Hi BP members,
I am a newbie from Baltimore, MD and am very interested in getting involved in Real estate. My situation is that I would like to start with Wholesaling because I don't have the money or credit to buy a property outright (or a down payment) as of now. But I am very motivated to make this happen. I am soaking up the Immense amount of knowledge available especially on Bigger Pockets! It could be I am experiencing analysis paralysis a little, because even thru this amount of knowledge I have gained, I am still balking at actually starting. I feel like I need a real estate GPS to show me the way :) .. Any help is greatly appreciated! ty
Jake
@Jake K. Welcome to BP. Don't be afraid about going to REIAs because you are not a social person. Go listen and absorb. You will often run into people who post here on BP. One group I like, the Anne Arundle REI meetup, run by members here @Gabriel G. and @Matt Schelberg has a lot of people who show up from BP. If you ever see me at a local event be sure and say Hi.
Hi @Jake K., First..Welcome to BP! I am a new member as well out of the Detroit area in Michigan. Reading your post, i understand exactly where you are coming from. I have been researching real estate investing for MONTHS now..without taking the action due to the dreaded analysis paralysis. I am in the same boat as you with limited personal funds and credit which has been a source of discouragement while I try to save. However, I have made the conscious decision to start taking the necessary steps in order to make my goal a reality. Wholesaling is one thing I would like to tackle, but BRRRR is a strategy I really want to get into.
The best advice I can give is to just dive right in. The goal is progress...not perfection. Continue to read as many blogs, books and articles as you can in order to educate yourself on the topic and to reach out to those that are doing what you want to do! Create a plan of attack..write down a list of steps that you want to take towards your goals and keep it somewhere that you can see it all the time. Look up and go to your local REI meetings or perhaps reach out to an investor friendly real estate agent who can give you some assurance to the types of options and financing that is available out there, and lastly keep notes of your progress. It is really motivating when you can see exactly what you have done, and can help drive you to want to tackle more.
I wish you the best in your journey. I look forward to seeing you around the Bigger Pockets site!
step 1 - area, size, purchase price in your range (all that research). Spend a full day on this.
The rest of this can be done on a Sunday afternoon:
step 2 - pull a list of exact sellers you want to mail to. For example, 3/2, zip code xxxxx, subdivision, lot size x, assessed value between x-y, no mortgage or less than x %, etc. You download a report in an easy spreadsheet with owner name, address, and all property detail.
step 3 - scrub your list to remove duplicate owners, government agencies, anything out of ordinary
step 4 - "mail merge" list into your ready to go offer letter to purchase. (make a sincere, realistic offer and included your closing agenda)
step 5 - use a cheap, industry specific printer (we spend less than the price of a stamp to get the whole thing printed and mailed)
step 6 - wait for signed offers to come back and pick the best ones to purchase! Or put them under contract and pass the deal to your ready to go flipper and charge them $10k per deal like we do.
You should be buying at way less than "market value" so everybody wins! Hope this helps.
Hi Anthony, Thank you for this really detailed reply. Sorry for the delay..
Can you elaborate on step 2 and also step 4, im not clear on them? ty!
Hi @Jake K., First..Welcome to BP! I am a new member as well out of the Detroit area in Michigan. Reading your post, i understand exactly where you are coming from. I have been researching real estate investing for MONTHS now..without taking the action due to the dreaded analysis paralysis. I am in the same boat as you with limited personal funds and credit which has been a source of discouragement while I try to save. However, I have made the conscious decision to start taking the necessary steps in order to make my goal a reality. Wholesaling is one thing I would like to tackle, but BRRRR is a strategy I really want to get into.
The best advice I can give is to just dive right in. The goal is progress...not perfection. Continue to read as many blogs, books and articles as you can in order to educate yourself on the topic and to reach out to those that are doing what you want to do! Create a plan of attack..write down a list of steps that you want to take towards your goals and keep it somewhere that you can see it all the time. Look up and go to your local REI meetings or perhaps reach out to an investor friendly real estate agent who can give you some assurance to the types of options and financing that is available out there, and lastly keep notes of your progress. It is really motivating when you can see exactly what you have done, and can help drive you to want to tackle more.
I wish you the best in your journey. I look forward to seeing you around the Bigger Pockets site!
Ty Lauren, for the encouragement and great practical advice! My game plan is similar. I need to to start wholesaling basically for lack of another option bc of credit and capital issues. But I also like the BRRRR strategy as a phase 2 of my goals. I have started to write down a serious plan of action and it is great to see it on paper, makes a difference! I like your idea of keeping it handy to constantly remind me and keep me motivated. I am constantly reading and learning more in the meantime as well.
