How to Wholesale Real Estate In 12 Simple Steps

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How to Wholesale Real Estate In 12 Simple Steps

Ever wanted to know how to wholesale real estate? We give you 12 steps to real estate wholesaling success here.

How to Wholesale Real EstateFor many people who want to get started flipping houses, real estate wholesaling is a great first step to get started - especially if money is tight.

Although there are many ways to flip real estate with no money of your own, there's lots of people who want to get started investing in real estate quickly, without having to raise an capital on their own.

This is where real estate wholesaling may be a really good fit for many people interested in getting into real estate investing.

The definition of real estate wholesaling is simply "the entering of a contractual agreement with another party for the purpose of purchasing property, and then assigning your interest in that contract to another investor for compensation".

Sounds simple? There's a few things you'll need to know about before you get into it. But first let's talk about why real estate wholesaling may be right for you.

The Advantages of Real Estate Wholesaling

The advantages of real estate wholesaling are several, here's a list of just a few:

  • No money or little money is needed to close a deal
  • You don't need a license, anyone can do it
  • Wholesaling does not take a lot of time and offers the ability to make a nice profit
  • Wholesaling has less risk than rehabbing
  • You will build relationships with other investors and buyers and allow for repetitive business transactions
  • Contractors are not necessary as the home or property is being sold in "as is" condition
  • Wholesalers are selling to investors so dealing with retail buyers is not necessary
  • Real Estate agents are often not necessary
  • Wholesaling is a fast way to create a positive cash flow

So as you can see, there are several benefits to learning how to wholesale real estate. The next question is the process to actually do it.

How to Wholesale Real Estate: The 12 Step Process

When learning how to wholesale real estate, there are a number of basic steps you need to take, here is an overview of the most important ones:

  1. Marketing
  2. Fielding Calls & Talking to Sellers
  3. Information gathering & determining comps
  4. Inspecting the property & estimating repairs
  5. Negotiating
  6. Getting it under contract
  7. Take it to your team
  8. Identify a buyer
  9. Assignment of Contract
  10. Control everything!
  11. Go to settlement & cash your check
  12. Rinse and repeat!

1. Marketing

The most important part of your real estate wholesaling business is getting it going. You need to market to find deals; if you do not find deals you will not have a business. Your marketing plan should consist of a combination of broadcasting, social media and networking, and require consistent amounts of volume.

If you expect to send out one mailing of 100 pieces a month and you don't network and let people know what you do, don't expect to get a lot of deals. You need to tell everyone what you do. You need to network, network and network.

2. Fielding calls

As you start to get responses from your marketing materials you will need a way to capture and analyze those responses. Once you capture them, you will need to qualify them. By tracking how you received those responses, ie: e-mail, bandit signs, direct mail, telephone and social media.

3. Gathering information

You need to analyze all the information you have on the subject property.  You need to determine how much the property is worth (ARV). The best way to do that is to get comparable sales from a local realtor to confirm the value. This is part of your building your power team. What else do you need to know about the property? Book and Page, Lot Size, Liens, Zoning and pretty much anything and everything else about it!

4. Inspect the property

There will be a good well of knowledge that you will need to gain before you truly understand how to evaluate the renovation on a property. As a wholesaler you do not have to give an exact number. Your job is to get the best estimate in the ballpark so that your numbers make sense and you can justify it to the renovator that you are trying to sell it to.  For newer investors, you should consider hiring a local inspector to educate yourself on how they inspect properties per deal.  Let me remind you and inspectors job is to scare you from buying the property.

5. Negotiation

You may have heard saying, a good deal is not found a good deal is made. Very seldom are you going to get a call with someone wants to sell their property at 70% the after repair value (ARV) minus the repair cost.  Most sellers want to get top dollar for their home. It is up to you as the wholesaler to get the best possible price you can and create a win win situation for both you and the seller. As a wholesaler you solve problems.

Being a good negotiator is not only a skill but it is a science. As you become better at negotiating, your deals also become better.

6. Get it under contract

Once you and the seller agreed to a deal, you need to have them sign a contract. You will need to educate yourself on the legalities of real estate transactions and the legal paperwork. You will need to know entity structuring as well as purchase and sales contracts, and what to do with them when they are signed.

7. Introduce to your wholesaling team

Now have a deal, you have to take it to your team. The legal paperwork should go to your attorney; our attorneys do all the heavy lifting for us such as title reports and closing the deal.

8. Identify a buyer

Once you have it under control or under contract and you know you have a great deal you need to advertise that deal. There aren't many ways to go about this, calling renovator's that you meet in your local networking groups. Post it online using outlets such as craigslist. Look for renovators who want to buy this property from you to become landlords or simply flip the house retail for more profits.

9. Assignment of contract

Once you come to an agreement with the buyer you simply transfer your rights and responsibilities in your contract to the buyer. This is simply done through an assignment of contract. There aren't many different ways to assign the contract, we will teach you some of the tricks we've used to prevent title issues.

