How do i takeoff in Wholesaling?

5 Replies

how exactly do i start? im 21 years old and I took an interest in real estate and i want to get started with whole saling. i understand that you need to find a house below market deal and then negotiate a contract with the homeseller. my question is how exactly are these contracts executed and do you need money? because i have none and i want to find a house deal, analyze it, then advertise it to a potential buyer. I've already taken a few steps in jotting down numbers off for sell signs to try and build a potential buyers list but what do i do from here?? im lost

It's a marketing game.. optimize a marketing strategy to let people know what you do. I would strongly suggest you find some local real estate investor meetings in your area, you'll find more cash buyers and other people in the local industry, it is very very useful to build those relationships. Ask those cash buyers what they are looking for and their criteria if any, use that as a template when running numbers. You can also likely get contracts and documents that they are using regularly. When you lock down a property using a contract, in that contract you have it spelled out that you have the right to assign it or 'your name and assigns' , this is where you sell the contract(your equitable interest in the property) to a cash buyer. Another contract is used for that component of the deal between the cash buyer and you for your assignment free, never be too greedy about your fees, keep good relationships and always go for win-win deals on all sides.

I would say you have to have a great marketing strategy, work ethic, and most importantly, be able to provide a service to your buyers and your sellers. There's money in it for you, but don't be greedy and burn your bridges over 500 bucks, like Nick said. If you work with serious investors, they have to know that you're out for their best interest and not just out for a fee - of course that's what you're in it for, but you need to also make sure they're getting a good deal. If they feel that, they'll buy from you again and again. 

Please be clear in your mind about what you are doing: Signing a promise to purchase a house that you have no intention of actually purchasing. Do you plan to be up-front with the sellers about that? If they knew your intention, would they still agree to the contract?

"or assigns" wording may make it legal, but for a seller who doesn't understand, does that make it right?

Also, consider that without at least some cash to put a reasonable deposit up, you're basically asking a seller to lock up their property with you for little money at a FIXED PRICE, while you go find a buyer. This sounds like what a listing agent does, but the fixed price is an important difference. A listing agent makes more money (a percentage) when the seller makes more money. A wholesaler makes more money at the sellers expense. It will be difficult for you to find sellers willing to do this, and when you find one it may simply be that they don't understand.

Think Twice before taking this up as a line of work.

By the way, since you're young, have no money or experience, and want to get started in RE - let me give you something more constructive that you CAN do: Go work for someone, or even volunteer, in the business. A loan broker, RE agent, or whatever. Someone actually making money day in and day out (probably not another wholesaler). Maybe you can take pictures of properties for them, or something like that.