Wholesaling

17 Replies

I am a new investor looking to receive some sound advice on the "wholesale" process, I have heard there are 2 basic methods. One is to simply "assign" the contract during escrow and the other is to do a double closing ?? Obviously I have done neither but want to feel comfortable with my approach especially as a new kid in town, well, not really a kid, I am a retired police officer getting into the REI business. Thanks

Not totally sure what your question is, but you have it right. By assigning you are on the hud statement similar you a realtor commission (not much cash out of pocket). By double closing you'll need the funds to close and you'll be both seller and buyer.

Hey Kid,

Before worrying about double closing or assigning contracts.  I'd recommend focusing on getting seller and buyer leads.  Read as much as you can.  Ask as many questions as possible.  But start at the beginning.  Get leads, talk to sellers, talk to buyers, get a deal signed then determine if it best to assign or double close.

good luck

A question about wholesaling.  When you get a contract on a property:

1) How far out should the closing be scheduled?

2) Specifically (esp. Texas) how can you include contingencies in the contract so that if you can't find someone to assign to you are not STUCK with obligation to buy yourself?

3) Whats to keep an investor you share the details with from just waiting until the contract is  terminated then going straight to the seller themselves?

@Wayne Igo I am a complete newbie, but I've done a good amount of research on your first question. From what I have read you should set the closing between 7-30 days and find a cash buyer that is willing to buy the contract. 

Originally posted by @Wayne Igo :

A question about wholesaling.  When you get a contract on a property:

1) How far out should the closing be scheduled?

2) Specifically (esp. Texas) how can you include contingencies in the contract so that if you can't find someone to assign to you are not STUCK with obligation to buy yourself?

3) Whats to keep an investor you share the details with from just waiting until the contract is  terminated then going straight to the seller themselves?

 Your #2 and #3 are the same questions i have.  

Originally posted by @Roland Paicely :

Hey Kid,

Before worrying about double closing or assigning contracts.  I'd recommend focusing on getting seller and buyer leads.  Read as much as you can.  Ask as many questions as possible.  But start at the beginning.  Get leads, talk to sellers, talk to buyers, get a deal signed then determine if it best to assign or double close.

good luck

 Can you recommend a method for obtaining buyers lists who are interested in purchasing wholesale properties ??

Bruce,

There are a number of ways to get a list of buyers. To begin with I'd recommend going to your local REIA. There are always plenty of buyers there. Talk to people and ask them what are they looking for. What price range, how much in repairs can they handle, what area do they want etc. They will let you know!

@Bruce Olson  My advice as far as a buyers list goes is not to call up investors with a long list of questions about what we like to buy. It is very annoying to get phone calls asking what I would buy or wouldn't, what area's I like and don't, what is the most I would spend on a house, do I like commercial, residential, multi or land, would I buy out of state and so on you get the point. I found that most of the people that call me never call back with a deal and it is just a time waster. I on the other hand and happy to listen to someone call me with a deal - even if it is not a deal to me, at least it is something concrete and I will then let the person know what area's and types of investments I am interested in. Heed this advice and you will make better first impressions.

For the escape clauses, you can always write into the contract an inspection period or pending approval of a partner. I'd be a little cautious on this because if you frequently back out of deals, you could get a bad name and that would potentially hurt you in the long run.

Also, if you end up not being able to find a buyer you don't actually have to close you would just lose your EMD.

Great discussion I have the same questions, and two more! What are the pros/cons or why would someone choose to double-close rather than assign a wholesale deal? Assigning seems like the simplest, most cost effective way to go but I am just getting started and am hoping for some clarification. Is it simply a matter of the type of property (such as HUD) or is it a matter of location (I am in PA)... or title company? Taxes? Seller's attitude? Other? I would love to hear any advice from Roland or other seasoned investors.

@Michelle Evans - you are correct in the fact that it's easier and more cost effective to assign. 

I will double close when I have a large profit on the deal. Many assignments have blown up after the seller finds out how much you are making on the deal. They see you as doing nothing when actually you marketed for negotiated and put a property under contract. 

It always baffles me that they were fine with the selling price until they find out someone else is making money on their property.

Just my $.02 

That makes sense John, I know an investor who always double closes for basically that reason. I guess I just have to get out there and test the waters, maybe the truly desperate sellers wouldn't care if presented right initially...but with larger profits  a double closing isn't bad if the process goes smoother and it closes more deals. Thanks for your input.

@Bruce Olson  Here are a couple of ways to find cash buyers.

  • REIA Meetings as @Roland Paicely  mentioned above
  • Craigslist (at least in my area) has a few that will post that they are looking to buy homes for cash
  • Bandit signs are probably all over town, if not check out towards the town lines and adjacent cities. I take a photo of the sign while I am at a stop light and then call them when I get home. Some will answer, some wont. Some may even be a wholesaler like yourself but I have found some solid cash buyers that way
  • Realtors - I have spoken to a couple of realtors (some you may meet through REIA) and just ask them if they have any cash buyers that are looking for deals. Chances are they do and probably wont give you their contact info but at least if you get a deal under contract you can go back to that realtor and have them work with her contacts.

Create a spread sheet and start listing their contact info, if they tell you what they are looking for, put that into the spreadsheet as well. You will be surprised how quickly they add up. Don't go too crazy with trying to get hundreds of cash buyers. Get a deal and if it's honestly a "good deal" you wont have an issue finding a buyer. In my area there are all types of buyer and not enough deals. The tough part about being a wholesaler is finding the deals and getting to them first. Find a niche and own it.

@Eric Munson ,

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Raymond

My major source of buyers so far in my RE investing has been linkedin and Craig's List. If you know how to write, you can get a lot of investor attn in those places. 

I also do bandit signs, but San Antonio doesn't have tons of cash.....most of our buyers are in CA, and I focus my online marketing there. 

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