So often, the hardest part of trying something new is taking the first step. If you’ve heard about real estate investing wholesaling but are unsure where to start, we’ve got your first step! Review our step-by-step guide for how to start wholesaling.
What is Real Estate Wholesaling?
Wholesaling works well for beginner real estate investors, because it does not require a lot of money or experience to start. Plus, it’s a great way to launch into the real estate investing game quickly and begin making money in a short time.
With wholesaling, the concept is to enter a contract with a seller to purchase a property with the intent to find a different buyer to take over the contract. Once the buyer takes over the contract, you collect a fee for your efforts to connect the seller with the buyer. You never take possession of the property. These deals move rapidly making this investment strategy a way to make cash fast.
The History of Wholesaling
Wholesaling is a newer term in real estate investing. I started wholesaling in the 1990’s when it was called “flipping the contract.” The idea was the same, but over the years I perfected the strategy to make the process more efficient.
In recent years, wholesaling became a normal strategy for real estate investors. I often advise new investors to try wholesaling as an entry point for their real estate investing business. REIW was born out of our desire to create resources and opportunities for women real estate investors, like introducing you to our easy-to-follow wholesaling guide.
Wholesaling isn’t complicated, but it does require the right timing sequence for success.
Download our free eBook, The 7 Simple Steps, to learn even more details about real estate investing with wholesaling.
Step 1 – Select the Right Area
Location matters! This step is crucial to gain success in wholesaling, especially in today’s competitive and saturated market. Virtual wholesaling opens your business to locations outside of your immediate geographic area allowing you to find the right area regardless of where you live.
Step 2 – Build a Buyers’ List
A buyer’s list is your ticket to connect with buyers and sellers. Once you find the right areas to invest, your next step is building your buyers’ or prospects’ lists. These are the lists you work from to promote your business. Use your lists to grow your business opportunities.
Step 3 – Locate Properties
Now that you’ve laid the foundation, you’re ready to find investment properties. Look for “distressed sellers,” not necessarily “distressed properties.” These are highly motivated sellers that want to work with you using creative investment strategies instead of sticking to the traditional real estate sales method.
Your best bet in locating distressed or highly discounted properties is to locate the “Don’t Wanters.” In the 7 Simple Steps eBook we go into the 10 best ways to locate these owners.
Step 4 – Analyze Deals
Consider whether the price of the deal is at a level where you can make a profit. The Rule of 70 does not work for wholesaling. The rule states you should not pay more than 70% of the Actual Retail Value (ARV) for real estate investments. This is outdated thinking and not productive for wholesaling and other creative strategies.
Instead, negotiate a fair but discounted price. Try to leave a margin of at least $10,000 for your profit as a wholesaler.
Step 5 – Submit Contracts
Keep the purchase contract simple when dealing with distressed properties and owners. Use a simple and straightforward two-page sale contract with only one or two contingencies. However, ensure the contract states the details of the deal to protect your interests as a wholesaler.
Step 6 – Due Diligence
With wholesaling, due diligence doesn’t matter as much because you don’t take ownership of the property. The end buyer decides the level of due diligence to perform. Your role is to simply negotiate a transaction and “flip the contract.”
Step 7 – Set Up a System
Real estate is a numbers’ game, including with wholesaling. To find the best properties for wholesaling, you need a lot of leads. For the best results, you need to automate your process to reach more prospects and increase your leads. Set up a system from the beginning. Build a system that works for you, but that goes through many leads thoroughly, to find the right options to grow your business and wealth.
Start Wholesaling Today!
Wholesaling is a fun strategy and an easy way to make money fast when you have the right tools and knowledge to build your business. Contact REIW to join our community of like minded women real estate investors.
If you are interested in learning more about the 7 Simple Steps System to
“ The 7 Simple Step System ”
Wholesaling at least 5+ Deals a Month, please download the free ebook.