Wholesaling Process and Procedures. Feedback needed :)

9 Replies

Hey Everyone, 

I have been learning and researching how to go about setting up my wholesale business and launching it in January 2022. I would like to get your feedback about the information I've compiled to do it the right way and efficiently. 

How to wholesale legally with no troubles?

  1. Have Finder’s Fee contract with Investor
  2. Form a new entity with wholesaler and Investor, at closing, you sell shares of the company to the Investor for the agreed-upon fee.

What is Wholesaling?

  • Selling the RE Contract to an investor/ Cash buyer.

How to get paid and not break laws?

  • Create LLC with you and Partner and once closed sell share of the LLC to Partner for finder's fee.
  • Create a Finder’s fee agreement with the Cash buyer.
  • How to be a great wholesaler
    1. The ability to contract RE at great discounts.
    2. The ability to build a real buyer's list (real cash buyers with real proof of funds)
    3. Ability to evaluate your market and ability to peg rehab numbers.
  • 4. Honesty

What is the Key to wholesaling?

  1. Marketing and getting off-market motivated sellers.
  2. Quality Cash buyers list

Lead sources for Wholesaling

  1. Listsource
  2. Popstream
  3. REI List Broker
  4. How to estimate Rehab cost.

$10 per ft= light renovations

$20 per ft= medium renovation

$30 per ft= Heavy Renovations

What is an A-B contract?

A-B contract is the contract between the seller and the wholesaler. You are the B-C transaction, from the wholesaler to you. 

A= seller

B= wholesaler

C= buyer

Cash Buyer/ Investor Qualifying Questions

  1. What's your Sweet spot?

  2. How quick can you close?

  3. What are the top ideal property types you want? (I.E. duplex, single-family, apartments, etc)

  4. Do you have access to Private money?

  5. Do you have access to hard money?

  6. What’s your price point?

  7. Do you want to buy and hold?

  8. Will this be a flip?
  1. How many deals have you done in the past 2 years?
  2. May I have the addresses?
  3. Do you have Proof of Funds you can send me?
  4. If I find you a deal that fits your Criteria, how soon can you close?

Vetting Cash Buyer/ Investor?

  • Have title company lookup all Cash closed transactions with entity names in the area that repeat multiples of 1.
  • Make sure to get financial Feedback. (Example, if I find a deal that needs 60K in rehabs, after repair it could sell for 350K, how much would you be willing to pay for that deal?

Helpful tools

Comps and Lists - Propstream

Skiptracing - Batchskip

Drive for Dollars - Deal Machine

E-sign Docs - Hellosign

CRM - Podio

Dialer  - Mojo Sells

It is my goal to fully Launch into Wholesaling by January 2022 and I want to make sure I am doing it correctly to build a reputable name in the space, eventually getting into Fix and Flips and Rentals. 

I am currently in the process of building my buyers list, any insight as to how to find properties out of state, and what would the process look like? would you guys mind sharing the template contract you guys are currently using? anything else that I might be missing? 

Any feedback would be greatly appreciated, thanks! :)

@Orlando De Los Santos   

Oh man, where to start...so much could be said.  I'll start with one item and give you more later if you want. 

We'll start with the glaringly obvious...

Lead sources for Wholesaling

Those three that you mentioned aren't going to be enough.  Everyone and their mom has access to those and is sending out crappy postcards that all look the same and say all the same thing.  These lists are stale, the homeowners on these lists have already been touched by so many other investors, unless you just luck up with perfect timing (which can happen), you are going to be frustrated before you get going.  

How can you niche down?  How can you hone in on a certain type of seller?  Do you have the ability to craft a message that resonates and converts?  Have you taken the time to truly build the avatar of your ideal customer?  95% of the people I see posting haven't.  They think they can sign up for a service for $39-$99 a month that will just pop out deals worth thousands lol.  

If this is you, stop.  Do better.  Think about what I'm saying and make an adjustment.  If you have done these things, good, you have done more than most.  I didn't see you mention a website to generate leads.  This is most investors' number one source for leads.  

