| Wholesaling houses is without a doubt one of the | | | | systems for staying on track. Your systems don't |
| easiest strategies in real estate, but it can be hard to | | | | have to be complicated, but they do need to be things |
| understand the process when you are first starting out. | | | | you can repeat month after month. In my opinion, you |
| I love to wholesale houses. You can make quick cash | | | | need to have a burning desire to "chart your own |
| with no risk, no credit, and either no money down or | | | | course" to succeed at wholesaling houses or most |
| very little money down. I have bought a number of | | | | any entrepreneurial venture. There will be periods |
| houses with nothing down. But typically, I make a | | | | when you will just want to throw in the towel and this |
| deposit of somewhere between $10.00 and $100.00 on | | | | burning desire will see you through these times. |
| each house. It is actually easier to justify to the seller | | | | We have already said that you need a constant |
| not putting anything down than it is just giving him | | | | source of leads. Leads = houses purchased. To shake |
| $10.00. But I have been told by my attorney, that you | | | | out these motivated sellers, you will need to do some |
| really should make an earnest money deposit to have | | | | type of ongoing marketing. I have great results with |
| a valid contract. It is also a lot easier to walk away | | | | marketing to absentee owners as well as probates. |
| from $10.00 if you can't find a buyer for the deal than | | | | Folks that need to sell houses from estates have been |
| a larger amount of money. | | | | one of the best sources of motivated sellers for me. |
| One thing I would like to point out is that I never give | | | | Most of these houses have been well maintained, but |
| that money to the seller. Always make the check | | | | are just "ugly" or outdated |
| payable to the closing attorney. That way, if something | | | | Building Your Team |
| happens and the house doesn't close, you will be sure | | | | Contrary to what most people think, real estate |
| to get your money back. When you are wholesaling | | | | investing is not a "solo" venture. It is vital that you begin |
| houses you don't have to deal with tenants, pay utilities, | | | | to build your team right from the beginning. These are |
| insurance and other costs associated with buying a | | | | some of the folks you will need on your team. |
| property to rehab or to hold for a rental. Rehabbers | | | | *Closing Attorney. You will need a closing attorney on |
| also need access to substantial amounts of cash that | | | | your team. I have two on my team because let's face |
| you will not need as a wholesaler. | | | | it, some people like to have a choice. My closing |
| Where Do I Begin? | | | | attorneys are well respected in their field and by local |
| The one thing you will need to succeed in wholesaling | | | | investors. I know I can count on them to do things |
| houses is a steady stream of leads. It will be your job | | | | correctly and they are used to getting things done |
| to find motivated sellers that will sell their house to you | | | | quickly. Both of the attorneys I use are investors and |
| at a deep discount. It has been my experience that | | | | they belong to our local investors group KREIA (The |
| you need to talk to somewhere between 10 and 20 | | | | Kentuckiana Real Estate Investors Association). They |
| folks to find just one really motivated seller. Why the | | | | are also used to working with investors who |
| big difference in the numbers? I believe that the more | | | | wholesale houses and do double closings. |
| targeted your letter is the better your response will be | | | | One thing I would like to mention is that closing costs |
| from motivated sellers. Also, you will get more calls | | | | are very affordable when you are doing "cash deals". |
| after sending multiple letters over a period of time than | | | | They are typically only a few hundred dollars for each |
| you will off of your first letter or two. It is not at all | | | | transaction. This is important to me as I usually do |
| unusual for me to buy a house from someone I have | | | | double closings rather than assigning the contracts |
| been marketing to for 9 months or a year; sometimes | | | | when I am wholesaling houses. |
| even longer. The seller that is not motivated today | | | | *Realtors. Having at least one Realtor on your team is |
| may be very motivated a year from now when his | | | | a must. I personally have built relationships with a |
| circumstances have changed. That is the importance | | | | number of Realtors. They can help you with "comps" if |
| of an ongoing direct mail program. | | | | you don't have access to the MLS. Even if you are |
| Where Do I Find Motivated Sellers? | | | | able to do your own comps, they can help you when |
| There are many ways to find motivated sellers when | | | | determining the value of an unusual property or a |
| you are wholesaling houses. You can use "Bandit" | | | | property that is in an area that you are not familiar |
| signs in areas where you would like to buy property. | | | | with. Realtors are also a great source of "pocket |
| You can put "We Buy Houses" ads in local papers and | | | | listings". These are the houses that they are about to |
| on Craigs' List. The MLS can be another source of | | | | list, but have not yet been put on the MLS. Usually you |
| leads. The owner of a house that has been sitting on | | | | will hear about one of these properties because it is |
