All Forum Posts by: Salvador Hernandez Jr

 I'd rather take calculated risks though. Most people boast and talk proudly about making mistakes, I'd rather just not make the mistakes.

 Build a buyers list of 20-100 solid investors before you worry about anything else. Get their buying criteria and which title companies they work with. I wouldn't worry about anything else until you have end buyers.

@Salvador Hernandez Jr

Wholesale real estate refers to a short-term business strategy that investors can use to make quick and steady income in the real estate market.

In wholesale real estate transactions, the wholesaler enters into a purchase contract for a home from a seller, for a small earnest money deposit. The contract spells out the amount the wholesaler will sell the property for and the required time period for the sale.


After the wholesale real estate contract is in place, the wholesaler attempts to find an interested investor. Once found, they reassign the contract to the investor at an agreed upon higher price. The difference in prices is known as the wholesale fee and can be 5% to 10% of the property price. This goes to the wholesaler.

Usually, wholesalers look for a distressed property that the owner doesn't want to spend time or money on. The owner is usually motivated to sell and often doesn't want to work with a real estate agent.

Wholesale real estate may be well suited for people interested in real estate transactions but who don't have the financial wherewithal to actually buy and sell properties.

You often don't need a real estate license to become a wholesaler (but check your local laws to be sure). If you have great people skills and are industrious, wholesale real estate may be right for you.

Instead of purchasing a home and selling it, a wholesaler contracts with a seller for the property, finds a party interested in buying it, and sells them their rights to the contract.
How to Wholesale Real Estate
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.
Pros and Cons of Wholesale Real Estate
Pros
Real estate wholesaling can school you in the real estate market and help you build high-value negotiating skills.
It's a low risk money-making strategy because it requires little money upfront.
Money is made quickly—generally, the fee is partially paid at the assignment of the purchase contract and the remainder at the closing of the property sale.
No credit score (good or bad) is required.
No property renovation experience or effort is necessary.
If you have a good network of investors, you can sell the house fast.
You may make a large profit in a relatively short time, depending on how may deals you put into play.

All the best!

Hi Salvador! Lots of people think wholesaling is an entry level strategy, but the truth is, it's a full time job. Don't get me wrong, I love wholesaling. I am a full time wholesaler and part time investor. 80% of wholesaling is marketing to find off market deals and that's really where all real estate strategies start. With discounted real estate. Start with marketing to find motivated sellers. Practice analyzing properties, because that is an essential skill of any real estate investor no matter what their exit strategy. Proper deal evaluation is how you determine what is a good deal and what is a marginal deal. I see you're in California so I can understand not having the kind of free cash it takes to buy properties in that market. Don't be scared of other, lower priced markets. You have a wonderful tool at your disposal. A W-2 job. Banks love to give money to people with W-2 jobs. Consider leveraging that to buy a rental property in a more reasonably priced market. 

As for specific wholesale information, it's everywhere. YouTube has thousands of videos about wholesaling where you can get the basics you need to get started. I think Im not allowed to make specific recommendations here in the forums but if you PM me I will point you in the right direction. Dont get hung up on this idea of a mentor. Thousands of people figure out what they need to do and take imperfect action, learn from their mistakes and move forward. Once you're properly educated on what to do and how to do it you'll feel a lot more comfortable jumping in and getting your feet wet. And of course there are countless people with experience in this community who can answer questions that come up during your process! 

 Salvador, I'm newish to wholesaling and located in SD. If you are open to talk more in and move forward, I will dm you.

Here is your very first strategy tip.

Act.

Be the DM you want to send.

Schedule the life you want to live. 

If we wait for others, we will wait until the last day.

That's all.

Best of luck!

In my not humble opinion, wholesaling for most people is a huge waste of time and energy. Save money, educate yourself and then get into the game.

Buying a property without funds or funding and the sole purpose of making money on the transaction is practicing real estate without a license! Wholesaling is legit when done right. This would be illegal in most states.

Wholesaling is a good place to start and end.  You learn a ton if you get good at it.

@Salvador Hernandez Jr,

You may see yourself waiting a few months before you can get that first wholesale deal done. There are a lot of moving parts with wholesaling: marketing, deal analysis, negotiating, financing, building your buyer’s list, etc., that you have to be good at or pay a premium for. You may break even on your first deal after all is said and done. Just be aware that you have 100 no’s before you get a yes and that yes needs to make sense on paper. And to get to that yes might cost you a lot in marketing. And on top of that, you need to be able to present this to any and all buyers. That means you need to have a somewhat of a relationship with them or at least have their emails. What happens if you can’t find the buyer in time? Do you have the funds to close on the deal? Or do you have to have that awful conversation with the sellers that you can’t proceed and have to back out? The seller was depending on you to solve their problem. Now what? Do they take legal action?

My point is that it needs to be treated as a legitimate business and the operations and systems required to be successful are very tedious. If your goal is to save up the funds for a down payment, there may be other underlying factors contributing to that that need to be addressed first before deciding on wholesaling.

Can you get overtime at your job? Are you overspending by eating out often or on Amazon too much at night? Uber is expensive! Is there another side hustle you can start by monetizing your skills/talents? Can you flip couches or furniture? Do you do any graphic design? BP just released a podcast episode on this.

You could definitely start wholesaling but I caution those who do that are new to real estate: you need to be an expert at everything to be good and stay out of trouble. If you do, find a mentor to walk with you. Find a way to bring value to a wholesaler without asking: what are they needing and how can you present that to them? Find a deal for them. Improve their website SEO. Bring them some interested buyers. Asking for a mentor is like asking someone to give them another job to take care of you for minimal return.

Hope that helps! Let us know what you decide to do!