Do you have a real budget for lead generation?  And by real I'm not talking $300  per month.  Most people want to get into wholesaling because they are told by the gurus they don't need money.  If you really want to do this business without money, its doable but VERY VERY VERY difficult.  So what is your monthly advertising budget?

To be honest, you are wasting your time building a cash buyers list until you actually start generating some leads.  I can talk more about calling cash buyers later if you want (most of them lie and the ones who don't are sick of people calling them with criteria questions but no actual deal)

Colby,

thank you so much for your honest feedback, I appreciate it a lot. what are your thoughts on the Deal machine to get leads driving 4 dollars, I was thinking of starting that way until I am able to have a decent marketing budget? 

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I don't use deal machine so take this with a grain of salt.  

I don't think you need an app with a monthly subscription to track property addresses of vacant houses if you are budget conscious and haven't done a deal yet.  You have excel?  You know how to look up who owns a property?  

Seriously man, one of the things that frustrates me about the ecosystem of real estate investing is the number of gadgets and services that you don't need but guru's and real estate influencers make it seems like they are THE key to your success. (not a commentary on deal machine specifically b/c idk about them)

Maybe others can chime in on the benefits of deal machine that I'm unaware of.  I can think of better ways for you to spend $50-150 per month if you are just starting out.  

Originally posted by @Orlando De Los Santos :

Hey Everyone, 

I have been learning and researching how to go about setting up my wholesale business and launching it in January 2022. I would like to get your feedback about the information I've compiled to do it the right way and efficiently. 

How to wholesale legally with no troubles?

  1. Have Finder’s Fee contract with Investor
  2. Form a new entity with wholesaler and Investor, at closing, you sell shares of the company to the Investor for the agreed-upon fee.

What is Wholesaling?

  • Selling the RE Contract to an investor/ Cash buyer.

How to get paid and not break laws?

  • Create LLC with you and Partner and once closed sell share of the LLC to Partner for finder's fee.
  • Create a Finder’s fee agreement with the Cash buyer.
  • How to be a great wholesaler
    1. The ability to contract RE at great discounts.
    2. The ability to build a real buyer's list (real cash buyers with real proof of funds)
    3. Ability to evaluate your market and ability to peg rehab numbers.
  • 4. Honesty

What is the Key to wholesaling?

  1. Marketing and getting off-market motivated sellers.
  2. Quality Cash buyers list

Lead sources for Wholesaling

  1. Listsource
  2. Popstream
  3. REI List Broker
  4. How to estimate Rehab cost.

$10 per ft= light renovations

$20 per ft= medium renovation

$30 per ft= Heavy Renovations

What is an A-B contract?

A-B contract is the contract between the seller and the wholesaler. You are the B-C transaction, from the wholesaler to you. 

A= seller

B= wholesaler

C= buyer

Cash Buyer/ Investor Qualifying Questions

  1. What's your Sweet spot?

  2. How quick can you close?

  3. What are the top ideal property types you want? (I.E. duplex, single-family, apartments, etc)

  4. Do you have access to Private money?

  5. Do you have access to hard money?

  6. What’s your price point?

  7. Do you want to buy and hold?

  8. Will this be a flip?
  1. How many deals have you done in the past 2 years?
  2. May I have the addresses?
  3. Do you have Proof of Funds you can send me?
  4. If I find you a deal that fits your Criteria, how soon can you close?

Vetting Cash Buyer/ Investor?

  • Have title company lookup all Cash closed transactions with entity names in the area that repeat multiples of 1.
  • Make sure to get financial Feedback. (Example, if I find a deal that needs 60K in rehabs, after repair it could sell for 350K, how much would you be willing to pay for that deal?

Helpful tools

Comps and Lists - Propstream

Skiptracing - Batchskip

Drive for Dollars - Deal Machine

E-sign Docs - Hellosign

CRM - Podio

Dialer  - Mojo Sells

It is my goal to fully Launch into Wholesaling by January 2022 and I want to make sure I am doing it correctly to build a reputable name in the space, eventually getting into Fix and Flips and Rentals. 

