Wholesaling Property
Class 100 - Starting in Wholesaling
Wholesaling is the art of finding discounted deals and passing that deal on to another investor. You make your profit on the difference between the price you negotiate to buy and the price you sell to another investor.
Wholesaling can be very tough if you do not treat it like a business. That is why it is crucial that you lay the foundation for treating this like a business and a profitable one at that. You will need cash to fund your real estate rental machine or you can just make extra cash.
You may be wondering: “ why listen to me, what is that I have and you want?” I do wholesale property and make around $2,000 to $15,000 a deal. That is great cash flow to help me with my rentals and that is exactly why I do it.
I understand that when you first start out in the wholesaling game you are kind of lost on how to do it. I was there at one point and time, so I know how it is. If you are new, it will be a bit overwhelming to say the least. Get your education by learning and by doing. Start slow in this business especially if you are new and, if you do it right, retire well off in 15 to 20 years. What! 15 to 20 years. All those gurus tell me I can be rich tomorrow, why is it taking so long? It will take awhile to get your knowledge, skill and business savvy up to par to make the big money so be patient and keep at it.
Set up an office in your home so you have a place to run the business. Get a desk with a computer, internet access, cell phone or hard line phone, accounting software, business cards, set up a business name, set up an LLC and get educated.
Setting up a business office
Make sure you treat this like a business, you do not have to get anything expensive to get started but do make sure you get what you need.
1. Computer
2. Desk
3. Cell phone
4. Internet
5. 2nd phone line VOIP
6. Accounting software
7. Your team
8. Tenant screening company
9. Copier / fax
10. Business cards
11. Website
12. Join local real estate group
13. Digital camera
14. Real estate forms
15. Training
That should do it for what you will need to get started. Now lets go into detail on each item listed.
Your Team
You should have some experts on your team to help you with the things that are specialized. Here is a list of people that you need on your team.
* Accountant
* Attorney
* Insurance Agent
* Loan Brokers
* Banker
* Real Estate Agents
* Other Real Estate Investors
* Hard Money Lenders
* Private Money Lenders
* Repair men and Contractors
Here is how this list breaks down for my business and me. I have 1 accountant, 1 lawyer, 2 insurance agents, 3 loan brokers, 1 banker, 4 real estate agents, 125 investors, 4 contractors, 1 hard moneylender and 2 private moneylenders. You do not have to have the same number of teammates as I have but you will at least need one of each. If you are new and have one property you may not need all of these right now but as you get bigger you will have to get this team together.
Local REIA Groups
You should check out your local REIA group. It is a great resource to learn more about real estate investing. Go to our REIA group section to find a group near you.
Most groups will have educational workshops, expert speakers, vendor nights, networking, buy and sell meetings and much more.
Class 101 - Finding Deals
Driving For Dollars
Before you get into your car to start driving think about where you would most likely find motivated sellers. Low-income neighborhoods and moderately established neighborhoods are a good place to start. If you know what to look for there are all kinds of great deals in these neighborhoods. So how do you find these deals you ask? Here are a few indicators that there is a great deal waiting to be captured:
* An unkept lawn where the grass is really high is a big sign that the property is vacant.
* Broken windows are another sign the property is in distress.
* You can also look for mail hanging out of the mailbox and laying on the ground.
* Open doors are a clear sign that the house is vacant.
* Boarded up windows speak for themselves.
When you first start out in real estate investing you will be doing the driving to look for the properties above. What you have to do is be creative and have a plan. Instead of driving to and from work the same way everyday, just change your route to drive in the neighborhoods you targeted.
If you see a property that looks like a good prospect then stop in to take a walk around it. Look for stickers or other notices that might give you a clue as to what is going on with it. The neighbors are a good resource so if you see them outside walk over and ask questions about the previous owner. Tell them you are interested in buying the property and you are looking for the owner. Believe me neighbors do not want that property sitting there empty they will help out.
Most investors also call this bird-dogging.
Bird-dogging is when a person goes out and finds you the investor a great real estate deal. They use varying methods to find the deals but the most common is just driving around looking for abandoned properties.
My partner in real estate works out at Gold’s Gym in downtown Columbus. He has several people there that he talks to. One of the guys, we will name him Pete, came to my partner saying that a guy he works with has to get rid of his home ASAP and only wanted $40,000 cash for his property. We did some research and found out the property was worth $85,000. We gave Pete a finder’s fee of $700 for bringing us that deal.
If hiring a person to bird-dog there are some things you need to make sure you do.
