Wholesaling real estate is an investor’s best dream. Talk about passing the buck and reaping the rewards while someone else does all the work. Here’s the beauty of wholesaling real estate; you get the property under contract, make a quick payday, then pass it on to another buyer who will close and do all the work – and if you follow a few simple rules, your wallet should gain a few lbs. Best part? The most “wholesaling” will cost you is chump change.
WHOLESALING REAL ESTATE = FLIPPIN’
Now let’s call it what it really is – flippin’ houses, wholesaling, bird-dogging…whatever – and let me give you the Cliff’s Notes on the “how to.”
TIP: As a bird dog, you don’t actually put the house under contract. You simply refer the deal to an investor who will pay you for the referral.
Step one to wholesaling? – anyone, anyone? Bueller? Bueller? Dahh….you first have to market, market, market. Letters, postcards, ads in the paper, driving for dollars….do whatever you have to do to find great deals. Once you think you have a deal, make sure its matches up with the rehab formula
. The contract needs to be completed with the distressed homeowner as the seller, and you get to play the role of the buyer.
Tip: Be sure to fill in your name where the contract says “buyer” and “and/or assigns”, so you can “assign” or flip your contract to the rehabber investor.
The homeowner will expect a deposit ($500 bucks should do it – but you can offer less.) to make the contract binding. You’re probably thinking I left at least one zero off the deposit amount, right? Well you’re wrong, smartass. The key is – tell the seller, don’t ask – when it comes to the deposit. Never forget that your offer has to work for you – and for your end buyer. If you make some insane offer with a crazy earnest money deposit, you may not find a buyer who wants to front that kind of scratch.
The sooner you find a buyer like me for your deal, the sooner you get paid like Johnny Kemp. So in addition to marketing, marketing, marketing for buyers, you want to do the same to build a buyers list. The best wholesalers will have the deal sold before they even sign the contract with the distressed seller.
MAKE A SIGN
Place an ad that speaks to buyers, put out bandit signs soliciting for buyers, do a public records search for non-owner occupied properties
near your deal, drive the streets looking for dumpsters in driveways….and reach out to all the investors in your “deal neighborhood.” When your “celly” starts blowin’ up, deliver the following script with your own flavor: “I’ve got a sweet deal with the following numbers (tell them the ARV
, rehab estimate, and their purchase price). If its a hot deal, experienced investors like me will bite like Mike Tyson almost every time.
Wholesaling houses is a numbers and negotiation game, and dealing with the investor rehabber is no exception. It’s safe to assume that the distressed homeowner needs to get out quick. If you’ve done your homework, and you know what amount the homeowner needs to make the fast move, then you should know what to offer. What else do you know? You know what the home is worth, what the repairs will cost, and that the rehabber will pay 65% of the retail value. If the rehabber does what he or she (’cause I know you ladies are out there rehabbing too) is supposed to do, you should be looking at substantial profit, typically $5-10k, which does not suck.
Last year I paid $40,000 wholesale fees on two separate deals! $40-large! How could that one flip change your year?
HOW TO GET PAID
The paydays in wholesaling are so easy. At closing time (one last call for alcohol, so finish your whiskey, or beer, or scotch….oh, damn…sorry, stay focused Fuhr) your trusty title company will finish the job and stroke your fat wholesale check right at the closing table, so you can have the happy ending (me love you long time) you’ve been dreaming about.