Beginner Wholesaler Advice

7 Replies

Originally posted by @Lamontis Gardner :

I am a full time college coach looking to wholesale on the side, What advice would you guys give me in order to get started? Thanks 

The first step is to understand the terms and legalities of the business to make sure you get started the right way.

Wholesaling is traditionally defined by the investor community as "the assignment of a contract" but some people define it as buying a property and reselling without doing any work at all which is known as wholetaling which is simply retail real estate. The dictionary defines wholesaling as selling to retailers, especialy in large quantities.

There is no dictionary, official or legal definition for flipping, rehabbing, wholesaling of real estate or wholetaling. These are just slang terms that have been invented by investors in the industry.

Some states have defined wholesaling activities as brokering and are requiring licesnes so you need to check the laws in your state to make sure you are in compliance.

I would not recommend flipping, or using hard money if you're just starting out especially if you have limited funds. Hard money Is very expensive, you will need a larger down payment if you're just starting out and you need reserves to pay for your mistakes and cost overruns. The interest carry will eat your profits fast especially if you struggle to get the project done and sold quickly. You are better off finding private investors and doing a JV structure.

One of the best ways to get started is by wholesaling (which is the assignment of a contract) Once you have done several deals, gained some experience and have set aside some cash you could try a flip or other strategies. For now I recommend you focus on getting really good at finding cash buyers and finding good deals and solving sellers problems.

First step is to make sure you understand the laws in your area regarding wholesaling. While wholesaling is legal in most states, several states have passed laws defining wholesaling as brokering and are requiring a real estate license to wholesale property. You should talk to a real estate attorney that works with investors in your area to ensure you are in compliance with any laws. They will also have the proper contracts as well.

If you are considering staying in this business long term I recommend getting your license. This will elevate your stature as a professional and open up a lot more opportunities for you to monetize deals you can’t buy or wholesale. Either way you need to operate with honesty and integrity and look to serve others by helping them solve their problem and not try to take advantage of anyone.

Next you need to educate yourself on the business and your market. You really need to immerse yourself and learn all you can. Attend REI groups and meetups and network with other experienced investors.

Start with finding cash buyers. You want professional legitimate cash buyers so you know you can close on the deal and do what you tell the seller you will do. I can’t emphasize this point enough. You do not want to contract a property unless you know you have a buyer who can close it or take it down yourself.

Different types of cash buyers are flippers, buy and hold, subject to and lease option. You need to find several of each of these types of buyers and learn what they are looking for. You will learn a lot about the business and the market by talking with cash buyers.

Best way to find cash buyers is networking at local REI meetups, masterminds, Facebook groups, Realtors, title companies, closing attorneys, property management companies, auctions, Craigslist, google search, billboards and bandit signs. Some companies also run TV and Radio ads.

You can search real estate transactions in your tax database. Look for entities and individuals that have bought multiple properties with cash. You may need to search by the address of the buyer as they may change their name or the name of the entity on each purchase. You can also buy lists from companies like list source and there are some REI software companies that have a cash buyer search feature.

Some of best ways to find motivated sellers is to purchase lists from companies like listsource and or compile lists from city and county like 60-90-120 days late on mortgage, pre-foreclosure, delinquent taxes, water cutoff, code violation, probate, divorce, etc. Then you can mail or cold call or both.

Other cheap or free methods are driving for dollars, craigslist, Realtors, FSBO sites, expired listings, foreclosure sites and bandit signs if allowed.

If you have the funds you can use billboards, newspaper ads, other offline publications., TV commercials, radio ads, motivated seller websites, SEO, pay per click/adwords, facebook, Linkedin, Youtube, and other forms of online advertising and boosted/promoted social media postings.

Bottom line is integrity and consistency. You need to do what you say you will do and take consistent focused action every day, answer the phone when it rings and follow up and follow through.

 

Welcome to the industry! I suggest continuing to network and finding the right market/area that will work FOR you. Sometimes, that may be out of state. Finding contacts in the wholesaling, real estate market can be tricky - so take initiative in researching properties and finding resources that will allow you to understand what sellers in the market are looking for (ARV and ROI). Driving for Dollars and then doing the research by preforming skip traces, may allow you to find off-market properties that don't have several folks on the contract already.

Hopefully, that will take some risk out of what opportunities you're willing to put your name on.

Good luck!!

Hi @Lamontis Gardner - are there any specific niches that interest you?

I'm wholesaler of all property types, but land is my calling. One of the best parts about flipping land is that it can be done anywhere in the country so you can buy and resell based on your budget. It's SUPER easy to start out just doing it on the side with a low budget and scaling up from there. For example, 5 acres in King County, WA (Seattle) is very different from 5 acres in Cochise County, AZ.

Here is what we do - 

1. Identify an area to buy land and set our acquisition criteria.

2. Download the ownership records for all properties that meat our criteria.

3. Price each offer based on our calculated purchase price. (Typically 20-25% of current "for sale" similar properties in the area.)

4. Mail at least 1,500 specific offers to those land owners. (Usually buy a property with every 300-500 letters.)

5. Wait for calls and signed offer letters to come back.

6. Complete our due diligence and pick the best ones to purchase.

7. Buy and immediately post for sale ALL OVER THE PLANET for double what we paid.

8. Sell, close, repeat.

Super easy to turn $500 into $1k and later $10k into $20k into $40k...

Happy to help if you have more questions.

Originally posted by @Lamontis Gardner :

I am a full time college coach looking to wholesale on the side, What advice would you guys give me in order to get started? Thanks 

Wholesaling as it's taught is a myth. You need a license to Broker real estate. That's all wholesaling is as it's taught in these programs, it's brokering real estate except instead of being up front & telling the distressed seller that you'll sell their property for X amount & take X amount as your commission / fee you are taught to lie to the seller & pretend you are going to buy the property while you secretly attempt to "assign" your contract.

It doesn't work. Nobody has any respect for wholesalers. The only people making money wholesaling are the guys selling you all of that education.

To be successful connecting buyers and sellers you need to have

  • An in depth knowledge of the market.
  • Marketing skills.
  • Sales skills.
  • Negotiation skills.
  • Accurately estimate rehab costs.
  • Understand how to much time it would cost to run a renovation on the properties you are presenting.

My advice get a real estate license. Way cheaper, no legal issues, more respect and there is a decent chunk of cheap or free training out there from the mega brokerages. Soak it all in while you're trying to get off the ground. It's not an easy job, 90% fail rate but it's better than the 99.9% "wholesaler" fail rate.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here