Newbie in Real Estate Wholesaling

15 Replies

I wanted to start as a real estate wholesaler. I live in Stockton California and have been doing a lot of research with being a wholesaler. I have very little capital and I am trying to develop a buyer's list now and have a few questions.

I am new at this, so I hope I am asking the right questions.

1) Does anyone have any point of contact near Stockton,CA whom I can shadow?

2) Is it true that I do not need a license to do wholesale?

3) How can get a sample contract for my use?

4) How long should I hold a contract before selling?

5) Do I inspect the home first then have my cash buyer inspect?

My understanding with wholesale is there is a seller, me(wholesaler) and

then the cash buyer. Are there any parties involved?

Your support is very much appreciated.

Respectfully,

George 

I think there are some forms here on bp, Gerald Harris offers some here on bp, i like jp moses' forms you can google him. 

Sell your contracts ASAP and get a back up buyer just in case, tell back up he/she will have first access to next deal if they dont get this one.

You dont need a license because you are a principle in the transaction.

Some will say you have to inspect the property but ultimately all that matters is that the end buyer inspects it and is willing to pay more than what you have the property contracted for.

Other parties include title company, you turn contract and earnest deposit into them. Also it would help if you had an agent to give you comps or tell you what the property is worth (you will have to give them something of value in return like maybe retail leads).

As a newbie myself I'll do my best to make sure MY understanding is correct. 

1) As I'm in Kansas City I can't help you here...sorry. :)

2) I'll leave that to pros in CA as it will vary by state.

3) I believe there are good contract templates in the FilePlace under the Resources tab at the top fo the page.

4) Don't hold the contract any longer than you have to. If you can sell it in 24 hours...go for it. If it takes you a couple of weeks, that's fine too; but the quicker you can offload it the better.

5) You will definitely want to look at the property before you put in an offer. This way you can calculate the estimated repair costs (if applicable...and it usually is) so that you can offer it to your buyers at a fair price. Your buyers will want the same courtesy so they can verify your estimated repair costs and get a good basis for calculating comps on the ARV. You may eventually get to a point where you've worked with particular buyers enough and supplied them with enough solid deals they may start buying from you sight-unseen...but you should always allow them their opportunity to inspect the property.

Most cases the only parties involved will be the "motivated seller", you and your buyer. Professionally there may/may not be an attorney and/or title company that will handle the paperwork, escrow & closing.

One more thing...ALWAYS be up-front and above board with ALL parties on what you're doing. Let the seller know you may be working with other parties to make sure their house gets sold at the agreed-upon price, but the end buyer may not be you. Don't hide anything from anyone involved so there are no surprises for anyone. You'll establish and keep a good reputation that way.

Hope that helps! And if I'm off on anything I'm trusting the BP pros to let me know!

Dang it...@Russell Ponce  beat me to it! :) But he has more good info anyway so it's all good. :)

Wow! This was very informative Russell.  If I may I'd like to ask a few more questions.

1) Is there a set amount on the earnest deposit, I've been reading numbers like $10?

2) When you say agent, is that like a licensed real estate agent/realtor? 

Thank you again and I hope to return you a favor.

v/r

George

Wow! This was very informative Russell.  If I may I'd like to ask a few more questions.

1)Is there a set amount on the earnest deposit, I've been reading numbers like $100?

2) When you say agent, is that like a licensed real estate agent/realtor? 

Thank you again and I hope to return you a favor.

v/r

George

Jim,

Thank you for this great info and advice you've provided.  My apology I've had to repost because I typed $10 vice $100 on that earnest deposit.  I've  just created my account today and I am glad I've got the professionals on my side.

Jim I am glad you had mentioned to be up front from the beginning with these transactions. 

Respectfully,

George

Hi George,

 I am also a " newbie" but I am pretty sure the city of Stockton , Ca  filed for municipal bankruptcy. You may want to check on the availability of Police , fire , and ambulance service to your property. My understanding is the " services" to the community are important . Maybe not to wholesaling but you may want to research 

Anne

Hi Anne,

Back in 2012  the city of Stockton did file for a chapter 11.  Do you know if that could be a major road block with being a wholesaler? I realize I've got more research ahead of me. I am planning to prospect the market within a 2 hour distance from Stockton,  talk to you soon.

George

@George Bernardino  Ultimately the only thing that matters is if there is a buyer for your contract. Go on Listsource.com and build your own list. Choose at least these criteria: zip code or city (I do both at different times), sale date last 6 months, and absentee owned. This will give you the number of investor transactions in last 6 months so you will know if people are buying in a zip code or city. Zip code is nice because you will know exactly where they are buying.

Now you can purchase this list and mail them when you have a property under contract or mail them ahead of time to build a buyers list and see what they want. The list will have the addresses of properties they bought so you can go on Realtor.com and see the house and purchase price.

Yes, I was referring to a licensed realtor because they have access to the mls. Its perfect if your buyer has access because he will advise you on what you should pay and then you have a built in buyer for the contract. Its best to eventually get your license.

The earnest money deposit (EM or EMD) can be whatever, ive done $25 but my paperwork now says $50. Dont give an explanation just state it and move on. If they say anything you're not a retail buyer who might fall in love with another house, you're an investor who is going to buy the house as long as there are no surprises during the walkthrough. And this will all happen in the next couple weeks.

Good luck! 

Russell,

Thank you brother, this is really great stuff. I'm  glad I could count on your expertise.

Very Respectfully.

George

@George Bernardino

Welcome. Thanks for your service. You have received some excellent advice. Time to build the foundation below.

Check out the Start Here page http://www.biggerpockets.com/starthere

Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.

Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having over 70 past ones to catch up on.

Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.

Couple good reads 

You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.

Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over

http://www.biggerpockets.com/files/user/brandonatbp/file/real-estate-rewind-a-biggerpockets-community-book

Good luck

Paul

Hi Paul,

Thank you for all these excellent resources, it will definitely be helpful.

Respectfully,

George Bernardino

Hi, George

Although, some may have did it, be prepared to provide an earnest money deposit that is substantially more. You could expect 1% to 2% with some seller's in order for your Offer to get serious attention. It all comes down to how you negotiate with the seller. "Rapport."

On the positive side, many Seller's willing to take a price hit on their home, realize that they cannot sell through traditional channels and they can be flexible.

If there is a Real Estate Agent involved and you have no credibility built, then you will more than likely be cutting a check to escrow for 1% to as much as 3% or whatever is customary for the Stockton California area. 

Much luck with your Investing.

Hi George,

 You might ask investors in Detroit , Michigan and Valejio , California how their municipal bankruptcy has affected their wholesaling. Just a thought . ,also  Jefferson Co. Alabama ( Birmingham ) 

     Municipal bankruptcy is not all that common , but people might have questions. 

Good luck

Anne

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