Categories
Wholesale Wholesaling

Wholesaling Tips: How to Wholesale Empty Land Instead of Houses

Vacant land in Downtown Detroit
Source: Zillow

Empty land is a valuable commodity. In some parts of the country, it’s worth more than homes—simply because there’s always a market for land for building a new structure or something else.

It’s also easier for wholesalers to find buyers for vacant land than for houses, as there is less competition in the market for land deals. As a result, you’ll find better deals on properties ripe for development than those with established homes.

So, if you want to learn how to get into this small real estate niche, we’ve got tips to get you started in the wholesaling process.

5 Steps to Wholesale Empty Lots

We’ve all seen those empty gravel lots in our neighborhood. But now, you’ll see them as more than just a pile of dirt. Instead, they’re an opportunity. While the land is valuable everywhere‌, some lots are worth more than others—highly sought after by the buyers you want to attract.

So, here are 5 ways you can start wholesaling land:

1. Look for Developing Areas

Look for areas that are being developed or zoned for development, as it’ll give you a good sign of where the market will move to in the coming years.

You can attend city council meetings to get a sense of which areas are being approved for rezoning or development variances. Search online for local land auctions—being good indicators of where the market is moving, and scan MLS listings for “raw land” or “vacant land” to identify hotspots.

2. Research the Title and Zoning

Do your due diligence when researching a piece of property. Check the title to see if there are any liens or encumbrances, and ensure that the property is zoned for the type of development your buyers have in mind. It’s also essential to determine if easements or rights-of-way could affect your prospective buyer’s development plans.

3. Get a Professional Opinion

Before making an offer on a piece of property, it’s always a good idea to get a professional opinion. Have a real estate attorney look over the contract, and have a land surveyor assess the property to determine its potential uses. You can also use the information to market the land to potential buyers.

4. Make an Offer

Once you’ve decided that a piece of property is a good fit for your portfolio, it’s time to make an offer. When making an offer on vacant land, it’s important to be realistic about the value of the property and the costs of development.

Remember: It may take longer to sell vacant land than it would to sell a finished home in some areas, so you’ll need to take the additional waiting time into account.

5. Close the Deal

With a buyer now confirmed, close the deal using a professional team to help with the process. Ensure that all the necessary inspections have been conducted and that the property is free of any environmental hazards, secure the appropriate permits for development from the local municipality, and verify that the title is clear and there are no outstanding liens or encumbrances on the property.

Turn Empty Lots into Enticing Deals

Next time you walk by an empty lot, remember that it’s more valuable than you think. By following these steps, you can successfully wholesale vacant lots in no time. Just remember to be patient, do your research, and work with a professional team to get the best results.

Want more real estate advice?

Join REIA as a member today! Or attend our next meeting so you don’t miss any important information—just like this article. If you don’t have the time to spare, sign up for our newsletter instead to get content delivered right to your email address.

Categories
Flipping

Does House Flipping Qualify as QBI Deduction?

Man repairing a house
Source: GO Banking Rates

Over the years, the IRS has been cracking down on taxpayers taking advantage of the qualified business income (QBI) deduction. Because of that, some house flippers are wondering whether flipping houses can still qualify as a business.

So, let’s dive in and see what you need to know.

QBI Deduction: What Is It and Who Can Claim It?

QBI deduction is a tax break that allows business owners, freelancers, and independent contractors to write off up to 20% of their total taxable income. This effectively decreases the income tax they owe to the IRS. However, not everybody is eligible for it.

For instance, only business owners with pass-through income may take advantage of the QBI deduction. This includes the following:

  • Sole Proprietors: An individual, such as a freelancer or independent contractor, who runs an unincorporated business
  • Partnership Members: Two or more people who made a formal agreement to oversee a business together, sharing in its profits and liabilities
  • S-Corporation Shareholders: People who own shares in an S-Corporation and include its income and/or losses on their personal tax returns

In short, you’ll have to double-check if you qualify for the tax deduction to take advantage of it, as there are some income limits and business types that may affect your eligibility.

What Does Not Count as QBI?

Now, not all income types qualify for QBI. In fact, there are nearly 20 different income types that the IRS does not consider as QBI. Here are a few of them:

  • Income from out-of-country businesses
  • Investment items (e.g., capital gains and dividends)
  • Interest income not related to a business or trade
  • Annuities received from something unrelated to a business or trade

Of course, as a house flipper, your only concern is if income from flipping is included on the IRS list. Well, it’s not specifically mentioned by the IRS. So, are you eligible for the 20% tax write-off?

Does House Flipping Qualify as QBI Deduction?

The law says that the QBI deduction will only apply to taxpayers who are sole proprietors of a business or trade, a member of a partnership, or a shareholder in an S-Corporation. So those in the fix-and-flip business will be eligible if your operations are conducted within one of these entity structures.

However, there are still rules dictating how much you can deduct from your total taxable income:

  • If you’re single or unmarried and your total taxable income is less than $164,900, then you can deduct 20% of your qualified business income.
  • If you are married and filing jointly with your spouse and your total taxable income is less than $329,800—then you can deduct 20% of your qualified business income.

Because of W-2 wage limitations, things become more complicated when your total taxable income exceeds these thresholds. If this is your situation, then it would be better to call an accountant for advice.

