First time wholesaling

17 Replies

Originally posted by @Janet Hansen :

How do I start wholesaling using OPM with no money coming out of my own pocket?

1. Build a list of cash buyers in the market you wish to wholesale in.

a. Find them.

b. Vet them to make sure they're real cash buyers by asking them the right questions. 

2. Once you have a few solid buyers on your list and you know their criteria; then you begin searching for distressed, off-market properties. You want properties that fit the criteria of these buyers.

3. Market to the properties via cold call, sms, direct mail, door knocking, Facebook ads, whatever your choice marketing is. 

4. Run your #'s and ask for help from someone that knows what they're doing so your #'s are good. No cash buyer wants their time wasted with "deals" that aren't really deals. 

5. Negotiate w seller. 

6. Contract deal.

7. Because you built your buyer list first, and know the criteria of the buyers that you'll sell deals to, you will be able to assign the deal within a couple hours. 

8. Buyer covers EMD and all other expenses associated with the deal, title, because you are no longer the person purchasing the property.

This is the simple version. Each step takes effort and some knowledge. But, I'm letting you know that I have never put a $ into any wholesale deal I've done and I've done them in 4 different states virtually. Feel free to reach out if you need any help.

Promotion
Apartments.com
List, Screen, Lease, Get Paid, Manage.
No Better Place to Lease Your Place
Owners rely on the #1 rental site to get the best results from their rental properties.
Get Started Now

Yeah I'm in Austin, but most of my deals are in Houston. I've got one going in San Antonio right now actually. I've done a little bit in Gavelston as well this year. Basically anywhere in TX, but main focus is Houston. Austin is so hot right now that I don't pull lists here, I just go after properties I happen to see when I'm out driving. I'll help out any way I can!

Hey @Janet Hansen the advice above it GOLD.

3 & 4 are the ones that seem to be the hardest. You are going to have to spend money to find the lists that you need to send to or spend plenty of time creating the lists. THEN you have to spend plenty of time to call, direct mail or knock on these doors. 

This game is a full time job. Please realize that it is NOT all sit back and make 200k per year. If you spend an extra hour a day, you should be able to wholesale a house in about 3 to 6 months. Hopefully it will be 3k to 10k for your efforts. The next one should take half that time.

The whole thing is not hard, it just takes doing lots of repetitive work and doing it consistently. Reach out anytime.

Solid advice, I’d switch up the first part. 

Initially, I would find a legitimate buyer, build a relationship with them and start bringing them deals.

Send them the details, ask what they would pay and then get it for less. 

Over time you’ll learn how to properly comp properties, estimate repairs, and price properties rights to sell. 

I often see folks jump in and contract houses way too high, have no idea what the repair costs are, and ultimately have the house way overpriced and it’s a disservice to any investor wanting to buy the house and also the seller. 

Good advice above which is good to hear because so often on BP regarding wholesaling, you hear people giving bad advice like lying to sellers, violating laws, etc.

One thing I would add to the above, when finding your cash buyer(s), have your title company look up all cash closed transactions with entity names in your area and find the entity names that repeat multiple times in 1 year. That is a real cash buyer (proven by public records).

Next, when you have discussions with these buyers as to what they want, make sure you get the financial feedback from them as well. In other words, if you find a deal that needs $60k in repairs and after repairs, it would sell for $350k, what would they be willing to pay for that type of deal. If you find a deal with $100k in repairs and exit would be $450k, what would they pay, etc, etc. Once you know their numbers, you know where you offer amount needs to be to meet their needs and still provide you a spread in the deal.

Once you know that and know your market (which includes how to accurately and properly identify rehab costs and exit values (after repair values), you can then contract with this "partner" in any number of legal ways. Option 1 would be to have a finders fee contract with them, you simply bring them to the deal and they write the offer direct to the seller with their proof of funds, their EMD, and in the name of their entity. The risk to this is if they circumvent you and not pay you. Of course that would be short sighted of them as you would never do a deal with them again. Option 2 is to form a new entity naming you and your buyer as owners of the entity. Then at closing, you simply sell your shares in the company for your agreed upon fee. Doing any of these options allow you to go to sellers and say "my partner" without lying because you actual do have a partner and it allows you to avoid violating brokering laws without a license as you are actually a real buyer with a money partner.

@Will Barnard and to piggyback on that.  Legit buyers aren’t going to go around Your or care what you make in the deal. 

I’ve had people try to bring me deals and not want to provide the address which is just a waste of time 

Originally posted by @Aaron Bihl :

@Will Barnard and to piggyback on that.  Legit buyers aren’t going to go around Your or care what you make in the deal. 

I’ve had people try to bring me deals and not want to provide the address which is just a waste of time 

I 100% second this. Legitimate buyers know that there are so FEW legitimate wholesalers with LEGITIMATE deals that when one actually lands in your lap you wouldn't dare screw them over.

That's like finding a unicorn............. and then shooting it. 

We don't shoot unicorns around here.
  

Originally posted by @Aaron Bihl :

@Will Barnard and to piggyback on that.  Legit buyers aren’t going to go around Your or care what you make in the deal. 

I’ve had people try to bring me deals and not want to provide the address which is just a waste of time 

 I agree which is why I stated it would be "short sighted" of them and as such, a very low risk to take.

Originally posted by @Alan Bostick:

@  question about point 1-B. 
what are the right questions?

How many deals have you done over the last 2 years? May I have the addresses? Do you have a POF you can send me? If I bring you a deal that fits your criteria, can you close in X days?

These are the questions you need answers to to prove they are legit buyers. There is another list of questions to ask for their criteria of course.

Originally posted by @Janet Hansen :

@Duncan Hayes Perfect! Exact answer I was looking for! I will reach out for sure! Build a relationship would be great! I’m in San Antonio trying to make this work, you’re not far! Thank you!

 Hey I am a Wholesaler in the DFW area, if you have any questions you would liked answered, please post them here. Looking forward to seeing your success! 

Promotion
REI Nation
Premier Property Management Group
Premier by REI Nation is the #1 PM Choice for Passive Investors
Looking for worry-free property management? Check out our Ultimate Guide to Property Management.
Download Now
Originally posted by @Orlando De Los Santos :

@Manuel Jaime hey! Would love to pick your brain about wholeselling, I have taken a lot of notes in this thread and would appreciate any help of feedback to get my journey started. 

Post your "brain picking" questions here for the benefit of all to read and others to also answer.

All this advice is solid.  I happen to fall on the other side of when to find the end buyer, but that's just me.  One thing everyone left out that was part of the original question is looking to have no money out of pocket.  9 out of 10 times, finding a legit deal as a wholesaler takes some upfront cash no matter what the guru's are selling

Originally posted by @Colby Hager :

All this advice is solid.  I happen to fall on the other side of when to find the end buyer, but that's just me.  One thing everyone left out that was part of the original question is looking to have no money out of pocket.  9 out of 10 times, finding a legit deal as a wholesaler takes some upfront cash no matter what the guru's are selling

 Great point, gurus always seem to preach you can wholesale with little effort, no credit and no money. Well, we all know the truth and the truth is, driving for dollars, marketing campaigns, etc. all cost MONEY. Wholesaling is a marketing business, not real estate investing, and a business needs capital to run.