10. Be in control of everything

This is the most important step, controlling everything. You really want to be in control at the end especially coming into a closing and especially with the buyer and seller. You want to be controlling everything.  Being a professional and you will lose fewer deals and perform far better on all the deals in your portfolio.

11. Closing and cashing your check

The closing is also known as the settlement.  You go to the closing you sign all the appropriate documents and you cash your check. One thing I find very helpful is asking your seller for testimonial. I use my testimonials to put in my evidence manual or on my about us page on my website.

12. Rinse and Repeat!

How to Wholesale Real Estate: Conclusion

With all the interest in house flipping, real estate wholesaling is becoming more and more popular. Its only natural. Although the real estate deals are a bit more hard to come by right now, there is still plenty of money to make wholesaling real estate.

All you have to do is get started and take the first step.

  1. Im trying to geg into wholesales myself if u have time can u answer a quick question, say a houses value is 100,000, and the ower wants to give you the house for 80,000, how do i know that 80,000 will cover their loans or and fees, cause isnt the home cost $100,000 im a little confused

    Reply
  2. First, you need to do your diligence by going to the registry of deeds. I also ask the seller for their latest Mortgage Statement and Property Tax Bill. That will tell you how much they owe on the property and if they are current on their taxes.

    Also, just because a house value is $100,000 doesn’t necessarily mean they owe $100,000. Does this particular property need work to sell at $100,000?

    When you wholesale, you need to cater to what your buyers are looking for. If this house needs zero work done to it, and they only want $80,000 anything you can sell it for over 80,000 is profit to you. But if the property needed $20,000 in repairs, then there is no margin for profit.

    Most Investors will buy a property based on the 70% rule that Mike teaches in a few of his blogs. It’s mainly a guideline but a good guideline to follow. For Example using your numbers above:

    If the house is worth $100,000 all fixed up nice. You take 70% of that ($70,000). Then analyze how much in repairs the property needs. Say it needs $20,000. Then your Maximum Selling price to an investor is only $50,000. Anything under $50,000 you can get it for is your profit.

    I hope this helped!

    Reply
  3. Hey I’m 18 years old and want to get into wholesaling real estate and have questions to ask. First, if someone calls me and their house is in a very bad neighborhood and the house is in bad shape, how do I tell the seller politely I don’t want their house? Also, where do I get the correct contracts from? Online or somewhere else?

    Reply
    1. Why would you say no? Thats easy money. But if you dont feel good about it than just give it to someone else and split it 50/50. Let the other guy finish the deal. Now you got paid and you can still keep that person as a future customer. Its a win for all.

      Reply
  4. Also, when I am closing a deal where do I go? I asked my dad and he said a title comapny but, do you, the investor or the seller choose which title comapny to close it at?

    Reply
    1. It can go either way but you should try to always use your own people. Start building yourself a team. A title company, mentor, lawyer, ect ect ect

      Reply
  5. sorry i ask many questions but when you have bandit signs is it ok to have your own cell phone number on their?

    Reply
    1. Get a google phone instead or something else. Its not a good idea cause you will have city workers harassing you for doing that.

      Reply
  6. John,
    This is one of the most simple ways I have seen wholesaling broken down. I would like to thank you for making it available. I would like to ask a couple of questions though. You have 12 steps.

    Is there way to break it down into a step by step plan of this is what you should be doing daily in order to get deals going? I saw a thing on youtube that says do a wholesale deal in 5 days. Here is the link to that first day. How to Wholesale a house in 5 days…and put money in your pocket by the end of the week! (Day 1)
    https://www.youtube.com/watch?v=xkMsEbvtU_s
    I guess I am talking about this kind of break down, but not using another wholesaler in the mix.

    Thank you for your response in advance.

    Reply
  7. How do I find sellers? This is one of the toughest part. How do I pull vacant properties, find sellers who want to sell?

    Reply
    1. Attend real estate investment meetings. Some are free. Some associations you must join. Lots of investors or house flippers will be there.

      Reply
  8. How do you calculate what your making off the property your selling

    Reply
  9. If I have a property under control, why wouldn’t an investor just wait for my inspection period to end and make his own offer?

    Reply
    1. Because you have other investors that are willing to purchase that property now if their not willing to jump on it. And even if you don’t have any other investors still tell them that. Not to mention not many sellers are willing to wait 30 days or however long you have that contract for.

      Reply
  10. So i’m in Washington State, i’m just getting started. I’m sort of lost on which foot to put forward first, i will give this a try. Iv been going through seminar which keeps leading up to a sales pitch leading up to the end of the days. Prices to move forward are for more info are way beyond my budget, thousands of dollars. Anyways thank you, any information i can get is helping.

    Reply
  11. There is a duplex for 7,000, but a reality company has it. Can I still put it under contract? I want to flip it for 14,000 just to make a small profit and it only needs like 10,000 in repairs. Is 14,000 a good price?

    Reply
  12. so what I see is there’s 2 different contracts for each deal correct? where can I get to get those contracts?

    Reply

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