Confused? Don’t sweat it—here’s a quick example to help you understand QBI deductions better:

Let’s pretend that you’re a single-house flipper whose net operating income is $100,000 and W-2 wages are $50,000. Since you fall below the $164,900 threshold, you can deduct 20% from your net operating income, amounting to $20,000.

Assuming that you belong to the 24% tax bracket, this QBI deduction will save $4,800 on your tax bill.

Yes, House Flipping Qualifies as QBI Deduction

The QBI deduction has undoubtedly benefited a lot of industries, particularly real estate, where house flippers are now seeing more profits earned from every sale they close. But if you are still confused about the calculations, then we recommend working with a certified public accountant (CPA).

Calculating your QBI deductions is a huge headache and as a busy house flipper, you simply do not have the time for that. That is why you should consider joining the Real Estate Investors Association of Oakland County—our members have access to tons of resources that help them take their house-flipping business to new levels of success.

From landing sales on your fix-and-flip projects to help you determine your tax write-off, REIA has everything you need. Interested? Check out our website to see what your next steps should b

Calculating your QBI deductions is a huge headache—which you may not have the time for. Consider reaching out to REIA and our team of experts to help you with everything. Subscribe to our newsletter as well and join as a REIA member to attend our upcoming meeting!

Categories
Wholesale

How to Get Your First Wholesale Deal in 30 Days

Man handing keys and a toy home to another person
Source: Fortune Builders

Are you interested in real estate wholesaling? Great!

But are you ready to start now?

Many would-be real estate wholesalers are afraid of the risks that this industry is notorious for. After all, who would want to pour their time, money, and effort into a project that’ll take months or even years to see returns?

Well, you’ve come to the right place because, in this article, we’ll walk you through the whole process of how to get your first wholesale deal in just 30 days. From finding the property to negotiating its price and closing the sale, we’ll give you the exact steps you need to take so you don’t waste any time committing rookie mistakes.

Ready? Let’s dive in!

1. Find a Property: 8 Days

The first step to landing a wholesale deal is to find a property you can acquire at a discount. This stage of the process will usually mean finding distressed properties that have motivated sellers, which you can easily find via the following techniques:

  • “Driving for dollars” or going around your area to spot vacant and abandoned properties
  • Checking tax lien or foreclosure records to find homeowners that are desperate to sell
  • Placing bandit signs in high-traffic areas that contain a short message and your contact details
  • Direct mailing or sending out postcards and flyers to potential sellers
  • Leveraging your network by joining real estate investment clubs and associations
  • Checking expired listings for properties that weren’t sold by the date specified in the contract 

Finding distressed properties and motivated sellers will take some time but don’t let this challenge stop you from trying to succeed in this industry. Keep in mind that real estate wholesaling is all about generating leads––the better and faster you get at doing so, the more you’ll become successful.

2. Negotiate for the Right Price: 5 Days

Once you’ve found potential properties, negotiate with the seller to determine a good price.

As a real estate wholesaler, the money you make will depend on how well you negotiate. Moreover, you can’t be too selfish while negotiating. Instead, you have to create and reframe the situation for the seller to see the benefits of agreeing to a lower price.

Your goal is to find the sweet spot price that’s low enough for the seller to approve, but high enough for you to generate a hefty fee without struggling to find a buyer.

If you aren’t confident in your negotiation skills, consider taking a seminar, reading books on the subject, or working with a trusted friend who has experience in real estate wholesaling.

Pro tip: Pay close attention to your tone of voice, body language, and behavior throughout the entire transaction, as it’ll indirectly affect the property’s selling and a purchase price as well—tampering with your potential profit. 

3. Find Buyers for Your Property: 10 Days

Once you’ve got a good price with the seller, it’s time to find potential buyers. Doing this may seem like an insurmountable challenge, but thanks to the Internet, it’s now easier than ever. Here are a few tips:

  • Create a website: Showcase your past work and customer testimonials so it’s easy to get new sellers and buyers to trust you. You can create simple websites with WiX or WordPress, or get in touch with a web developer friend to help you out.
  • Scan forums and social media: Online forums, wholesaling Facebook groups, and social media platforms are also rich sources of potential buyers. So join groups dedicated to helping people find their next home, and establish your trustworthiness and expertise as a real estate wholesaler there.
  • Work with agents: Ideally, you want cash buyers that wouldn’t need a loan to purchase a home, so the transaction is quicker and easier for you. The best way to find them is by working with real estate agents, as they’ll usually have a list of financially capable buyers.
  • Cold calling: In the real estate industry, cold calling is one of the most effective ways to find potential buyers. Reach out to your current connections and find out if they know someone on the market for a new property. Then, give those prospects a call to explain your deal.
  • Put up bandit signs: Another popular method of lead generation, bandit signs are poster-sized signs that contain an attention-grabbing message and your contact details. For a better shot at success, place them in high-traffic areas, like shopping malls and busy streets.

As challenging as this stage may be, know that there are many tried-and-tested strategies that will help you out. By leveraging your existing network and being creative with your methods, you’ll have a list of potential buyers in no time at all.

4. Close the Deal: 7 Days

After receiving confirmation from your buyer, you can now officially start closing the deal. Now, real estate wholesaling relies on short-term funding and compressed timelines, which means you’ll have to pay close attention to every part of this process to make sure that nothing goes wrong.

