BiggerPockets

Wholesaling Articles

Hi Shawn! Great idea to start with wholesaling! It is a quick way to generate some coin fast without any cash or credit risk. I would not start with building a buyers list, once you find a good deal, the buyers will find you off of your advertising. Just make sure you keep all of their info for future deals.
Now you need to find the deals. I personally like fining nice homes in nice areas and taking them on lease/ purchase. Then I sell my lease/purchase deal to an owner occupied buyer. I like this method because there are so many opportunities.
I have done tons of ghetto deals too. Buy for 10k and sell for 15k. They are fine, but that market is a little played out. At least here in the Cleveland market. Good luck to ya!! :mrgreen:

Also, I would love to have the OG poster answer the questions I typed so that we all can better answer the thread post.

Wholesaling is often held out as a "quick and easy" way to generate cash. Often by gurus who's only real goal is to sell you on classes. That is, to separate you from that $20K. They're selling a "get rich quick" scheme.

I suspect its neither quick nor easy. For all intents and purposes, "wholesaling" is "real estate brokering". You're putting sellers and buyers together and collecting a fee. Yes, there are all sorts of techniques to avoid it becoming unlicensed brokering, but the fundamentals of the job are the same. You have to chase down deals. You have to chase down buyers (because you lack the huge aggregating advantage of the MLS.) I would focus on doing both.

I don't think REOs are a good source of deals.
1) They're already on the MLS and readily available to anyone who wants to buy one.
2) You're not going to get a radically discounted deal vs. what they're listed for on the MLS. Banks may come down a little, but you're not going to have much success offing $50K for properties that are listed for $100K
3) The selling bank is going to do everything in its power to make your deal fail. They're taking a loss, and they just don't want a wholesaler to take a 5% cut out of the deal. You'll end up doing transactional funding or some such to deal with their restrictions.

Start with marketing directly to various lists. Landlords who have recently appeared in eviction court, code violations, fires, probate, out of state owners, properties with back taxes, properties that look abandoned. Basically, people who may want to sell, but just haven't taken the action to get the property cleaned up and listed. Find buyers who are willing to put some work into the property and are able to buy multiple deals and pay cash or have flexible lenders. Move-in ready pretty houses are sold to retail buyers (people who are buying with conventional loans) through the traditional MLS/agent system. REOs are also sold through the MLS. If you're going to deal with these, you have to figure out how to add value. If that $209K house is really a source of $150K in profit, some investor would have already bought it. As a wholesaler, you're dealing junkier properties and investors. Find deals, find investors, put in a LOT of work and you might make some money.

1) They're already on the MLS and readily available to anyone who wants to buy one.

2) You're not going to get a radically discounted deal vs. what they're listed for on the MLS. Banks may come down a little, but you're not going to have much success offing $50K for properties that are listed for $100K

3) The selling bank is going to do everything in its power to make your deal fail. They're taking a loss, and they just don't want a wholesaler to take a 5% cut out of the deal. You'll end up doing transactional funding or some such to deal with their restrictions.

I'm much more skeptical a new wholesaler can just look at REO listings on the MLS, get something under contract and then turn around and make 5% on it. When I first get "deals" from a new wholesaler I look for it on the MLS. Frequently, they're right there. The wholesaler has marked them up a few grand and wants to resell them to me.

Wholesaling is not easy and for me, I had to become an expereinced flipper before I even had the ability to wholesale. In my opinion, wholesaling REO's is more difficult then just flipping them because you have to arrange for an even larger spread in the deal for your own profit, yet still have the minimum profit margins flippers expect to contract.

Seems logic that you would decide where to fish before you select what type of fishing pole you will need doesn't it?

Then how do you know it is what you want to do?

You don't know anything about wholesaling, but plan on going after the same thing as everyone else? Don't you think that kind of puts you at a HUGE disadvantage?

If you don't know anything about investing, but you say this is a million dollar property on sale for $209K, needs only $100K of work, how do you figure there is only $150K profit? More than likely it is a $275K property listed for $209K that needs $100K worth of work. That is why it is still available and how you know about it.

Do you think this because you believe wholesaling is the easiest thing to do in real estate or because you think it puts you at the least amount of risk? In my opinion, wholesaling takes the most amount of knowledge. Maybe you should start with bird dogging properties for other investors for small finder's fees until you start to figure out what you really want to do as a real estate investor?