, Realtors, FSBO sites, expired listings, foreclosure sites and bandit signs if allowed. If you have the funds you can use billboards, newspaper ads, other offline publications., TV commercials, radio ads, motivated seller websites, SEO, pay per click/adwords, facebook, Linkedin, Youtube, and other forms of online advertising and boosted/promoted social media postings. Bottom line is integrity and consistency. You need to do what you say you will do and take consistent focused action every day, answer the phone when it rings and follow up and follow through.

Lydia R. · Answer

@Javon Marable Wholesaling gets sold as a way to make money without using your own cash or credit as a way for gurus to sell you books, tapes, scripts, bootcamps, seminars etc. As someone who has been wholesaling full time for 6 years, I will tell you that it does take money. You will need to spend money on marketing. Marketing is how you find deals. If you dont have deals then you dont have anything. I will say that compared to buy and hold or fix and flip strategies you need considerably less capital to get started wholesaling. But you will need some cash. Also when putting properties under contract you will need cash for your EMD. Not too long ago there was a newbie wholesaler here on Bigger Pockets who had found his first deal and stood to make a $25,000 wholesale fee but the seller was insisting on a $2,000 earnest money deposit and this kid didnt have it. I’m saying all this not to discourage you, but to give you all the facts upfront so you dont get surprised later on down the road. Wholesaling is great, but its a lot of work if you are going to do it right and be successful at it. [Request to contact removed by moderators]

Jonathan Greene · Answer

Everything @Lydia T. said is what you need to know. It's silly to think you can start any profitable business without resources to market and build credibility, but that's how they lure you in. To be a good wholesaler, you will need to find good properties that no one else knows about and you will need to cultivate a vetted buyer's list. A lot of that is done through connections at first and then marketing. The majority of people saying they are wholesaling aren't doing anything, you need to listen to the people who are still doing it after years because they know what how to get it done. And you do need money, most importantly as Lydia said for the EMD. In my opinion, you need money (or a partner) to close as well because if you default on multiple deals because you couldn't get a buyer, your contracts will be worthless.

Emmanuel Soto · Answer

His course is pretty cool. After your go through his course a couple times, then focus on finding a good script to get started cold calling. Regardless if you choose to cold call, the most important thing is knowing how to talk to the seller. One thing i wish someone would of told me from the beginning... Good luck!