There are two types of contracts in real estate wholesaling. The type of contract you choose should largely depend on your risk tolerance and how fast you want to close the deal:

  • Assignment Contracts: Find a buyer and sell them the contract without buying the property yourself, so you won’t have to put down any of your own money. This entire process can take as long as a week to complete.
  • Double Close Contracts: Buying the property and immediately selling it off to a buyer will give you bigger profits as the two parties won’t know what you bought and sold the property for. This process usually takes longer and can even last a few weeks.

Each type of contract has its own set of advantages and disadvantages so evaluate your situation before picking which one to go with. For instance, assignment contracts may be simpler and quicker but they also mean that both parties will know how much you’re making on the deal, which doesn’t give you a lot of negotiating power.

On the other hand, double-close contracts may mean more anonymity and privacy, in terms of the profits you’ll potentially walk away with. However, the process takes longer, is more complicated, and involves financial risks. With this type of contract, you’ll have to pay closing costs two different times—-when you buy the property and when you sell it off.

There isn’t a right or wrong type of contract to execute. Rather, the best option will depend on your risk appetite, financial assets, and how much you ultimately want to earn on the sale.

One Month Richer with Real Estate Wholesaling

Real estate wholesaling relies on short-term funding and compressed timelines, which means you’ll have to pay close attention to every part of this process so nothing takes too long. Ultimately, your goal is to have strong negotiation skills and the determination to find people looking to purchase the property.

If you can do these things fast and effectively, you’ll be reaping significant wholesaling profits within 30 days—we guarantee!

If you want more tips on navigating the world of real estate wholesaling, subscribe to our email newsletter. You can also check out our website, where you’ll find the date of our next meeting and an application form to become a member of REIA.

Categories
Wholesale Wholesaling

Can Real Estate Wholesaling Be Done Ethically?

Women thinking about real estate
Source: Photo by Pexels

Many people in the real estate industry frown upon wholesalers. In general, it seems that wholesalers have developed a bad reputation because many investors and sellers think they can find each other without an expensive middleman pocketing some of the profits.

But ‌the reality is far more complicated than just that…

The truth is real estate wholesalers make everyone’s lives easier, helping sellers to actually sell their unwanted homes and connecting buyers with properties they actually want. In a way, they fill a gap in the real estate investment game that nobody else can, providing genuine value to both seller and the investor.

Still, not everyone thinks that and so we wanted to address the question: Are wholesale real estate transactions ethical?

Let’s take a closer look at the issue.

When Is Real Estate Wholesaling Unethical?

Here’s how we see it: Real estate wholesaling is only unethical if someone conducts their business for the wrong reasons. After all, real estate wholesaling is legal in all 50 states—although with many local and state rules governing it.

Here are two situations where real estate wholesaling becomes unethical:

#1 – Deceiving the Seller

If a wholesaler deceives the seller into thinking that their property is worth less than it actually does, they’re effectively tricking them so they can earn more profits. But if the wholesaler tells them the actual value of their home and is clear about the extra cost they’ll pay for their expertise, then everything is done ethically.

As a wholesaler, the goal is to convince the seller that your list of buyers and connections will help them greatly, so they can sell their homes as soon and as easily as possible. After all, most sellers have the following problems:

  • They don’t have access to interested investors or buyers.
  • They don’t have real estate knowledge to handle the transaction.
  • They don’t want to take care of the property anymore and would rather liquidate it.
  • They don’t have the time and finances necessary to repair the property.
  • They don’t have time to waste as the property is near foreclosure already.

Another situation is if the property is already in foreclosure and the bank just wants to liquidate it. A real estate wholesaler can then step in, offer their expertise and knowledge, and get the job done quickly and efficiently.

#2 – Deceiving the Buyer

Another example of an unethical situation happens when the wholesaler underestimates the repairs needed and oversells the property to a buyer.

Sure, the wholesaler will certainly gain a hefty profit, but that effectively pushes the problem to the investor—where they have to repair and renovate the property at a much higher cost than expected. With a bloated after-repair value (ARVs) and inaccurately estimated repair costs (ERC), they’ll have lower their profits and struggle to bring the home up to standards or find another exit plan before they sink too deep.

Unethical situations like these are what fuel the negative reputation wholesalers have today.

Instead, you want to be known as an expert deal finder. Give accurate ARVs and ERCs, and put in the effort to build your experience, knowledge, and reputation in the community. The more you do this, the more buyers will see your added value to their investments—becoming an irreplaceable asset to them.

Ultimately, it boils down to the quality of deals you provide. If you offer pathetic deals for hefty profits and push problems to other parties, you’re only fueling the negative reputation that wholesalers already have to deal with in this industry.

Wholesalers = Real Estate Pawn Shops

Pawn shops also have a bad name, but they also fill a niche in local economies. Someone in need of quick cash chooses to sell their item at a pawn shop, usually for less than they could get by selling the item on Facebook Marketplace, Craigslist, etc.

Doing Real Estate Wholesaling Ethically

Many real estate agents look down on wholesalers as predatory, when they should actually look at them as another avenue for a quick sale in certain situations.

As long as you conduct your transactions the right way, you’re wholesaling real estate ethically and shouldn’t have any problems. After all, when you can build trust and credibility as a wholesaler, you’ll get far more recommendations from other buyers and sellers as well.

And when it comes to real estate wholesaling—networking is more important in the long run than acting out of your own self-interest for short-term profits.