| the MLS (Multiple Listing Service) for an extended | | | | "trashed" or just needs a lot of repairs. If they can sell |
| period of time can become a very motivated seller if | | | | it quickly to an investor, it is a win-win for everyone. |
| he is paying two mortgages. Probate attorneys, | | | | There will also be times that you will need to list your |
| divorce attorneys and bankruptcy attorneys can also | | | | property on the MLS and you will need a realtor to do |
| be a source of leads. But I can tell you after doing this | | | | this. |
| for a few years. I find the bulk of my motivated sellers | | | | *Contractors and Inspectors. As a wholesaler, you will |
| through direct mail campaigns. You get great results | | | | become very proficient in estimating repairs if you stick |
| over time with direct mail. | | | | with it. There will be times however when you will |
| How Much Can I Make? | | | | need an opinion from an inspector or contractor on |
| This is a question that has many answers. I have | | | | one thing or another. You need to have these |
| made as little as $3,000.00 on a deal (not a figure I | | | | professionals on your team before hand as you will |
| particularly like), and I have made over $20,000.00 on a | | | | typically be working on a short time frame for your |
| couple of killer deals. These $20,000.00 + deals do not | | | | inspection period. Things happen very quickly when |
| come around very often in my area. Somewhere | | | | you are wholesaling houses. |
| between $7500.00 and $12,000.00 is much more | | | | *Private Lenders and Transactional Funding. |
| typical for me. For instance, if you can wholesale just | | | | You will always be looking for a cash buyer when you |
| one house a month for $7500.00, you would gross | | | | wholesale a house. But that cash may actually come |
| $90,000.00 in one year. Not too bad! If you are working | | | | from a private lender and that's OK. There will be |
| a full time job and you wholesale just 6 houses in a | | | | times that you will be able to get a house sold quickly |
| year and make $5000.00 on each house, you would | | | | to someone that doesn't actually have the cash if you |
| have made an extra $30,000.00 for your trouble. | | | | can steer your buyer to a private lender. |
| Who Do I Sell My Houses To? | | | | If you have to close on a property before re-selling it |
| This is probably the scariest part for an investor that | | | | and you cannot do a double closing, you may need to |
| wants to wholesale houses. When you are new, you | | | | use "transactional funding". Transactional funding is |
| can be terrified that you won't find a buyer for the | | | | short term funding that will allow you to close on the |
| house before you have to close on it. If you are not | | | | property and re-sell it typically in a few days. |
| already a member of your local REIA group (Real | | | | Transactional funding can't be used in most cases if |
| Estate Investors Association), this is the place to start. | | | | you do not already have a buyer lined up. Be sure to |
| Join your local association and become active in it. | | | | familiarize yourself with these sources of money. |
| These groups are a great source for buying and selling | | | | What I Love Most About Wholesaling |
| houses. This is the first place to start building your | | | | For some strange reason, I just love looking at ugly, |
| "buyers list". You are looking for landlords and folks | | | | outdated, dirty, trashed houses. I am one of those |
| that rehab houses for your list. | | | | people that can see the houses as they will look "after |
| Craigslist is another place I have had good luck finding | | | | the renovation". I especially love the fact that I can |
| rehabbers, landlords and other investors to put on my | | | | work when I want to from my home office. When you |
| buyers list. When I have a house to sell, I always put it | | | | wholesale houses, it allows you to help a lot of people |
| on Craigslist. I have sold a few houses this way but | | | | that are in tough situations and earn a good living at |
| even more importantly, I have found a number of | | | | the same time. You are not only helping a seller that |
| investors to put on my buyers list that have bought | | | | has an unwanted house, but you are funneling those |
| multiple properties from me. Be sure to include pictures | | | | same properties to rehabbers and landlords that |
| of the houses when you place an ad on Craigslist. | | | | ultimately provide nice homes for people to live in. I |
| When you have a house to sell, you can also find | | | | have sat in many closings where the seller says how |
| investors for your buyers list by running ads in local | | | | truly thankful they are to have found a solution for their |
| papers and by putting up Bandit signs in the area | | | | problem. It is a great feeling when you know that you |
| where the house is located. These are just a few of | | | | provided that solution. Happy investing! |
| the many ways you can build your buyers' list. | | | | If you would like to learn how to buy foreclosures or |
| Traits of a Successful Wholesaler | | | | "REO'S" as they are commonly called, I have a great |
| Becoming successful as a wholesaler requires pretty | | | | resource for you. "Flip This REO" is an E-book that |
| much the same traits as you would need to find in any | | | | provides in depth information on everything needed to |
| person that is self employed. You will need to be | | | | know when buying foreclosures. |
| focused, organized, a self starter, and you must have | | | | |