So you want to become a real estate wholesaler? Great here’s a 60-day action guide to wholesaling your first property.
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
Before we get started, I do not want to give you any false impressions. This is not 60 days to $5,000 without working; it’s 60 days to get you in the game.
I like to use analogies, and I will start with this one to put things in perspective. If you had the opportunity to play one season without pay to make an NFL team the following season, would you take the opportunity? I’d bet you would.
Let’s say you are doing everything your teammates are doing. You are getting up at 5:00 a.m. to run, and you’re in the weight room, out practicing, and learning the plays with the team. You’re doing everything, but you’re not getting paid. What do you think will happen? Eventually, you’ll be able to do what they do and make the team. You’ll become a paid player. It’s just the same for real estate wholesaling—you have to be willing to put in the sweat equity to reap the rewards. So let me show what this process looks like. Keep in mind—this is just one way, but there are many ways to close your first deal.
A 60-Day Action Guide to Wholesaling Your First Property
Step 1: Define your purpose.
The first step of the process is to ask yourself the following: Why do I want to wholesale property? What is it that I want and need? If you cannot clearly define these things, then stop. Also, your answer cannot be, “I want to make money.” Of course you do, but you want to use the money for what purpose? You have to have a reason. The universe will not work towards bringing what you need if you do not know how you intend on using it. This is like going to a bank and asking for a loan, and when the loan offer asks, “How much do you need?” you say, “As much as you can give me.” The banker then says, “Well, what do you need it for?” and your response is, “I just need it.”
Sounds foolish, doesn’t it? That’s how some of us sound when it comes to our approach to success. We want it but have no idea what it takes or what success looks like. Defining your purpose should not take long, but it will take energy. I tell people to think back to when they were children. What really amazed them? Work towards that and dig deep. Your answer is somewhere in there.
Step 2: Join a team.
Using that same analogy of football, let’s say you now have to find a team. In searching for a team, you’re simply looking for a group of people who want to accomplish the same goals you do. As a real estate investor, this is normally easy to do. As long as you find those that truly love real estate, you can find a common purpose with these individuals, and you can help each other achieve common goals.
When you’re wholesaling, you need other investors to network with. You have to be able to pick up the phone and discuss real estate with likeminded individuals. You can find these people at real estate meet ups, cash flow games, and online forums groups like BiggerPockets. You have to make yourself accessible. I often tell people to friend investors on BP in their area and start a group or join a group already established. Go to Meetup.com and search “real estate investor groups.” This is where you will begin to learn what they learn, do what they do, and know who they know. Real estate is a contact sport; you have to get out and create contacts.
Step 3: Absorb everything.
Once you find a team, learn as much as you can. Do not be afraid to ask what you may think are dumb questions. Ask and become knowledgeable. There are specific things you need to learn about, including your market, potential buyers, what these buyers are purchasing, and where they’re buying properties.
Let’s start with finding buyers; you can seek out this information by researching all the recent cash transactions that occurred in an area. Without going too far into the details, let’s just say you can contact a local title company and inform them that you’re doing market research and looking for all the recent transactions without financing that occurred in the past year. Once you receive the addresses, you can search those addresses with the county assessor’s office to look for the tax mailing address. Once you have the tax mailing address, you can then send out letters asking them to contact you if interested.
Once they call you—because they will call—ask them what are they looking for. Ask them if they will be ready to move quickly if you find it. Now you have buyers.
This is normally where the fear begins to kick in. Push that fear aside. You will go through the emotional roller coaster of fear, anxiety, low self-esteem, and many other emotions in between.
Step 4: Pay to play.
Education is not free. However, it does not have to be completely unobtainable, either. Building your circle of influence will cost you something. This will, of course, cost you time, effort, and sometimes money. You’ll need to put your money where your mouth is. If you really want to be an investor, you will have to invest in yourself
You will not be able to reap the benefits without giving up something. While gurus often say that with little effort you can close your first deal and make $5,000, that’s simply not so. The beginning is the hardest. You need to “pay to play” by taking others to lunch to ask questions, investing in direct mail, or driving for dollars. Also, to increase your circle of influence, you will have to pay to be in the environment of those who are doing what you want to do.
This article tackles the psychology of starting out. You have to have a purpose, educate yourself, absorb a lot of material, have the right mindset, and finally, put what you learn to action. Education is the key. If you want to learn to do something new, you have to reprogram your thinking to see it materialize. To quote my college professors, “Put your theories into practice.”
We’re republishing this article to help out our newer readers.
Newbie wholesalers: Where are you in your journey?
Let me know your questions and comments below!