What else do you want to know about wholesaling? Drop us a comment below!

Categories
Wholesale Wholesaling

Real Estate Wholesaling: How to Assure Sellers and Buyers That You’re Not a Scam

For sale properties on the west side of Detroit
Source: Crain’s Detroit Business

If you’re a real estate wholesaler, then you’re already aware that your success depends on the trust you build with potential sellers and buyers. Unfortunately, many scammers try to take advantage of people by misrepresenting their intentions or promising impossibly high profits.

As they’re on the way to the bank, the unfortunate wholesaler must deal with the fallout, which frequently involves unhappy clients and a ruined reputation. Nevertheless, there are things you can do to gain their trust, seal deals, and earn wholesale profits.

Here are 3 few things you can do to assure sellers and buyers that you’re a legitimate real estate wholesaler with their best interests at heart.

1. Know the common types of real estate scams.

Apart from posing as agents or homebuyers, some con artists go the extra mile by pretending to be home inspectors, lenders, or landlords. To protect your customers from fraud, familiarize yourself with common real estate wholesaling scams.

Besides protecting yourself and the people you’re working with, in-depth knowledge of common scams shows that you really know the ins-and-outs of the industry. Without a doubt, this will help build your reputation, where buyers and sellers will feel more confident partnering with an expert.

The Foreign Buyer Scam

In this real estate scam, the seller will usually receive an email from someone claiming to be a prospective buyer living abroad. Then they’ll say that they’re planning to move to the United States.

They’ll send a check for the down payment only to say that they accidentally paid too much and ask the seller to wire back the difference. Only later will the seller realize that the check is fake—they’ve received no money. By that time, the buyer will have vanished along with the cash that was “returned” to them.

The “Bait and Switch” Scam

This scam occurs when a prospective buyer makes an offer that’s above the property’s market value, its sale price, or both. The seller then excitedly accepts the deal, only to learn that the buyer isn’t signing the contract yet because of “delays”.

They eventually come back; although, this time with a much lower price and a list of demands. Unfortunately, the seller will have paid thousands in ongoing taxes, insurance, and utility bills by this time, and feel they have to honor the sale regardless.   

The Duplicated Listing Scam

Scouring through websites like Craigslist may lead you to great properties with incredibly low prices—but be warned! Some scammers copy legitimate rental listings and re-publish them with altered contact details and price tags. Unfortunately, some innocent buyers are so excited to grab the deal that they immediately wire a down payment to secure the purchase.

Needless to say, the scammer disappears upon receiving the payment, leaving the poor buyer with thousands of dollars lost and no property to show for it. They can try approaching the authorities for help but sadly, they often never get their money back.

2. Cultivate a robust online presence.

On the flip side, you want to show buyers that you’re not like the scammers we listed already. So, as a seller, you should establish a strong online presence is to convince buyers that you’re legitimate. After all, real estate scammers use fake names and likely won’t be as active on social media platforms.

Here are two ways to have an online presence:

  • Social Media: Create social media profiles on popular platforms like Facebook, Instagram, Twitter, and more to help prove your credibility and trustworthiness.
  • Website: Go the extra mile and build a website. Other than giving you a platform to display the properties you’re currently holding, you’ll also have a place to show past client testimonials, success stories, and positive reviews.

The more you cultivate your online presence, the more you can establish a strong brand and reputation. You also look more professional and differentiate yourself from scam websites that are often unorganized and hard to understand.

3. Avoid dominating the conversation.

As a real estate wholesaler, you’re probably aiming to grab all the opportunities you come across. There’s nothing wrong with this goal, but being too fixated on it could lead to being pushy or too eager when talking with buyers and sellers.

Instead, when speaking with buyers and sellers, stick to the basic facts—who you are, the name of your business, and how exactly you can help them. It’s completely alright to dig deeper and discuss their current situation and the property in more detail, but the key is to let them lead the conversation.

Constantly interrupting or talking over them will make you appear unprofessional and untrustworthy.

Build Trust, Land Sales, Earn Fortunes

Given how valuable an asset property is, buyers and sellers alike will only work with someone they trust. Therefore, if you want to land wholesale deals, you must focus on strengthening your brand and credibility. Only then will you find success in the real estate industry—one that’s largely built on trust.

Struggling to build trust with sellers and buyers? Our team of experts at Logical Property Management is ready to help!

We’ve been serving the Metro Detroit real estate market for more than two decades now and have everything you need to succeed in the area. We can help you with anything, from building an online presence to keeping track of your buyers and sellers.

Categories
Wholesale Wholesaling

Your Ultimate Checklist for Wholesaling Real Estate

A wholesaler and a homeowner working out the details of the contract
Photo by Scott Graham

It’s no secret: wholesaling can be a lucrative real estate investment method to earn a profit with minimal capital. On average, you can make around 5-10% of a property’s market value if you wholesale an undervalued home—that means you’re looking at a profit of $10,000 to $20,000 with a $200,000 home if you can get it under market value!

However, getting a slice of this pie does not come easy. Contrary to popular belief, real estate wholesaling takes a whole lot of skill, patience, and elbow grease. 

For example, you need to find a property with a motivated seller, then find a buyer for it, coordinate all the paperwork required, complete the deal as soon as possible, and repeat everything again. You also have to simultaneously grow and maintain your buyer’s list so your business doesn’t come to a halt.

