If you're a beginner in wholesaling read this!
So I've been reading all the forums here for almost 2yrs and its frustrating when someone ask a question about contracts and wholesaling. They rarely get a straight answer without all the noise. As a newbie this frustrated the **** out of me. Until I said "screw the forum!" and did it the old fashion way by just going for it. It's not that hard as some make it out to be, and I hit the ground running because I followed these steps.
1. find motivated buyers.. Whether its through advertising, word of mouth, or public records. What ever it takes! They will let you know what deals they want, and in turn you will know a good deal!
2. When it comes to contracts. Go and get a professional real estate attorney!! Tell them what you want to do, and they will hold your hand through the process! Do this before you ever even consider making your first deal! This will save you so much stress and time. It's just that simple! Get an attorney, he or she will draw up contracts, close, and hold your documents in escrow. I can't stress this step enough. I got more information from an attorney then I did any book, club and even this website!
3.Find motivated sellers just like in step 1. If you can't find sellers your not motivated enough! Seriously, no matter where I'm at I can find motivated sellers.
4. Due diligence.. Pay for a professional inspection, pay for a title search, and please check for code violations!
If everything checks out, and all steps are lined up, you have a deal! There is nothing else to do accept for close. Again, your ATTORNEY will guide you through this.
Oh, for those that say you don't need money to wholesale. Uh hhhmm, they are lying to you!! Step 2 and 4 cost money whether you get the deal or not! Also, real marketing ain't cheap! If all else fails and your still lost. Use this, a.c.y.a. it stands for Always Cover Your ***!
I just gave you the juice now go and get it!
Thanks, Nick. If there is one thing I have anxiety about in the wholesaling process is the contract and making sure it is legit. I was looking into legal zoom for it but would you suggest face to face or would an online service like this work?
Great post Nick Legato !
As far as paying the attorney, how did you go about that? I was thinking about splitting costs between the buyer and seller on the HUD-1 but if there are any other suggestions, please comment!
Good information, @Account Closed. Thanks. Is it necessary to form an LLC before my first deal?
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#2 All Forums Contributor
- Real Estate Broker
- Lake Oswego OR Summerlin, NV
@Account Closed wholesaling or pimping real estate without a license is just like any other small business it takes capital.. can you make it with no capital like the guru's say... well 1 out of a 100 maybe..
what do you think the minimum cash reserves to get started is for most that want to give this a shot.?
I am thinking 10k to 20k...
Do not use legal zoom, accept to setup your LLC. I did the economy package, because you can do your own EID number for free. Use an attorney in your area! Ask them if they do wholesaling and make sure they have connections to title insurance. I was advised to never put my personal name on any contract, but to use an LLC. I was also advised not to use an assignment of contract, but rather a straight option. States have been cracking down on assignment of contracts do to whiny real estate agents, claiming they cause problems. I was also advised never sign or have any party sign without a witness, such as a public notary or certified attorney. Documents without a proper witness will most likely not hold up in court! Again, I'm not a legal advisor hence, go get a professional attorney!
If you start an LLC go get a business account with a bank and apply for business credit cards. I was able to get 40k in 30 days.
I paid my attorney the day of closing the full amount I was charged. I didn't have to pay until I had a successful deal! My attorney was understanding of my situation and not only held my hand but believed in me. Every attorney I interviewed, if I got a funny feeling about them or they did things like shake my hand in a weak manner or stutter. I didn't go with them!
The amount of money I had when I started was 3k.
I paid $169 for the LLC
$400 inspection
$150 title search
$746 attorney fee, which covered everything!
$600 marketing fees such as business cards, flyers, ect.
You don't have to do the inspection, but I have found by doing it and getting an estimate on repairs I can sell to cash buyers that try to low ball me for a higher fee! So its worth it!
title search is import because you want to be able to insure it. If you can't insure your option walk away!
Also, an awesome side hustle to meet people and scope out areas. UBER!
I hope this helps you!
Nick Legato Thank you for all the helpful information! You bring up a good strategy for starting an LLC and applying for business credit cards. This might be my next move since I want to ramp up my online marketing.
Welcome to BiggerPockets, this is an excellent site for real estate (actually the best, hands down).. Unfortunately people who wholesale get bashed a lot on here.
I could write an entire post on the legalities of wholesaling. Basically if you close before you resell to your end buyer that kills the brokering without a license nonsense they throw around on this site. Get in touch with a transactional lender, JV with your buyers or..Get a license! It's less than $3,000 and it'll give you a lot more information to work with instead of relying on another agent you can become one.
The good part is it's easy to overcome the legal issues, the bad part is 95% of the people on here only talk about those solutions 5% of the time, they like to bully. Best of luck!
Hi Eugene, thanks for the input. I've been hearing people locally as well saying that wholesaling is too hard or challenging. I'm going to look into this.