When starting out, wholesaling can be terrifying. There are so many questions that need answering. You read all the blog articles you can find. You study all the course material you’ve purchased. You’ve found and listen to all the real estate podcasts on iTunes, but your biggest fear still haunts you:
“WHAT IF I CAN’T FIND A BUYER!?”
In this article, I will provide you a few solutions to help you overcome this fear and describe some great exit strategies to prevent this from happening.
What you are facing is normal. Believe me, it’s typical.
This question will always be in the back of your mind, even when you become a seasoned investor. This is one of the greatest challenges, but if you prepared thoroughly, you will be able to minimize this risk. Note that I said “minimize the risk,” not “eliminate the risk.” So let’s dig in.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
5 Smart Strategies for Newbie Wholesalers to Find an End Buyer
1. Have an Exit Strategy
Having an exit strategy is essential when planning any investment or executing any plan. You must be able to visualize the end goal and work to achieve that end goal. For wholesalers, that end goal should be a transaction where all parties are satisfied with the results. This will include the seller, buyer, tenants, and yourself. One major mistake newbies make when starting out is focusing on the money they may potentially make. I have repeatedly addressed how important a good transaction is — because you would like for those you’ve helped to refer you to others in similar situations.
A good exit strategy will help you facilitate great transactions, which will result in referral sources. So what do you need to create a good exit strategy? For starters, know your market.
2. Know Your Market
Are you really familiar with your market? Do you truly know what areas you need to focus on to find your first deal?
You have to know your market. You have to know what pockets of your area are highly desirable for investors. It’s good to be aware of the areas fix and flippers desire, as well as those areas that are great for buy and hold investors, land deals, and scrape projects (new builds). In each market, there is a sub-market, and in each sub-market, there is a niche of that sub-market. For example, you may be interested in starting with a certain subdivision of your city. This is great because you will be able to focus all your marketing and branding in this area. You can become known as the subject knowledge expert for this area.
3. Know Your Buyers
This is really overlooked by a number of newbies. If you have a true relationship with your buyers, you will be able to ask them about a deal before you have it under contract. What? Did I just hear that right? Yes — when you have a solid buyer base, you become familiar with who buys in certain areas and what they are looking for. There have been numerous deals where I was able to present the deal to a buyer, and they informed me exactly what they would be willing to pay for the property. At that point, it was basically a matter of negotiating with the seller what my assignment fee would be. I already knew the sell price, so I had to work on the buy price.
This definitely minimizes the risk and allows you to be confident knowing that your seller and buyer are going to be happy.
4. Use Online Marketing Sources
Now, being a newbie, you will not have these relationships established with buyers. That is understandable. So you will want as much exposure as you can get. It is advantageous to get as many eyes on the property as possible in a very short period of time. If you truly have a deal, it will sell, but if the margins are thin, it will take a little longer. So here are a few online strategies you can do to market your property.
Posting the property on these sites is not an exact science, but you will have buyers calling you regarding access. Post numerous pictures of the property along with the number of bedrooms and bathrooms, the property square footage, and the lot square footage on sites like Zillow, Craigslist, Backpage, FSBO listing sites, Postlets, and any other media outlet.
The only disadvantage to doing this is the property owner may see their property listed. To ensure we are covered we have added in our contracts that we reserve the right to market the property as well because we are Realtors. We have not received any push back from the sellers when adding this verbiage to our contract.
5. Use Offline Marketing Sources
I wrote an article a while ago regarding networking (“The Beginner’s Guide to Highly Effective Real Estate Networking“). You will need to utilize these skills when trying to find offline resources for your deals. This will take some serious initiative, so sitting behind the computer will not work.
You will need to build your network. This will take attending meet up groups, attending local real estate club meetings, and other places where investors gather. You should already be doing this, but in case you’re not, you need to get started. These are the places where you will find true cash buyers, landlords, and lenders. By becoming familiar with the players in your area, you will be able use them as a resource for your deals. You have to remember, a relationship requires time and it’s about give and take — not just take.
Related: Newbies, Want to Succeed at Wholesaling? Focus on Finding Deals! Here’s How.
Also by networking, you can find joint venture partners who may have that extensive buyers list to help you. Again, by building these relationships, you will be able to do many more deals together versus alone.
If the property is vacant or the seller does not live near the property, a for sale sign or a bandit sign marketing the property is a resource as well. I had to do this on a run-down shack that I had under contract. A neighboring church bought the property to use it as a parking lot. Remember, buyers can come from anywhere, and this shack definitely proved that to me.
Another offline source that most people tend to overlook is the good, old fashioned newspaper. Yes, that’s right — the newspaper. Many seasoned investors still scan the real estate section in the local newspaper. The cost of running an ad for a weekend or two can bring you buyers.
You cannot get a property under contract without knowing what constitutes a good deal and having an exit strategy. You also have to know your market, your buyers, and marketing channels to make your deal visible. Being knowledgeable in these areas will minimize your risk when wholesaling real estate.
If you know if any additional tools to get your property in front of buyers, please share. We all face this challenge in the beginning.
What issues have you been running into in terms of finding buyers? Any tips you’d add to this list?
Let’s help each other out in the comments section!