What is the best way to get started in wholesaling?

[Toby Auer]

I currently have 3 properties. I am using a family members line of credit on their house to build an ADU in the back of my 2nd property and I will be in debt to them approx. 100k plus about 8-10% interest. They aren't in a hurry to get paid back as long as I am making their line of credit payment which is 5%.

Since they aren't in a hurry to get paid back, I would rather not refi after my ADU build because the cash flow is too good and should allow me to pay them back within 2 years and quit my W2.

My properties as of January (all are two units):

#1 Income  $2,250 +$1,550 - $2,400 (mortgage) = $1,400
#2 Income  $2,100 + $1,700 - $1,350 (mortgage) = $2,450
#3 Income $2,000 + $1,800 - $1,800 (mortgage) = $2,000
Total cash flow = $5,850 (I know this isn't figuring in cap. ex., vacancy and maintenance/repairs) 

I should be able to pay back the line of credit within two years between the cash flow and my W2. I know I could refi out of property #2 to repay the line of credit off right away but I love having my mortgage of only $1,350. I know some would say refi since I owe 208k and the ARV will be about 475k but my goal is to quit my W2 and go into real estate full time so I want to keep that cash flow up.

Since I am out of capital to buy, I want to start wholesaling. I have a construction background and have the drive to make calls, write letters, meet with sellers, etc. I just want to know how you are getting your wholesale deals closed. How do you find your end buyers? Where do you get most of your leads and what would be the best use of my time, (letters, calling, trying to find people that are behind on taxes?) Should I make a website and hope to get contacted through that? I just feel like since I have never wholesaled a deal I don't have the reputation to be making a website. I basically just don't know where to get started. I know once I find out what works I will get the hang of it but on my days off I am so lost on what my ONE thing should be and at the end of the day I normally feel unproductive as far as wholesaling goes. My goal is to wholesale my first deal by Jan. 13th and hopefully make 5k from the deal. 

Thank you in advance!

[Jerryll Noorden]

Originally posted by @Trevion Anderson:

@Jerryll Noorden I'm new to the site, as I've been scrolling through the comments I see that you were recommended quite a few times. I am diving into wholesaling and Rehabbing and feel as if a mentor/advisor would be great seeing that I'm fairly new to the game. I'm definitely firm on my career of choice and need a reliable mentor. I know a little about SEO, Cold Calls and other methods of marketing but know I can be educated more on these subjects. I am currently in Florida looking for properties and I could use some tips on doing proper research to be able to provide correct and accurate data to my customers. Dealing with bigger markets I've been having issues w calculating accurate prices for properties, how should I go about calculating proper sales prices and ARVs?

 Thanks friend.

Here is how we did it. In the beginning I too like everyone, had no clue how to do any of that stuff. So like most, I tried to solicit an agent to help me out. Meh sometimes they do, and  sometimes they do with an evil pink eye constantly aimed at you, (even if the other eye is reading  something on the table...) really creepy looking so it scared me to poops, and decided I needed a better way.

Now... did I find a better way? No!

This happened. When ever an agent gave me the ARV's. I just trace back the way they did it. I checked out the comps, questioned why they pick this and that comp, and then quickly saw it was not an "opinion" what the numbers should look like... it was an equation. I am really good with equations. So eventually I started doing comps myself instead of agents doing them, and I just asked them to verify the comps.

Eventually I finally managed to do a deal and listed it with an agent. This is a great tip. When you list with an agent, those sneaky bastards will be eager to become your friend.. and there is where you exploit them... I mean .. there is where you befriend them too and now you can ask them way more questions and they go out of their way to help you.. those freaks... I mean,  those nice people.

The way you do it is just going to Zillow, look at the properties recently sold (that yellow ball) make sure the properties are as close in location and characteristics as your subject property and you just pick 3 to 7 similar properties and you take the average of the numbers, or you calculate the cost/square foot which ever fits the situation better and you get that number.

NOW... this "solid" analytical method, I did when I was more of a beginner. When you become good at it, and you understand investing, flipping more you realize that you CAN NOT use an equation to find the ARV. NO WAY. It is good for a check to see how off the calculated number fairs with the actual number, but that is it.

The reason I don't believe in an equated ARV is because there are some things you can't measure.

If the subject house is next to a cemetery, or a loud bar, how do you quantify that "inconvenience" into an equation? You can't.

When you start flipping and selling your flips you also notice that when I do this finish, and this style, and this pot filler, people usually offer 20% above asking price. EVERY SINGLE TIME when we listed out flips the house is under contract within hours of listing and  with $30K above asking price.

Although the ARV said it would sell for $300K, our houses sell for ARV + $30K... so if you do not take this into account, you will lose a lot of money you could have made.

So ARV is both an art and a science, and it is a skill to acquire. You will get it as you do it, honestly.