In other words, there’s a lot to keep track of when dealing in wholesaling. 

But there is a solution to it: Make a list! Just like most projects in life, it’s easier to streamline the wholesale process if you have a checklist to guide you. That’s why we’ve written this ultimate checklist for wholesaling real estate—perfectly designed to help wholesale investors like you.

The Wholesale Checklist

Having a guide to the step-by-step requirements of a wholesaler can make the entire procedure easy as pie. But we do understand that not all of the things we’ll mention below will apply to you, so we advise that you focus only on the things that are most relevant to you.

Let’s get to the checklist!

A. Select a Market

Have you selected a market? Have you checked the trends of the current market? 

Selecting a prime market can land you a hot deal. You want to find a market where there isn’t too much competition but is still highly coveted. In other words, try to find a balance—buyer markets that are on an upward trend without much competition to deal with. 

Take for example Burlington, N.C. There’s a total of around 57 thousand brokers in North Carolina—far smaller than states like Florida with 212 thousand. But, the real estate market in Burlington, N.C. is booming right now. In fact, it is the 2nd most lucrative market in the US with listings only lasting an average of 35 days on the market.  

You can only identify potential markets like these if you’re familiar with real estate market trends, so here is a quick jump-off point to get started:

  1. Reference the MLS listings to get an idea of current trends in real estate prices.
  2. Look for how long listings stay on the market. The less time on the market, the faster the turnaround for properties, and the better the situation for you.
  3. Additionally, it’s important to know the median price of properties sold, so you know what you’ll be working with. For instance, in Burlington, it’s $295,000.

Once you’ve chosen your ideal market, you can move on to the next step in the checklist.

B. Build a Buyers List

Have you built your buyer’s list? Have you found any willing buyers in the area? 

You’ll need a robust buyers list for a steady stream of good deals. Your goal is to continuously generate and follow up with the leads in that list so your wholesale investment becomes a growing business.

Here are a few options to build and grow your buyer’s list:

  • Create an online marketing campaign. Use social media and other platforms to get the word out on your name to build a potential buyers list.
  • Use customer relationship management platforms (CRM). Creating accounts on CRM platforms like Hubspot or Zillow can increase your reach to interested buyers.
  • Take note of buyer contact information and criteria. Make a note of the budget of your potential buyers and their contact info. When you find an appealing property, you can reference your list to see if the property coincides with the budget of one of your contacts. 

By having an established and growing buyers list, you can increase the reach of your wholesale business which can lead to more deals and profits.

C. Look for Motivated Sellers

Once you’ve accomplished the first 2 steps, you can now enter the meat of the wholesale process: Finding a motivated seller with a property that coincides with the criteria of your interested buyers. 

Now, in the industry, you’ll notice that distressed properties are popular for real estate wholesaling. There are 2 reasons for this: It’s easier to convince sellers to let go of their unkempt homes, and it’s easier to secure a larger discrepancy versus market price.

But how do you find distressed homes and motivated sellers? You can already do this by increasing your scope, using the same techniques for finding buyers:

  • Use CRM software to find properties. 
  • Use social media to create a marketing campaign for yourself. 
  • Create a dedicated email address and/or phone number to screen incoming leads.

Once you’ve found a motivated seller. You then must hash out your wholesale contract.

D. Create the Wholesale Contract

Having found a motivated seller, you now need to finalize the wholesale contract. When creating the contract, you need to make it clear to the seller that you’re not buying the property. 

You need to establish that you’re only finding an interested buyer for the seller. 

Given that, be sure to establish the terms of what will happen if you fail to find a buyer. For example, you can set up an earnest money clause that will act as a guarantee. This clause will protect you and the seller in the event of failing to find a buyer. You will hand over an earnest money deposit that will act as a contingency that will be returned to you once the wholesale is complete. 

Then, you need to find a buyer for the property.

D. Look for an Interested Buyer

Once the details of the wholesale contract have been decided, you then need to find a willing buyer. Be sure to thoroughly scope out the property to make it easier to find buyers. 

For example, take photos of the property that shows potential buyers exactly what it looks like without having them visit the home. Additionally, take note of important details such as the number of rooms, the size of the property, and the overall condition of the property. 

Once you’ve gathered all the necessary information, you should then do the following:

  • Send the property report to targeted buyers on your buyers’ list. Ensure that you send the property only to the buyers with the perfect criteria—or you lose their trust in the long run.
  • Like insurance, you can get in touch with local wholesalers to market to their own buyers. This expands your coverage, helps you grow your network, and makes it easier for you to sell.

Once you find a willing buyer, you can then move on to the contract turn-over. 

E. Assign the Contract 

With a willing buyer, you can then move on to assigning the contract. Here are the basic steps to remember when assigning a contract to a buyer:

  1. Receive the amount necessary to purchase the property from the buyer.
  2. Collect your earnest money deposit from the seller. 
  3. Turnover the buy and sell contract of the property to the buyer. 
  4. Enter into a new assignment contract with the buyer and collect your wholesale fee.
  5. Contact an escrow company to complete the deal after the arrangements have been made.

Once the buyer has the contract, you can move on to the final step of the wholesale process. 

F. Close the Deal 

The escrow company will now oversee the process of transferring the property to the end-buyer. During this phase, you should keep in touch with the escrow company to get updates on the progress of the sale. 

