Four Step System for
Wholesaling Real Estate
So, what is wholesaling Real estate anyway?
A wholesaler is someone who puts a property that's normally a distressed property under contract and assigns their contract or resells to another investor.
Wholesaling real estate is my personal favorite…
After running out of money I had to figure out how to make more so I could continue buying more rental properties.
The great thing about it is that you don't have to take ownership of that property if you don’t have a lot of money to get started.
Once you’ve found the right property and you have it under contract, you simply assign the contract to another buyer who will close on the property instead of you.
There is no risk, and you can do it with very little or no money down!
Seasoned investors call it " wholesaling real estate." Others refer to it as "flipping properties." Regardless of the term they use, the end result is the same: You can make tons of cash from property you never own!
Here’s how easy it is if you follow my simple system.
Wholesaling real estate boils down to four simple steps:
1). Find a Property
2). Find the Buyer
3). Negotiate with Your Buyer
4). Let the title company do the rest
Next, Get a BIG FAT check in a few days after closing.
Step One: Find a Property
How can you find a property to wholesale?
Create a “We Buy Houses” ad to attract sellers.
From these sellers your goal is to find a motivated seller who will sell you their property at a steep discount. For this, you'll need a lot of sellers to call you.
If you run the right ads in the appropriate locations in your city you’ll have plenty to choose from. A lot of these prospects coming to you will be in financial distress.
For example, they will be in foreclosure, getting a divorce, etc. or the properties may need major repairs and will need to sell fast.
Let say after running several ads you come across a seller with a property that has an after-repair value of $200,000.
This owner is currently in foreclosure and behind on his payments for three months and the property needs $30,000 in repairs.
The sellers of the home owes $105,000 and wants $8,000 for their relocation expenses so they can walk away.
Now, you need to call your friendly real estate agent, or use a real estate value-generating service and confirm the after-repair value is indeed $200,000.
Your real estate agent comes back to you and agrees with the after-repair value. Now negotiate with the seller a purchase contract for $113,000. This total is the sum of what the seller owes and how much they need to walk away.
Make sure to write “and/or assigns” after your name when writing the contract!
This will allow you to assign the contract to your buyer. Once the contract is signed you have a great deal worth $200,000 with a purchase contract of $112,000 that's $88,000 in potential profit!
Once again, if you run the right type of marketing program, your phone will ring off the hook. The more calls you get the easier it will be to find a property with sufficient equity.
Let's say for example you get a call from a motivated seller of a property worth $100,000. Because this seller is motivated you negotiate him down to a purchase price of $68,000. Then you correctly have him fill out your purchase sales contract with the homeowner as the seller and you as the buyer.
I prefer to use contracts from the Board of Realtors in my local area because everyone is familiar with them and they are easy to use.
Call your local Board of Realtors to see if they sell contracts to the public or contact a local Realtor and ask him or her for a copy. I have never had a problem getting a copy.
If not, most office supply stores sell real estate contracts, or find one on the internet.
Click Here for Instructions on how to fill out the Purchase and Sale Contract
in the second page of Wholesaling Real Estate.
Step two: Start Building Your Buyer's List
When it comes to wholesaling real estate, your “Buyers List” and your ability to sell quickly determines Your Success.
Your buyer's list is a list of people that want to buy properties from you. They can me investors, rehabbers or retail buyers who will buy your wholesale properties fast because they are looking for a bargain.
To start building your buyers list run ads in the local new paper and online classifieds that says something like:
Handyman Investor Special
Great deal for rehabs!
Priced below market--Won't last!
Fixer Upper: Cheap…all CASH
Hurry won’t last
(There are more wholesaling real estate sample ads at the bottom of the page).
Click here for a detailed look into building buyer's lists
You should also market yourself as a wholesaler, use business cards and network with people who want to invest in real estate.
When investors begin calling and they will, be ready to get all their information.
* Take their name, number, fax, email address, and put that information on a caller information sheet or in a database. Then the next time you find another great deal you'll simply call or email your list of buyers.
Run different ads everyday…making changes to get the best result possible. Even if you sell your property the next day, keep the ads running. Your success and ability to make tons of cash will all depend on your buyers list.
If the property is sold tell your buyers that the property sold however you are working on another great deal and ask if you can call them once the deal is finalized.
They will always say yes and will ask you for the address so they can drive by.
DO NOT give them any information on the property until you have a signed purchase and sale agreement. They may go to the homeowner directly and offer the seller more to buy the property cutting you out.
What’s great about your buyers list is whenever you get a new deal under contract you now have an entire list of potential buyers to phone, fax and email!
My buyers list has thousands of names in it and I’m constantly working to add more names to the list. I have been collecting them for years.
Every time I get a deal under contract, I email my list and bang…the deal is gone in hours. Always remember, the faster you find a buyer, the faster you get paid.
Step Three: Negotiating with Your Buyer
This is how most wholesaling real estate transactions might look:
Ok, assume you found a house worth $100,000 in good condition. The homeowners are distressed—motivated to sell because they are either behind in their payments or facing foreclosure or getting a divorce and need to sell fast.
Say they owe $50,000 on their Mortgage, and they need $5,000 to move and pay deposits for their new place.
You know this because you have asked them what they need so you can buy their home quickly.
Use your negotiation skills, and offer them what they owe on their property, plus in this case, what they need to move and make a deposit on their next place which would be $55,000. Many times this offer is accepted. (You can be creative here, and even barter...)
The house is worth $100,000 in good condition. You have a contractor give you an estimate and he figures it will take approximately $15,000 in repairs to get it to market condition. You have a rehabber lined-up from your buyers list and you know he'll pay $65,000 FAST.
In this case, you can decide to sell it to him for $65,000 in "as is" condition, and make $10,000 hard cash as your assignment fee.
The numbers look something like this…$55,000 to the homeowners and $10,000 to you for putting the deal together.
Your rehabber will fix-up the property and make the difference between the $65,000 and the $100,000 fair market value. If the rehabber does a good job fixing the property and keeps rehab costs to a minimal his potential profit is $15,000 to $20,000. Not too bad either!!!
Win, win, win and everyone is happy. Your seller sold their home quickly, you made $10,000 hard cash and your buyer will make $15,000 to $20,000.
Make sure to leave enough profit in the deal for the incoming investor. Your minimum profit should be $5,000.
At $5000 to $10,000 a deal wholesaling real estate, how many would you need to replace your income??
Step Four: Prepare for Closing
Make sure you develop a relationship with an investor-friendly title company that understands how you are doing your closing.
The beauty about the title companies is that they do all the work for you.
All you have to do is find the deal, wholesale it to your rehabber, and go to closing. The title company does the rest. Yes, it's that simple!
Wholesaling real estate is fun and the money is great.
I hope you can you see why I love it so much!
Here are some more wholesaling real estate sample ads:
Finding motivated sellers
I Buy Houses
Any Condition Any Price
Close when you want to
We Buy Houses
Buyer in town for the weekend
Relocating to area
Need to buy a Home for Family
Sample wholesaling real estate ads:
Building your buyers list
House must be sold by the
End of the month
Handyman Investor Special
Great deal for rehabbers!
below market--Won't last!
One of the greatest parts of wholesaling real estate is that it’s a way to get quick cash without worrying about your credit score or down payments.
As long as you put in the work and have the right professionals on your team, wholesaling is a great way to earn cash in the world of real estate investing!
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