Getting started/ wholesale/ rehab

8 Replies

Hello our names is Jewell and Angela and we’re just getting started in real estate. We’re both 23 with okay credit but not good enough for big time loans. We want to rehab mostly but we’re kind of looking into wholesaling to get started if we can’t find a private money lender. We attended the than Merrill workshop and yes a lot of good information but if were going to be honest they are a business and they make a lot of money on people buying their products so they won’t give away any others that’s could help newbies out.

Is wholesaling a good way to get started?

Sure. Create a monthly marketing budget and buy a list or create your own and put it into an excel spreadsheet. It may take 1,000’s of letter before your first closing or it may take a few hundred. Depends on your market. I would recommend printing the letters and not hand writing if you plan to do a lot of volume.

@Jewell Ford if you do not have the cash on hand to buy and fix properties right now then wholesaling is a good way to go but you need to learn as much as you can about your local market in order to be successful. It takes more than just finding a distressed property or coming across a motivated seller. The key is finding a great deal that will generate interest from multiple buyers. You need to learn about sourcing leads, what goes into a rehab, how to run comps, etc. to ultimately be successful as a wholesaler.  

Originally posted by @Gareth Jackson :

@Jewell Ford if you do not have the cash on hand to buy and fix properties right now then wholesaling is a good way to go but you need to learn as much as you can about your local market in order to be successful. It takes more than just finding a distressed property or coming across a motivated seller. The key is finding a great deal that will generate interest from multiple buyers. You need to learn about sourcing leads, what goes into a rehab, how to run comps, etc. to ultimately be successful as a wholesaler.  

@Gareth Jackson Thank you so much! When you say sourcing leads what do you mean? 

I like that you said it takes more than finding a distressed property because we’ve found a few and we’re hoping to contact the owners pretty soon but now that you said it must generate interest buyers we will hold off for a second. How will we know who the interested buyers are? Do we market first? Thank you Gareth!

@Jewell Ford Sourcing leads in terms of wholesaling would mean finding potential properties and potential buyers. There are a lot of different ways to make that happen and that typically boils down to what you are most comfortable with and feel like is most effective for you. The first thing I think you may want to do is figure out exactly what areas you plan to target so that you could work to become very familiar with those areas. Next you want to start working on finding buyers who target those same areas. Having the buyers lined up before you put properties under contract will make getting it closed much easier.

@Jewell Ford and Angela, Welcome to BP!

Yes, wholesaling can be a great way to get started. The way to go about it is to create win-win-win situations, and to listen carefully to your motivated sellers to eke out why they are selling and what their sticking points are. As Gareth said, learning how to run the numbers accurately is also of utmost importance, especially when it comes to marketing the property to your buyers -- they will not go for the deal if the spread is not wide enough.

I wrote a few biggerpockets posts on how to run comps, estimate rehab costs, and find motivated sellers and off-market properties, they are all here: https://www.biggerpockets.com/blogs/8814-investing-with-rei-kit

I feel that the most important information is how to run comps, as without that you are at the mercy of what the seller says their house is worth and have no baseline for where to start negotiations: https://www.biggerpockets.com/blogs/8814/68395-how-to-find-real-estate-comps-and-calculate-after-repair-value

You should start creating a buyers list right away, as getting a property under contract and running out of time to find a buyer is a real possibility.

Direct mail has been a very successful tool for investors. You can work with a list broker to get suggestions on targets for your campaign. 

A lot of people have been mailing to Absentee Homeowners. The thought being that they can be motivated to sell after getting tired of dealing with property that they don't live in.  

Another target is Seniors with 15+ year ownership. These folks are often ready to downsize or transition to assistance.  Additionally, they may have fallen behind on remodeling and deferred repairs so they will be expecting lower offers. Add in another level of motivation with Low Financial Stability Scores (FSS).

Just be sure that the list you get has been run through the National Change of Address (NCOA). You want to minimize the wasted postage by mailing to bad addresses.

I have some books you can read regarding wholesaling:

1. Flip by Nick Ruiz
2. If You Can’t Wholesale After This I’ve Got Nothing For You by Todd M. Fleming

You must build up your educational foundation before you start any new endeavor. It’s so crucial that you invest in yourself first before you start your marketing campaigns and the like.

You must learn before you earn!