Once the sale is completed, the escrow company will turn over your assignment fee, and your wholesale will be completed. 

Follow this Checklist to Make Your Wholesale Easy 

Getting into wholesaling unprepared can be a recipe for disaster, and we don’t want that—not when real estate wholesalers already tend to have a bad reputation because of newbies making rookie mistakes!

But with the use of a checklist, you can avoid many of the pitfalls of wholesaling, increase your odds of landing a wholesale deal, feel less stressed with conducting your business and reap continuous profits from the many deals you’re scoring.

Take our list and make it your own! Good luck in your venture and feel free to comment on any other concerns you have in the comments section below.

Categories
Wholesaling

Paperwork Made Easy: The Important Details Every Real Estate Wholesaler Should Look For

The buyer, seller, and wholesaler hashing out a contract.
Photo by Pexels

When conducting wholesale deals, contract negotiations become an everyday occurrence in your life. This means that if you aren’t knowledgeable about the requirements and details of wholesale contracts—you can end up losing a deal.

You have to be exceptionally familiar with contracts to be a successful wholesaler, which is why we’re writing this article to dive deep into the key paperwork you’ll need. Nail these on the head, and you can navigate through the world of real estate wholesaling with ease.

What is A Buy and Sell Contract? 

Otherwise known as a purchase agreement, this is the contract you enter with the seller of the property. It acts as a legally binding agreement and outlines the terms of the offer between a buyer and seller in real estate transactions. 

Your job as the wholesaler is to act as a middleman and find a willing investor to buy the property. That means to need to know how this is the contract permits them to purchase the home. Once you find a buyer, this contract transfers from you—the wholesaler—to the buyer. 

The content of the buy and sell contract should have the following: 

  • The date of the agreement 
  • The name of the seller/individuals listed on the property’s title
  • The buyer’s name
  • Property address 
  • The earnest money deposit. 
  • The total purchase price of the property
  • Financing 
  • Closing date and transfer of title 
  • Escrow and closing fees 
    • The buyer can be assigned to pay the fees
    • Or it can be the seller 
    • Or they can pay equally 
    • Or they can pay their respective escrow and closing fees
  • Signatures of you and the sellers
  • Date of signature

This list isn’t exhaustive, but these are the most relevant things you should pay attention to in buy and sell contracts. As long as you have these covered, you should be good to go.

Note that your buyer will also thoroughly examine the agreement before getting into the deal with you. As such, it’s best that you know your way around these contracts well enough to answer their questions and successfully close the sale.

What Is A Seller’s Disclosure? 

The State of Michigan requires a seller to complete and sign this disclosure to accompany any and all purchase transactions. It’s meant to protect a buyer from seller misrepresentation about the condition of a residential property.

Since most sellers aren’t aware of this form, you’ll want to keep a copy with your buy-sell contracts. Do NOT ever complete the form though, for a seller—legally they must complete it.

The next one to know is an assignment agreement. 

What is An Assignment Agreement? 

An assignment agreement is a real estate contract that transfers your rights and responsibilities listed in the purchase agreement to your investor—the new buyer. Often, this can also be referred to as an “Assignment of Real Estate Purchase and Sale” agreement.

After signing this contract, the buyer will take over the purchase agreement, and you’ll be awarded an assignment fee. Only you and the buyer will receive copies of an assignment agreement since the seller is not involved in completing an assignment contract.

An assignment contract needs to contain the following: 

  • The agreed-upon assignment fee
  • The assignor’s name 
  • The assignee’s name
  • The date of agreement on the purchase contract
  • The names on the purchase agreement
  • Location of the property 
  • Closing date 
  • Assignee to pay the security deposit in escrow 
  • Signatures of you and the buyer 
  • Date of signature

Once the assignment contract has been signed and fulfilled, the investor will then take over the purchase agreement. After that, the buyer closes on the property and you’ll be awarded your assignment fee.

Wholesaling Contracts Made Easy 

There’s a lot of paperwork that comes with wholesaling in the real estate business. If you get in over your head and gloss over every other contract you get into, you can end up losing your wholesale deals—or worse—alienating your potential buyers. 

If you ask us, it’s just not a risk worth taking if you want to grow your wholesaling business.

With our help, you’ll have a good idea of how the contracts you’ll be dealing with regularly are done. If you need more help with wholesaling paperwork, feel free to reach out to us!

Have any questions about wholesaling contracts? Let us know in the comments below!

Categories
Wholesaling

Build Dual Income Streams by Wholesaling and Renting Real Estate

Most real estate wholesalers only focus on only one thing: Connecting sellers with buyers. So, they build a buyers’ list of flippers and buy-and-hold investors every day, manually turning the wheel and generating a consistent flow of income by sealing deals as often as possible.

However, while being the middleman is lucrative, it can also be very labor-intensive.

You’re constantly on the lookout, hunting for opportunities to get a house under contract at a workable price. Then you’re always trying to find buyers to sell it immediately after purchasing. As a result, you buy low, sell high, and repeat—because stopping means no income.

Eventually, you get to a point where you’re sealing more deals than you expected. You feel like you’re all maxed out, working 60 to 80 hours a week. You say to yourself, “I made it! I’ll just keep doing this to make more money.” 

And that’s what you’ll do forever.