1. Make sure you do a quick review of what areas you want to buy in and the types of properties. Nothing worse then bringing on someone to bird dog and they go out and waste their time going to the wrong neighborhoods.
2.Make sure the person bird-dogging has a general idea of rehabbing or they take a digital camera to take photos of each property. They should take a picture of the front, the back and inside pictures if they can get in (be careful doing this).
3.Set clear goals and number of deals you want from the person bird-dogging. If you are paying per lead and picture this information is very important because everything is written down and there will be no misunderstanding later.
Check out the marketing section to get more ideas but the main way to find abandoned homes is to drive around the neighborhoods and look for property in distress and abandoned. The marketing section will give you more ideas on marketing to find wholesale deals.
Absentee Owners
You need to be marketing to the landlords who are out of state property owners, which we call absentee owners. They live far away from where they own rental property, so they may be open to selling the property at a discount that you can pass on to another investor as a wholesale deal.
To find out if an out of state owner has title of the property, you can usually get on the Auditors website to find out more. If your Auditor has not set up a website, then you will have to go to the courthouse or you can use a company to pull up absentee owners in your area.
You can pull a list of absentee owners from a database. Here are some companies.
* Melissadata.com
* sitexdata.com
Once you have a list of absentee owners, just select the areas you want to wholesale in and start contacting the absentee owners. I use direct mail with a letter specific to absentee owners. Here is an example:
Hello Bob,
My name is Dan Smith and I am interested in buying your house located at ____________________. I am not a Realtor and I am not interested in selling your house, I want to buy it.
* I can close quickly
* I can take care of bad tenants
* Even if your house is:
* Trashed
* Ugly
* Needs repairs
* No equity
If you have no interest, then throw this letter away, If you want to get rid of that home give me a call today.
Sincerely,
Dan Smith
555-555-5555
contact@contact.com
www.yourwebsite.com
Check out the marketing section to get more ideas but the main way to find abandoned homes is to drive around the neighborhoods and look for property in distress and abandoned. The marketing section will give you more ideas on marketing to find wholesale deals.
Class 102 - Buyers List
You need to get a strong list of qualified buyers to move your wholesale deals quickly. There are many ways to build your list of buyers and we will review each one with you. You will also need to classify the type of buyers you have on your list.
Cash Kings – These are the investors that have cash to buy houses. They are the best people to contact and maintain a relationship with because they have CASH. That means they can close on time with no bank or lender roadblocks.
Borrowers – This will be a larger pool of buyers and you need to make sure they have the credit to line up financing. You need to make sure that they prove to you that they can get financed. Once you have established a relationship with an investor that has bought from you then you will not have to be so critical.
Many people will run you through the ringer by saying they have the money or the financing is available when it really is not. Make sure you know that everyone on your buyer list is a legitimate buyer for your wholesale deals.
Build A List Of Buyers
Car Signs
Car signs are another way for the fixed budget advertiser to market their real estate business. Magnetic signs on your vehicle do work and the cost is only around $100. Make sure the letters are big, bold and easy to see especially your phone number, you will again need bright colors to make your information stick out. You can probably find a local vendor in your area or, if not, iPrint.com is always a good source to use on the net.
Bandit Signs
Bandit signs are, without a doubt, the most effective form of advertising your business. You will get more leads from bandit signs than any other form of marketing you do. Make sure you know the city ordinances for bandit signs. There should be numerous places to put up signs that follow along with the city ordinance. Keep your information to the bare minimum.Use big/bold letters saying what it is you do, your number, and website address if you have one. Personally I suggest a yellow background with black letters These signs seem to get the most responses.
Have the signs printed up professionally. Use contractor stakes to put the signs next to busy intersections. If you prefer to use metal poles for your signs, tie-wraps work best. Remember to put your signs high up to prevent people from easily knocking them down. Now where should you place your signs? Here are some suggestions for you: Subdivisions, busy roads, and intersections. Just look to see where other people are putting their signs, and keep in mind, if you are going to put your signs up along busy roads, make sure it’s in a location where people have time to look at it. What I mean by this is if I am going 50-60 mph I am not going to have time to look at your sign and remember the number at this rate of speed. Most people will need about 10 seconds to retain the information. So place your signs near four way stops or at least low speed limit areas.
Sign up for our advanced wholesaling classes by clicking on Join Now.
Advanced classes include:
Class 200 - Sellers
Class 300 - Negotiate Wholesale Deals
Class 400 - What to Pay and Calculating Rehab
Class 500 - Property Values
Class 600 - Title and Closing
Plus you will get advanced classes on short sales, marketing, flipping, financing and much more.