Reverse Wholesaling | An Unorthodox Take On A Popular Field | House Flipping School

House Flipping School logo

≡ Menu

Reverse Wholesaling | An Unorthodox Take On A Popular Field

Reverse Wholesaling is an innovative way to approach the wholesaling business.

Reverse Wholesaling An Unorthodox Take On A Popular FieldAs you may already know, a great way to get your house flipping career kick-started is by wholesaling properties. Wholesaling is great because you often do not have to spend any of your own money.

Essentially, the process entails you, as a wholesaler, finding a property and putting it under contract. Then, you will find a buyer and sell the contract to him or her. The buyer closes in your place and you do not have to spend a dime. Additionally, you do not have to worry about the rehab and all of the costs and troubles that are included with it. Instead, it is the investor who you sell to that will usually do the rehab. You are given a sort of finder’s fee for locating a good property for the buyer to invest in.

As long as you can find a buyer, you should be in good shape.

But what if I can’t find a buyer?

Finding an investor to buy your property is often the trickiest part of the process. Each buyer has his own needs and demands. Some buyers don’t have a lot of money so they’ll only want to work with smaller properties. Other buyers want a property that is in their own town so they can stay close to their other obligations in life.

If you are not able to find a buyer in time, you will have to close and buy the property yourself. That means, if you don’t have enough money to buy it, you could run into trouble.

Luckily, there is a way to avoid this problem. The process is called “reverse wholesaling”, and it’s a fairly simple idea.

What Is Reverse Wholesaling?

The most difficult part of wholesaling is finding a buyer, so the idea of reverse wholesaling is that you get this step out of the way first.

There is a deadline you need to meet after you put a house under contract, after which point you must pay for it yourself. However when you get a buyer first, there is no real deadline you need to meet to find a property. This worst that can happen is that the investor you are finding a house for might think you are taking to long and decides he no longer needs your help. If that happens you will won’t loose any money or run into any legal ramifications.

Also, by finding a cash buyer first, you can find out exactly what the buyer want in a property. You can see what their price range for a property is and what types of homes they are looking for. Maybe they’re looking for basic three bedroom two story homes, or maybe they want a multi-family house with more than one kitchen because they intend to rent it out. Whatever the case, finding out first by reverse wholesaling means that you'll never need to blindly look for a property.

How To Find An Investor

When finding a cash buyer, you want to start...

click here for the full article

by Mike LaCava

I'm a full time house flipper who isn't afraid to share information and help upcoming investors. If you have a question just ask. I am happy to help!

  1. Hi Mike,
    My name is Cornealus Thomas and I would really like to start my real estate adventure through reverse wholesaling. I understand the concept of wholesaling, but I have no idea how to put a house under contract once I find it for a buyer. Of course, this is a major problem for me and I don’t want the buyer to cut me out once I find what they are looking for; so my question for you is how do I go about drawing up a contract?

    Reply
    1. Hi Cornealus,
      You must establish credibility & trus for yourselves & the same goes true with any potential buyers. If you feel there is a chance they may cut you out then the relationship may not be that strong to begin with. Once you establish their buying criteria then you will be prospecting for them & being like a transaction engineer. If you find something that meets that criteria then you will have to get it under contract & then assign that contract. Remember not all contracts are assignable & you should check with your local attorney to be safe. All the best!

      Reply
      1. And don’t forget to record a MEMORANDUM OF CONTRACT to reduce your risk and increase theirs.

        Reply
        1. What is a memorandum of contract?

          Reply

Leave a Comment