However, you are right. The botttom is ACTION..ty very much, good luck to you too!
@Jake K. please don't believe the hype that wholesaling is the best option if you are short on funds. You need money to wholesale!! You need money for marketing, you need it for an EMD.
Yes it is possible to complete a wholesale deal with no money out of pocket, but that's also like seeing someone win a million dollar lottery and then conclude that you can do it too, let alone build a business that way. Those success stories are few & far between and they "normally" don't do it as quickly as portrayed.
This is not to discourage you, but to give you a dose of reality. You might need money just to attend the REI meeting, just depends on which ones in the area you attend. I you have no funds, then you will have to learn to be social. You will need to do things such as: call rentals to see if the owner wants to sell, call FSBOs on craigslist everyday/night, attend open houses, let everyone know that you "buy houses",...etc.
If you are not very social, that is one trait you will have to get rid of,....I did!
Continue to learn, network, & most importantly work on your personal financial situation. If you lack funds, but have some time, Uber & Lyft is a side gig. I know several wholesalers in the metro area that drive to fund their business.
We are new investors to the Baltimore market! Happy to keep in touch!
@Jake K. please don't believe the hype that wholesaling is the best option if you are short on funds. You need money to wholesale!! You need money for marketing, you need it for an EMD.
Yes it is possible to complete a wholesale deal with no money out of pocket, but that's also like seeing someone win a million dollar lottery and then conclude that you can do it too, let alone build a business that way. Those success stories are few & far between and they "normally" don't do it as quickly as portrayed.
This is not to discourage you, but to give you a dose of reality. You might need money just to attend the REI meeting, just depends on which ones in the area you attend. I you have no funds, then you will have to learn to be social. You will need to do things such as: call rentals to see if the owner wants to sell, call FSBOs on craigslist everyday/night, attend open houses, let everyone know that you "buy houses",...etc.
If you are not very social, that is one trait you will have to get rid of,....I did!
Continue to learn, network, & most importantly work on your personal financial situation. If you lack funds, but have some time, Uber & Lyft is a side gig. I know several wholesalers in the metro area that drive to fund their business.
Hi James, When you say that doing a wholesale deal with no money is like winning the lottery, im assuming your not talking about having some money for marketing and a small EMD..also I see you are a wholesaler, what is the smallest EMD you put down?
As far as being social, I am making an extra effort to speak to people as much as possible, takes effort but I see the value..Thanks alot!
We are new investors to the Baltimore market! Happy to keep in touch!
Sounds good Connie..Where are you investing? What is your strategy? wholesaling, flipping etc?
The smallest I've put down is $100.
What I mean by "no money wholesaling" is like winning the lottery is BECAUSE that is usually how it's portrayed when someone is trying to sell you their program. They normally don't mention money needed to get your business up & running. The "no money" aspect, strictly means that you are not purchasing the property yourself, you would be assigning the property to an end buyer. That part is usually not explained in detail.
@Jake K. I have put down as little as $10. However it is unethical to give a seller the impression you are going to solve a problem for them when you the deal may not go through is unethical. So it is best to have the money or ability to close if you can't resell it to another investor. Now if someone has abandoned the property and doesn't really care then that is OK. But if they are really counting on you, you should be able to close. That is hard to do without money.
If you market for deals by direct mail it could take thousands of dollars to get your first deal. Or you could mail out just one letter and get a killer deal - but counting on that is like winning the lottery.
It can take a lot of money for marketing. However there are other costs. What if you pay for title work and it kills the deal? Maybe you find a Hard Money lender to do short term financing (transactional funding) for a double close and they want money for an appraisal up front. There are a lot of hidden costs in any type of real estate including Wholesaling. It doesn't have to take a lot of money to wholesale but it does take some.
Another factor is it takes real work. One advantage is hard work can substitute for some of the money. But wholesaling is not easy. It is a job.
I don't say these things to discourage you. I say them to prepare you, so you don't get discouraged when roadblocks come up.
@Jake K. I have put down as little as $10. However it is unethical to give a seller the impression you are going to solve a problem for them when you the deal may not go through is unethical. So it is best to have the money or ability to close if you can't resell it to another investor. Now if someone has abandoned the property and doesn't really care then that is OK. But if they are really counting on you, you should be able to close. That is hard to do without money.
If you market for deals by direct mail it could take thousands of dollars to get your first deal. Or you could mail out just one letter and get a killer deal - but counting on that is like winning the lottery.
