where and how to get started.

Question

I am trying to break into this business but I could real use a few pointers(actually a lot of pointers) I don't have a lot of funds right now and my credit is not the best so based on what I have researched it seems wholesaling would be a financially safe place to start. any advise would be greatly appreciated. Thank You

Aaron Mazzrillo · Answer

Hey Gene,
I am an expert wholesaler out here in Southern California. I did 25 houses last year and my average wholesale fee was $15,600. 
Many people think wholesaling is the easiest place to get started. I disagree and here is why;
A wholesaler needs to know;
Marketing - to attract leads
Value - to determine what the property will sell for
Negotiation - to buy at the right price Documentation - to put the property under contract correctly so it can be wholesaled
Rehab - so you know how much to knock off and allow a budget for the person buying from you.

I started as a buyer from a wholesaler. I used a hard money lender to acquire the property, the wholesaler referred me to crew to do the repairs, and a broker to help me sell it. I used my credit card to buy the materials so I wouldn't have to have cash up front. I also had a small equity line which gave me some cash to pay my crew, cover the gap on the hard money, and cover holding expenses while I was waiting to sell. I made $26K on my first deal which gave me more than enough to go out and do it again.

I bought from a wholesaler because he knows all of the above. All I really had to do was sign for the hard money, pay the rehab crew, and wait for the property to sell.

I also disagree you need a huge buyer's list. This is really nonsense. Go to any court house and find out who the biggest players are at the auctions. The guys out here do 100s of houses a year. Why waste time building a list when you can find one guy with millions in his pockets and just sell to him? I sell all my properties to only 5 buyers. I have a few landlord types that will pay more for certain properties. All the rest go to my trustee sale buyer.

If you don't have money, you should find a partner. I strongly believe in partnerships especially for new investors. Investing is a team sport.

I would encourage you to fist start with attending local REI meetings. Get educated. Start reading a lot of books. The success of a person is directly related to the people he surrounds himself with and the books he reads. Be careful of and avoid the shark tanks. Those are the predatory meetings where some sleazeball attempts to sell you some useless system every month. Texas has lots of REI clubs so you should be able to find something in your area. 
Good luck!

Jimmy C. · Answer

Read the how to build a buyers list thread.  Its at the top (sticky) of the wholesaling forum.  This will give you every technique being used to create a list of real cash buyers in your area.

Working locally at least at first is probably best. But once you get the hang of it, you can wholesale property pretty much any area you want to work.

And finally I dont know if working with a buyers agent will help at all.  I would join the local REIA and attend some of their meetings.  That will help you find the investor friendly title companies, lenders, other wholesalers etc....

Aaron Mazzrillo · Answer

Another strategy you can use is to jump in the middle of a wholesale deal. Check out my IEInvestor page on youtube. I have a video called Xmas Pimp Cash. It explains it in detail.

Jeffery Bigsby · Answer

Checked out your video Aaron and that's exactly what I'm trying to focus on now.  Do you have a contract that you use with the other wholesalers or do you just reassign your assignment?

Kobus De Villiers · Answer

Gene,

Subject To = subject to the existing owner financing. That means you basically agree to pay his mortgage and in some cases a fee or few points so he gets regular monthly income rather than cash at closing.

Option = option to buy at agreed price in the future. Typically can also include that part of monthly payment goes to reduction in agreed principle.

These are strategies to use terms and monthly payments rather than cash at closing to structure a deal that gives the owner cashflow when putting it under contract. There are way too many variations on this to go into detail. I'm sure someone will post a helpful link to an existing thread.

Gene Corral · Answer

hey everyone:

I have been reading this site for the last few days and I am absorbing a lot. A couple of questions could someone please explain what exactly a 'subject to' contract is and how it works and also if someone could clarify 'option contracts' seems a vague in the forum posts

Thanks
Gene

Chris G. · Answer

Welcome Gene... Do us a favor and submit a profile picture. It makes it easier for others to recognize your future posts. It also makes it easier to build online relationships.

I agree that working with a buyer's agent is not the best approach to learning wholesaling.

Another thing that is crucial is to know your farm/market area. Know it like the back of your hand. Know it better than anybody else. That way you will know exactly how much a house is worth just by looking at the address. This will give you a heads up and will prevent the "catastrophic blunder" you mentioned earlier as you will never get a property under contract for more than other investors are willing to pay, thus minimizing the possibility of other investors ignoring your email's once you have a property under contract.

As already stated, read through the wholesaling sub-forum here. Also browse through the marketing and lease-option forum. You'll most likely come across more potential sellers that cannot sell for a steep cash discount, but could be open to selling on a "Terms" basis.

Gene Corral · Answer

thanks for the replies. I have been reading the forums for the most of today and I am trying to decipher all the different methods used by the pros I am eager to get started I just want to do it right and minimize my learning curve. A question I have is how to get started finding buyers for potential properties? From what I read is that a lot of end buyers shy away from wholesalers for various reasons. I understand that some mistakes will be made starting out however I don't want to burn any bridges with a catostrophic blunder. Also would you recommend working with a buyers agent to start out with so I could get familar with the negotiation and contract process ? And lastly do you recommend starting locally or is it prudent to shop several markets nationwide? Ideally I would like to start locally and maybe branch out later. Again Thanks for everything.

Keith Ahrens · Answer

Hey Gene,
We have all been in that boat when your credit stinks and your low on funds. I donâ€™t know if this will help you but this is what I did to build funds and credit.
Increase or Establish credit history.
Get checking/savings account at bank
Apply for debit card use it all the time after a few months
Ask bank for overdraft account on checking
Get bank credit card use for three months pay off entire balance in full each month then asks for increase in credit.
Ask bank for Line of Credit (POF)
  you can always ask anyone here at BP questions.
Hope this helps you out.  I have been through a couple deals nothing on contract yet but still digging. 
1# thing gene is not to give up and donâ€™t listen to the people that donâ€™t have want you want
Time 
Money
Freedom.

Jimmy C. · Answer

Welcome to BP Gene.  You are in the right place to learn about REI.

Wholesaling is the easiest way to start indeed.  I would start by reading the wholesaling section here in its entirety.

If you get stumped ask a question and we will be sure to help!

where and how to get started.

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