Wholesaling is a great way if you want to make money in real estate fast. A wholesale process is different from regular real estate transactions and hence closing on such a deal is a big achievement.
It is fast becoming a gateway into real estate investing, however, you cannot jump into it blindly. Wondering how to wholesale real estate? Follow this step-to-step guide on how to wholesale real estate.
What is wholesale real estate?
This is a business strategy where investors serve as an intermediary between property sellers and buyers. They enter into a contract to sell that property on the seller’s behalf for a specific price without acting as their agent or buying the home themselves. If the property goes for a sum that is more than the agreed-upon price then the wholesaler gets to keep the difference.
This is a great way for investors to get into the business of real estate without considerable up-front capital.
Steps to wholesale real estate
Step 1: Do your due diligence
The initial period of real estate wholesaling has a lot to do with preparing. Inform yourself, read helpful books, attend networking events and go through credible sources before you begin the process of wholesaling.
Research your regional market and get comparable of various properties in your area. Decide your marketing strategy and investing plan and create a timeframe within which you will close a deal.
Many beginners miss out on due diligence and are unable to close the deal. Thus, doing your homework is very important before you begin.
Step 2: Build a buyers list
Compile a list of potential buyers who would be interested in any deals that you might get. The contacts you collect should signify a group of people who you are quite comfortable in calling when you land a deal. But, it is notable that the list does not need to be exhaustive and there is no need to put in 100 names during the first month itself. Rather, take it slow. Even if you collect five to ten potential leads, as long as they are quality and add to your goals, that is what matters. So, focus on quality over quantity in the first month of your wholesaling.
Step 3: Get your logistics in place
Anyone looking to get started in real estate wholesaling should look at it as a business. While people may also succeed in treating it as a hobby, the benefits grow immensely with the more time you invest.
So, if you want to make a career in real estate wholesaling, then it is imperative to treat it as a business. And you cannot run a business in absence of proper logistics. No wonder, you will have to build a way for potential buyers to contact you. So, within the first month, it is recommended that you establish a dedicated phone line and design your first set of business cards.
Start a lead generation campaign using emails, direct mail, social media presence, and business cards.
This will increase your chances of landing the deals that come to you. Note that if people cannot contact you, you can never land a deal. So make logistics a priority in the first month of your operations.
Step 4: Market and market
Direct mail has a track record of being the best technique for accumulating motivated sellers. Go for delinquent taxpayers, owners who do not stay in the country or state, homeowners nearing foreclosure, absentee owners, etc.
You can look up for sale by owner websites to scout for potential sellers. These for sale by owner websites are a great place to find sellers who are not interested in selling through agents.
Get your marketing message in front of as many sellers as you can.
Step 5: Get a property under contract
Understanding how to wholesale real estate, you should first know how to get a property under contract. This is where you will have to negotiate with the property owner.
Once you find a motivated seller and property is found, work with them to finalize the price and terms of the property.
Make an offer that is a win-win for both sides. So, work with the seller and find out what they want.
Step 6: Find your buyer
At this step, you will speak with the end buyer to go ahead with the deal. It is wise to have an end buyer lined up before you start house hunting. This way you will know what kind of home to look for.
Step 7: Assign the contract
Once you have a buyer, make things official. Now as a wholesaler you will make an assignment of the contract agreement. Ideally, you will sell for a higher price. This should outline all the important points including the fact that you are assigning the contract for a fee and the amount should be specified too. This will initiate the contract’s transfer.
Learning how to wholesale real estate can be daunting at first but it is not that difficult if you follow a step-by-step guide. The little upfront costs and smaller timelines make it a great entryway for interested investors.
Published by Muhammad azam shehzad