Is it really worth the time you’re spending on it? Personally, we think there’s another, smarter way to use your time and money. In this article, we’ll show you how to harness the money-making power of wholesaling real estate plus renting out properties to build a two-layer strategy within your portfolio. That way, you can generate both active AND passive income.

Wholesaling Real Estate is Short-Term Money – So, it’s a JOB

Wholesaling makes money at high volumes. But the biggest downfall with wholesaling properties is that there is a limit to your earning capability (i.e. the number of deals you can physically close each month) because it’s very hard to scale.

The reality is this: Wholesaling doesn’t build up wealth. It relies on your constant hustling it to earn a living. When you stop working, your income stops.

Let’s illustrate this point by going over your daily schedule as a wholesaler:

  1. You wake up early to make phone calls and reach potential sellers and buyers before they go to work.
  2. You continue those calls until lunchtime, because you want to catch them when they’re on break.
  3. Then you crawl from courthouses to probates, scan divorce and bankruptcy rooms, do direct mailings, and drive around target neighborhoods to seek good deals.
  4. You also stay in touch with sellers, agents, and buyers with follow-up calls, emails, or physical mailing lists.
  5. You input all of this information in your tracking sheets and databases and continue tomorrow.

You’re doing the grind, trying to build a pipeline. Eventually, you’ll realize that there’s a ceiling to your earning capability because, at the end of the day, you’re trading time for money.

For example, you can’t physically do 500 calls a day to increase getting good deals. And while you probably feel ecstatic with learning how to improve your margins from one sale to another, you’ll eventually realize that $6,500 a month… just isn’t enough.

If you want to do something bigger but with less effort, you need something more scalable. You have to expand to other real estate investment strategies to gain more wealth.

Wholesaling Real Estate to Support Long-Term Wealth

Wholesaling is lucrative—especially when you use it as a feeder to a larger, wealth-building business.

Here’s the idea: Try to combine the active income you get from wholesaling with other investments that can give you passive income. That way, you’ll earn money in the long haul—not just that month.

Let’s see how this idea works. 

Imagine if you buy one house for every seven that you wholesale. You turn that house into a rental and start earning monthly income from rent. The result? You’ll earn dollars that will help you pay an annuity forever. You’ll create a ripple effect, growing your portfolio with two strong streams of income—wholesaling fees and rental income. 

Wholesaling vs. Rental Properties

By setting goals like the example above, you stand to gain advantages from both investment strategies. You can make quick money from wholesaling deals, channel a portion of your profits into rental investments, and achieve long-term financial freedom that’s not dependent on you working 9-5 as a wholesaler.

Wholesaling Real Estate + Rental Properties = Lucrative Portfolio

Make the most out of your time and money. You don’t have to stick to one real estate investment strategy. Instead, you can connect them to build wealth in your portfolio and surpass your previous income goals.

To wrap it all up, continue with your wholesaling plans, but set new goals for the long haul. You’ll find that it’s much more fulfilling to build a business that looks to the future. Treat wholesaling as a part of your overall investment strategy—instead of just a side hustle.

What is your goal in wholesaling real estate? What’s keeping you from scaling your investments?5

Categories
Wholesaling

How to Virtually Wholesale Real Estate

Like everything else, the real estate industry has drastically changed during the pandemic. The combination of people trying to avoid foreclosures and digital transformation allowing every real estate investor to tap markets nationwide has resulted in the rise of virtual real estate wholesaling—a trend that is likely to continue post-pandemic.

In fact, the National Association of REALTORS® said 51% of home buyers today found their home online—more than they do through real estate agents! This means there are many people out there who are willing to buy and sell homes online. Therefore, the virtual wholesaling process is an opportunity for you to take advantage of the digital transformation happening in the real estate industry.

Are you interested in becoming a virtual wholesaler? Here’s what you need to know.

The Benefits of Virtual Real Estate Wholesaling

Virtual real estate wholesaling follows the same idea as traditional wholesaling, except your involvement is completely done through digital means. Using digital technologies such as emails, digital signatures, and online databases, you can close wholesale real estate deals without showing up in person. 

Here are the three biggest benefits of this arrangement:

  • Expand to Multiple Markets: You can venture into multiple new markets without increasing your costs, making your wholesaling business scalable. Operate in the hottest markets, grow your buyers list, and even use digital marketing strategies to expand your business.
  • Save Precious Time: It takes weeks to visit all the properties you want to wholesale. With virtual wholesaling, however, you can check out multiple locations in a day. Chat with motivated sellers and make blind offers in varied investment areas easily.
  • Build a Virtual Team: You can build a virtual network to operate your wholesaling business online. Bring in real estate agents, virtual assistants, contractors, and vendors to help you analyze and close deals in all the markets you want to sell in.

All of these real estate investing benefits sound great, but can you really operate without physical appearance? Let’s take a look.

The Steps to Virtual Real Estate Wholesaling

Here are the points in the home buying process when physical presence is typically required:

  • Scouting areas with real estate agents
  • Negotiating with motivated sellers
  • Inspecting and conducting due diligence
  • Estimating the repairs
  • Signing documents

Your goal is to turn these points into digital processes. How? 

