Wholesaling Help! Step by Step Help in Making My First Deal

1 Reply

Hi All - I am new to Wholesaling and have a couple questions to the community. I am located in Boston and recently found a Seller that is interested in a cash offer for her home. The home is in great shape and most likely doesn't need any work (recently Renovated). The town assessors office assesses the house at $510K. 

My questions:

1. What is the first steps to get the house under contract so I can wholesale it to a cash investor? Is this a legal agreement (Assignment Contract?) or can I just come up with this document on my own? Examples? 

2. I am extremely new to wholesaling and trying to jump in and learn. Therefore, I do not have any Cash Buyers. Will it be easy to find a cash buy for this property? How should I find Investors? 

3. Will an Investor buy the Home even though it doesn't need work and is turn key? I imagine the house being sold for around asking price?  The house is in a vacation spot of Mass and can be rented. 

4. How do I close the deal and negotiate what I want to get paid for finding this opportunity? What's standard for commission? 

5. Lastly, I am dealing with an extremely expensive area of the country where home prices are a minimum $300K+. Will I have less of a chance to Wholesale Real Estate due to the increase amount of cash due upfrount? 

I realize these questions are all over the place so any advise or links to other forms would be helpful and great! A guided example would be great as well. 

Thank you for all your time and input!

Best,

Paul 

Hi, Paul! It's awesome that you're trying to get started. I'm a beginning wholesaler as well.

First off, you said you've found a homeowner interested in a cash offer. Did you make a cash offer? It sounds like a great situation, but if you haven't made an offer yet and don't know what she wants or thinks it is worth, it could potentially start to fall apart. To give you some basic answers to your questions, though, 

  1. The absolute first step to getting a property under contract is to contact the owner and determine if they're motivated, and what they'll take for the property. Once you've agreed on a price (and make sure that this price at least follows the 70% rule. Search BP on that, it's a tried-and-true but not foolproof rule), you get a P&S, or Purchase and Sale agreement signed with the seller. Wholesalers do what they do in one of two ways usually, via either a reassignment of contract or Double Close. With a reassignment of contract, which is arguably the easiest and least time consuming in most cases, your P&S agreement contains a provision that it is able to be assigned to another buyer (the person you wholesale it to). Alternatively, with a double close, you actually purchase and close on the property and then sell it to an investor. With the former, you never actually own the home at any point and are merely selling your "interest" (contract) in the property. In the latter, you actually purchase the property and own it for a period of time, even if that period of time is 10 minutes (often longer). 
  2. You're going to need to do some more research. To be perfectly honest, Paul, all of the information you asked for can be found in the forums over and over again. All you have to do is go to the "learn" tab at the top of your screen and read the articles, and also just search BP for some of the keywords you used in your post.
  3. It's not going to be "easy" or "hard" to find cash-buyers, it's going to depend on how you do it. You don't have a buyers list, so you should attend local REIA meetings to network, and depending on how you decide to go about wholesaling, you can market it on craigslist. Wholesaling can and should be your business -- how are you going to make sure your business succeeds? Market your property everywhere. Biggerpockets has a Marketplace that you can use to market deals as well. Remember, it's about what's in it for the other person.
  4. I'm confused by the next question, but if you're saying the house is going to be at market value, you're not going to sell it to anyone. If a property is worth $100,000, and doesn't need any renovations or repairs (which can go beyond surface stuff, by the way) I would want there to be at least a $10-20K spread between purchase price and evaluation before I would buy it... You just never know.
  5. Things don't work on commission when you're wholesaling properties. This goes back to searching the forums for your questions. First of all, read this: 
  6. http://www.biggerpockets.com/renewsblog/2015/01/31...

Then ask yourself questions based on that, and search them. If you've searched all day and still can't figure it out, it must be a doozy! In that case it's worth it to ask a new question in the forums. 

Good luck, Paul! 

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