It can take a lot of money for marketing. However there are other costs. What if you pay for title work and it kills the deal? Maybe you find a Hard Money lender to do short term financing (transactional funding) for a double close and they want money for an appraisal up front. There are a lot of hidden costs in any type of real estate including Wholesaling. It doesn't have to take a lot of money to wholesale but it does take some.
Another factor is it takes real work. One advantage is hard work can substitute for some of the money. But wholesaling is not easy. It is a job.
I don't say these things to discourage you. I say them to prepare you, so you don't get discouraged when roadblocks come up.
Thank you Ned, great advice..I do realize that it is hard work, and I kind of figured that there are always costs even in a no money down situation. Thanks!
Just remember , it sounds easy , everybody thinks its a quick buck , lots of people are trying to do it .
Its not .
Just remember , it sounds easy , everybody thinks its a quick buck , lots of people are trying to do it .
Its not .
Hi Matthew, I realize it is not as easy as the "gurus" make it sound.. but what is your experience specifically in Maryland ( I see you are from Severna Park) thanks
@Jake K. My experience has been as a competitor buying for myself . I currently have 1 under contract (settle in 2 weeks ) I made an offer , the seller wanted some more offers so they called some bandit signs . He called me back and we sat down and talked , he showed me their offers , both were about 15 grand higher than mine . He told me he didnt like the "feel" of the 2 other offers , and could I match them .
I spent about an hour in person explaining to him the wholesaling process , and the fact that I am the end buyer not a wholesaler . And told him simply I gave him my highest and best . Then I told him , ask for proof of funds , and ask for higher earnest money deposit like I was doing $ 10K . And run all 3 contracts by his attorney . I then told him , my feelings wont be hurt if he sells to one of them , its strictly a business transaction .
A week later we signed , He said that he picked mine because I didnt lie to him , or try to BS him . The other 2 wouldnt show proof of funds , and his attorney told him NOT to sign their contracts . Mine does not have any assignment language .
@Jake K., there is a great lesson in what @Matthew Paul & @Ned Carey posted. As a wholesaler it's a must that you find great deals that work for both the seller and buyer. I see many wholesalers in our area putting properties under contract, JUST to put a property under contract in the HOPES of selling the contract. They contract the property too high, then state too low repair costs, then wonder why the deal doesn't sell. I know this because I get many emails from wholesalers wanting to do JVs with me & when I see their deal I tell them I can't send this to my buyers - It won't sell!! In Matthew's example his offer and the offer of the other wholesalers should of been close, not a $15K difference. That doesn't even include their fee which they would add to the final offer price to their end buyer.
@Jake K., there is a great lesson in what @Matthew Paul & @Ned Carey posted. As a wholesaler it's a must that you find great deals that work for both the seller and buyer. I see many wholesalers in our area putting properties under contract, JUST to put a property under contract in the HOPES of selling the contract. They contract the property too high, then state too low repair costs, then wonder why the deal doesn't sell. I know this because I get many emails from wholesalers wanting to do JVs with me & when I see their deal I tell them I can't send this to my buyers - It won't sell!! In Matthew's example his offer and the offer of the other wholesalers should of been close, not a $15K difference. That doesn't even include their fee which they would add to the final offer price to their end buyer.
Thank you for that reminder, you are so right! both the buyer and the seller must be equally considered, and vital for me to get the repair estimate right so that I make an offer that works for the seller..gotta study up on my numbers
@Jake K. My experience has been as a competitor buying for myself . I currently have 1 under contract (settle in 2 weeks ) I made an offer , the seller wanted some more offers so they called some bandit signs . He called me back and we sat down and talked , he showed me their offers , both were about 15 grand higher than mine . He told me he didnt like the "feel" of the 2 other offers , and could I match them .
I spent about an hour in person explaining to him the wholesaling process , and the fact that I am the end buyer not a wholesaler . And told him simply I gave him my highest and best . Then I told him , ask for proof of funds , and ask for higher earnest money deposit like I was doing $ 10K . And run all 3 contracts by his attorney . I then told him , my feelings wont be hurt if he sells to one of them , its strictly a business transaction .
A week later we signed , He said that he picked mine because I didnt lie to him , or try to BS him . The other 2 wouldnt show proof of funds , and his attorney told him NOT to sign their contracts . Mine does not have any assignment language .
great advice! Being straight up with everybody is the way to go in everything
Get some money saved up and get yourself a good hard money lender. If your deal is good enough and you can pay for the lender then you are in business. However, tying up property without the ability to close the deal is the fastest way to destroy your reputation. Also look at house hacking, Baltimore has some programs to help people purchase homes.