  • Use Websites to Find Profitable Areas: Use Mashvisor’s heat map for analysis. As they say, in the real estate industry, it’s all about location, location, location. You won’t need to meet with real estate agents when you can do initial research yourself.
  • Use Websites to Connect with Sellers: Instead of elbowing your way through the MLS, Mashboard provides homeowner data for you to contact the potential seller. Through this tool, you can get their property address, email address, and phone number to start negotiating.
  • Use Virtual Walkthroughs: Browse through Zillow and you’ll see properties that offer virtual tours. If the property you’re eyeing is there, book a digital tour to simulate a walkthrough and check the property out. If the property doesn’t have a virtual tour, you can tap your virtual wholesaling team to conduct due diligence.
  • Conduct Real Estate Analysis: Once you find a good deal, conduct real estate investing analysis to ensure that the after repair value (ARV) and estimated repair cost (ERC) is favorable to market prices. Run comps for the ARV through Zillow or Redfin, and use online calculators by Home Advisor or Kukun to get the ERC.
  • Use Digital Apps to Sign Documents: Got yourself a wholesale deal to close? Download Docusign and DotLoop to sign the real estate contract electronically, send it through email, and get the property under contract without any physical contact. 

Lastly, collect your wholesaling fee either by including it as a line item on the settlement statement, or having the buyer send you a check. Either way, you can do this without meeting anybody in person.

Conclusion

Becoming a virtual wholesaler allows you to tap into lucrative markets with tremendous flexibility and agility. As our world evolves into a highly digitized system, virtual wholesaling is your opportunity to take advantage of digital transformation and get ahead of your competitors—expanding your wholesaling business in all possible locations.

Any other tips or tools for virtual real estate wholesalers?

Categories
Wholesaling

How to Dominate Wholesaling Houses in Your Area

While you might be tempted to cover areas beyond your local real estate scene, it’s possible that you’re already sitting on a wholesaling goldmine—and you just didn’t know it!

Here are the signs of a market that’s ripe for a booming wholesaling business:

  • Overwhelming amount of cash purchases
  • Abnormally fast sales
  • Houses getting multiple offers
  • Escalation clauses (to avoid getting outbid)

If your local area has all these factors, you’re in a great place to become a wholesaler.

Read along to find out the two-prong strategy that will help you dominate your local real estate market and build a successful wholesaling empire—right where you live.

Search-Optimize Your Wholesaling Business

Aside from doing offline marketing, there is also a world of possibilities online. Not only are geographic boundaries removed, but the internet also enables you to effectively target and reach your audiences with SEO (search engine optimization) tools.

Check out these online marketing platforms for real estate wholesaling:

  • Wholesaling websites
  • MLS (Multiple Listing Service)
  • Online forums and auctions sites

All of these efforts hinge on the fact that we do practically everything online nowadays. Your customers are more likely than ever to search online for new properties.

Your goal is to be visible and easily accessible via an online search. This is where keyword research comes in. By knowing what keywords to target, you can also maximize your reach on search engines, gain valuable traffic, and generate qualified leads.

Do a simple test to see how your business currently ranks in search engines:

  1. Search “real estate wholesaler [location]” on Google.
  2. Look at the top results.

Does your name or business appear? Where do you rank versus your competitors? Who shows up before you do?

Well, you need to beat them.

Optimize your searchability by choosing keywords that your buyers will search for, then incorporate them in your blog posts, listings, and website.

Here are some keywords you can consider:

  • local real estate wholesalers
  • house wholesalers near me
  • local cash buyers in [area]
  • local house sellers in [city]

For in-depth SEO strategies and more information on how keywords work, you should also check out Reibar’s article on keywords that real estate investors should be targeting.

To boost your online presence further, you can also pay to get increased visibility in highly competitive markets. Paid advertising involves platforms such as Google AdWords and Facebook Ads.

Network to Outshine Your Competitors

Given the wholesaling potential of your area, you might be competing with a lot of other investors. It’s definitely not bad for business, but marketing will be a challenge.

In our article on the best places to find wholesaling deals[1] , we mentioned a couple of offline marketing methods such as:

  • Driving for Dollars
  • Bandit signs
  • Direct mail campaigns
  • Networking
  • Newspapers

All of these methods are effective in finding wholesaling deals, but networking is the most important strategy when trying to dominate a market.

The good thing is that all competitive areas have an REIA or two in the community – Metro Detroit definitely does.

REIAs are a great place to start making your presence known—the goal is to establish your wholesaling business to outshine other wholesalers and be the go-to property supplier for the local area. REIAs give you access to a whole group of people for:

  • Building an active cash buyers list
  • Developing strong and reliable connections
  • Boasting your overflowing housing inventory

You can also team up with Bird Dogs or acquisitions managers who are interested in the local market. The more properties they bring you, the more inventory you have to sell to cash buyers.

Conclusion

The key to dominating your local wholesaling market is good marketing—both on-ground and online. By networking closely with the community and optimizing your online presence, you’ll set yourself up for long-term success wholesaling in any competitive space. Ultimately, you want to establish yourself as an expert—and building your credibility with a great online presence and consistent quality service is how you do this.

To succeed even in these uncertain times, go through our wholesaling trends and insights that have surfaced during the pandemic. Get a good grasp of the present and future of wholesaling real estate to dominate the business in your local area—and beyond.

Need help in beating your local competition? Get in touch with us! Our team is more than willing to help.

Image courtesy of Andrea Piacquadio


x Logo: Shield Security
This Site Is Protected By
Shield Security