Wholesaling Properties Like a Champ | 3 steps to great success
So you want to start wholesaling properties? Great, you have come to the right place. Here at House Flipping School we have recently placed emphasis on wholesaling real estate because wholesaling is essentially the first step to flipping a house.
Wholesaling properties can also be lucrative in and of itself. Wholesaling is a great way to get your foot in the door, establish relationships with more experienced investors, and earn a respectable living. Yet as with anything else in life, making money wholesaling requires will and skill. I will tell you from experience that you need desire and passion to become successful.
Nevertheless desire and passion alone won’t launch your wholesaling career. In this post I am going to divulge 3 specific ways get your wholesaling business up and off the ground.
1. Network with key individuals
All of the real estate blogs out there will tell you to network, network and network some more. This is great advice but to get optimal impact and better results, pause and strategize who you want to be networking with.
Remember that wholesale deals come in a variety of shapes and colors. Some of the best deals will be condemned homes, bank owned properties and abandoned homes. Certain situations also lead to good deals, such as divorces, tired landlords and soon to be foreclosed homes.
I hate to be a “Debbie Downer” because I understand how difficult these situations are for those involved. However this is the nature of wholesaling properties, and if you want to be successful wholesaling properties then these are the situations you need to find. In essence you are actually helping these people solve a difficult financial problem –often times it is a win-win for all involved.
To find these deals you want to not just network, but network with the right people.
Of course you will also have to find a buyer to sell the property to after you find it.
So to summarize, here are some good people to get to know:
- LLCs that own rental properties
- Real estate investors who own multiple properties
- House flippers
- Divorce attorneys
2. Become a Bandit Sign Master
Bandit signs can work wonders when it comes to finding a deal. Bandit signs are simple postings that say “We Buy Houses Fast” or “Sell Your House Today” etc. with an accompanying phone number. I would recommend not posting a sign that says “Avoid Foreclosure Today” or anything along those lines. Doing so could get you into some hot water.
Yellow and black bandit signs seem to work best for me. I think they stand out well and do a nice job of grabbing people’s attention. You can order professionally made signs or just grab some blank signs from a hardware store and handwrite them. Both methods work well.
Of course make sure to check with your city or town’s regulations before plastering bandit signs everywhere you go. Your local town hall should be able to fill you in on the rules and any applicable penalties for breaking the rules. If you hang signs in a town that does not allow them, your first offense will typically generate a warning. If you continue you will incur a fine at some point – and potentially a bad wholesaler reputation.
To be most effective with bandit signs, focus on locating an area that has a high foreclosure rate. Areas with many “run down” looking houses generally work well. A good strategy is to hang the signs on a Friday night so they are up on Saturday and Sunday when people are not at work and have the time to call you. The “sign police” typically don’t work on weekends, so there is a better chance of your signs remaining intact.
Come Sunday night it can be a good idea to head back out and take them down to avoid having to constantly replace your signs.
3. Send letters to motivated sellers
If you do step 1 and 2 right, then you will put yourself in a good position to find motivated sellers. However, if you want to take wholesaling properties to the next level then listen up.
I like to send direct mailings to people who are about to be foreclosed on. I send a minimum of six letters to people who are in pre-foreclosure. Keep in mind that due to life circumstances, these folks may not be super motivated to check or open their mail – which is why six mailings is the magic number.
Building a list of pre-foreclosures is not difficult. Simply use that incredible thing called the internet and do some Googling. Problem is that you will soon discover that many of these listings are outdated and virtually useless for your business. Building a good list of pre-foreclosures that could actually make you some money is a bit more challenging.
If you are lucky, you may stumble upon a recent local pre-foreclosure list that is accurate and useful. For the most up to date and accurate list, head down to your local registry of deeds or the courthouse and pull the records of “lis pendens” or “notice of defaults.”
Lis pendens is latin for “suit pending.” It is a written notice that a lawsuit has been filed concerning real estate involving either the title of the property or a claimed ownership interest in it.
A notice of default is given to a borrower stating that he or she has not made their payments by a pre-determined deadline, or is otherwise in default of the mortgage contract.
I recommend not sending a postcard to these people. You don’t want to offend them by having your message visible for the mailman to see and read. On top of that, someone within the house may not yet know that the home is being foreclosed on. If you burst the family secret via a postcard you can rest assured that you won’t hear from the resident. Instead use letters, and make sure to personalize your message and show empathy.
There is so much more that we could discuss with regards to wholesaling properties. This post really just covers the very tip of the wholesaling iceberg.
Now I can’t divulge just yet what we have coming down the road here at House Flipping School, but stay tuned for some exciting changes this spring. If you are hoping to learn how to wholesale and start your house flipping career, then stick around and be sure to check back in a few weeks.
We have some awesome things in the works which Mike and I think you will really like.
Until then be sure to download and read Mike's free eBook How to Flip a House in 5 Simple Steps. It's a good read that has helped motivate hundreds of people to stop procrastinating and take action on fulfilling their house flipping dreams. Click here to instantly download his eBook.
Take care and keep at it,