I am currently in the process of building my buyers list, any insight as to how to find properties out of state, and what would the process look like? would you guys mind sharing the template contract you guys are currently using? anything else that I might be missing? 

Any feedback would be greatly appreciated, thanks! :)

 Sounds like you have been reading my advice in the forums and taking good notes! As far as your buyers, be careful if they have to rely on hard money lenders to close. They have rules and can pull out adding more risk to you of not performing. Get real all cash, ones with bank statements or statements from their private investors. That said, if they do not know you, they are not going to just hand over their bank statements or that of their private investors so it is imperative that you research title to see how they funded the deal. If they borrowed, then there is a deed of trust (or mortgage in mortgage states) recorded with the county recorder's office which will show the deed of trust, lender and amount of funds borrowed.

So to add to all of this, you must first FORM a relationship with these buyers and that takes time, it does not happen over night. While doing this, it is important that you start shopping for their criteria to bring a few number options to them (no addresses and without actually locking up a deal) to see if it fits their profile. Once you bring a few of these, they will see you understand their numbers and their criteria and trust develops.

Originally posted by @Colby Hager :

@Orlando De Los Santos   

Oh man, where to start...so much could be said.  I'll start with one item and give you more later if you want. 

We'll start with the glaringly obvious...

Lead sources for Wholesaling

Those three that you mentioned aren't going to be enough.  Everyone and their mom has access to those and is sending out crappy postcards that all look the same and say all the same thing.  These lists are stale, the homeowners on these lists have already been touched by so many other investors, unless you just luck up with perfect timing (which can happen), you are going to be frustrated before you get going.  

How can you niche down?  How can you hone in on a certain type of seller?  Do you have the ability to craft a message that resonates and converts?  Have you taken the time to truly build the avatar of your ideal customer?  95% of the people I see posting haven't.  They think they can sign up for a service for $39-$99 a month that will just pop out deals worth thousands lol.  

If this is you, stop.  Do better.  Think about what I'm saying and make an adjustment.  If you have done these things, good, you have done more than most.  I didn't see you mention a website to generate leads.  This is most investors' number one source for leads.  

Do you have a real budget for lead generation?  And by real I'm not talking $300  per month.  Most people want to get into wholesaling because they are told by the gurus they don't need money.  If you really want to do this business without money, its doable but VERY VERY VERY difficult.  So what is your monthly advertising budget?

To be honest, you are wasting your time building a cash buyers list until you actually start generating some leads.  I can talk more about calling cash buyers later if you want (most of them lie and the ones who don't are sick of people calling them with criteria questions but no actual deal)

 This is great advice, although I don't fully agree with the last paragraph. To do this legally, you MUST have the buyer first. I do agree we investors get sick of people asking for criteria, but we also have to remember that we play the numbers game too and the more people we have shopping for us, the better our chances of landing another deal on someone else's efforts! I just gave criteria to 2 more people who will shop for me. They either perform or they don't. Didn't cost me too much time to get that handled.

I think wholesaling is about relationships... not systems or software. 

From my perspective, those who are successful starting out in this arena do well not because they planned the process via asking BP members how to do it or paying some unknown commodity crazy $ for training, or even investing in software before a deal is done -- heavens NO -- but because they actually had the balls to CLOSE a single (good? who knows at the time) deal and were introduced to other players during the process.

Get one good deal to the table and you likely just met several people who will help springboard your business to the next level.

@Orlando De Los Santos To further Colby's point on the saturation on the lists investors are pulling off of these software apps. I can attest to that. Many of the investors who have YouTube channels are touting the use of Propstream and Deal Machine. I have used both. While they both have their benefits, I can definitely say that the lists on Propstream have been played out. I called a lead last night and the property owner had already been called 3 times yesterday before I called him. I am finding more success with just driving for dollars all on my own. I take different routes home from work everyday and have gotten a few appointments doing that. I think more than anything, it is getting good at talking with people. In the end, it's a numbers game, like in any sales business. You just gotta get out there and do it. Your systems will never be perfect and will be continuously be refined over time. Don't get "Analysis Paralysis".