Tag: Wholesaler

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Wholesale Wholesaling

What Happens After Getting A Property Under a Wholesale Contract?

Source: Photo by Gabrielle Henderson on Unsplash

Real estate wholesaling is all about finding bargain-priced properties, getting them under contract and reselling them to investors or other interested buyers.

The main difference between a regular purchase contract and a wholesale contract, is that the wholesale contract allows the wholesaler to sell the contract to another buyer before actually owning the property. Theoretically, this allows the wholesaler to have little to no money to wholesale properties.

But what happens after you get a wholesaling contract signed? You still have a few steps to go before getting paid, so let’s go through them.

1. Send the Contract to the Title

You’ll need to send that contract to your title company to keep them in the loop. If you don’t know any companies, just search for one online and ask them to see if they work with wholesale investors like you to handle assignments.

Once you find the ideal title company, email the contract to them along with the seller’s contact details to collect any additional information they need. Next, you’ll have to coordinate with the title company to get your earnest money to them—often around $100 or more, depending on how good the wholesaling deal is—via mail, drop off, or courier delivery.

2. Take Photos and Videos of the Property

Next, you’re going to reach out to the seller and schedule a day for you to document the home. This task is often done when you meet the seller at the property to negotiate and sign the contract.

If the seller is hestiatent, assure them that you’re only doing so to have records of the property and so you can show the home to prospective buyers.

You have to take photos of every room, the front of the house from the streets, the backyard, the kitchen, the bathrooms, the HVAC unit, the electrical box, and even the roof if you can raise the camera high enough. The more photos you have, the more information you can provide your buyers.

Also, tell the seller that you’ll return with a contractor, so you can get a bid right away to start construction and renovations on the day you close immediately—time is money in the real estate game.

3. Send the Deal Out and Find Buyers

Now that you have the contract and photos, send the deal out to find cash buyers.

You can email blast with the likes of MailChimp, or manually go through your buyers’ list to find potential individuals for the specific property. You can also reach out to other wholesalers to see if they have any buyers that might be interested or go through real estate Facebook groups to find more prospects.

As you find buyers, ensure that you provide them with the asking price, after repair value (ARV), estimated repair cost (ERC), lot and living square footage, link to photos and videos, and a way to submit their offer. Once buyers start reaching out, proceed to vet your buyers.

4. Vet the Buyer and Walk Them Through the Property

You must ensure that buyers are legit and won’t waste your time. You can ask for the last three or five properties they’ve flipped. Ask for the addresses, look at the tax records, and check if their name or their LLC was on that property. That way, you know that they flip properties.

Then, get the buyer to sign and send the assignment to the title company. Ensure that the buyer will also deposit $500 (or any other amount) in earnest money.

We suggest you collect the earnest money before they check out the property so you have some leverage in the deal and lessen the chances of them backing out. However, this isn’t always possible and may only work if the buyer already trusts you as a wholesaler.

Once that’s done, you’ll have a buyer locked into the deal. Of course, you’ll need to ensure that they have the funds to purchase. So we recommend that you get in touch with fellow wholesalers, check their backgrounds, and directly ask them to know their situation.

5. Wait for the Deal to Close

Here comes the easy part: Waiting for the deal to close.

Stay in touch with both the seller, the buyer, and the title company to assure all parties that everything is going smoothly. If anybody needs anything, you’ll also be able to get them the information right away. You’ll also have to connect the buyer to the title company so they can set up the closing process.

Now, if the buyer ghosts you and becomes unresponsive (or takes too long to deposit the money),  then you’ve got a problem. We suggest that you move on and find a new buyer, because they might waste your time and give you the runaround, killing time and the deal in the process. You only have a certain amount of time to get the property sold—exit before it’s too late.

Keep Moving Forward, Keep Closing Deals

Ultimately, your goal as a real estate wholesaler is to find a property, vet the buyer, and sell the deal. The process we’ve outlined should give you a good idea of how to go about doing that.

Of course, there will be bumps in the road. But if you have a solid system in place, you’ll overcome them easily. Also keep in mind that this is a fast paced business, so it’s important to always be moving forward.

Don’t hesitate to join as a REIA member today! We have regular meetings and newsletter publications to give you all the help you need to become a successful real estate wholesaler today.

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Wholesale Wholesaling

6 Tips on How to Wholesale Real Estate in a Recession

Source: Usman Yousaf on Unsplash

Real estate investors are now finding out that sales prices and rents don’t always go up. It’s not as unstable as blockchain, the metaverse or crypto—but the real estate investment world isn’t completely protected against economic shifts.

The Federal Reserve is expected to continue to raise its overnight rate until inflation is brought back to acceptable amounts. These increases have a negative impact on bond prices, including mortgage-backed securities, which has caused mortgage rates to spike.

Of course, wholesaling has its challenges in an uncertain market.

That being said, knowledgeable wholesale real estate investors navigate them easily—simply because they know how to play the game. So, here are our 6 tips for experienced wholesalers and new ones alike to keep in mind.

1. Increase Your Lead Conversion Rate

Finding motivated sellers is key to a real estate wholesaling business. You have to constantly find people who need to sell their properties fast (usually because they’re facing foreclosure or have inherited a property they don’t want to maintain), because they present an opportunity for you to swoop in and make an offer.

In an uncertain market, finding motivated sellers should be easy, as more people looking to sell won’t be able to find buyers. You can find them by networking with real estate professionals, driving around neighborhoods to search for distressed properties, and more.

But it’s not just about finding motivated sellers; it’s also about increasing your conversion rate:

Number of deals closed / Total number of motivated sellers = Conversion rate

The higher your conversion rate, the better you can weather any uncertain market storms. So, it may be time to cut your marketing budget or at the very least, refocus it on the most motivated sellers. Continue to find motivated sellers, and improve your chances of closing deals with them.

2. Focus on Landlords

Typically when it comes to wholesaling, you’ve probably been selling most of your deals to house flippers. Well, they’re going to have challenges selling in a recession, so they won’t be buying as much from you. Luckily there is another market out there you can target. Landlords.

S, instead of selling to house flippers, you can replace them with landlords.

Now, remember if you’re selling to a landlord means that you’re selling to another investor. In other words, you’re going to have to be savvier and convince that you’re a reputable wholesaler.

3. Know Your Clients’ Numbers

Many wholesalers don’t care about how their clients run their numbers, but that’s a rookie mistake. Because when you think about it, helping their business succeed is just as important as making your own real estate wholesaling business succeed.

So, to stand out from the competition you need to start taking note of your client’s numbers—not just your own. Helping your clients by providing more services is how you stand out and attract new clients. That way, you’ll have a much stronger relationship with them.

4. Have a Plan B

Next, you may want to either consider doing some flips yourself or becoming a landlord. For that, you’ll need to sort your financing, look into flipper insurance, and a lot more depending on how you pivot your business model.

There’s always the possibility that something could go wrong, whether it’s:

  • The deal falls through
  • The market is taking a turn for the worse
  • Property values are dropping significantly

Or a combination of all of those factors. So, make sure you have another plan when wholesaling doesn’t work out.

5. Get Your Financing in Order

If you’re going to wholesale real estate, you need to have your financing in order before you start looking for properties. Getting your ducks in a row is important because, most of the time, the properties you’ll find will require some form of creative financing, like using:

  • Hard money loans: Loans based on property’s value instead of the borrower’s creditworthiness
  • Private money loans: Loans from private investors if you can’t qualify for traditional financing
  • Partner with another investor: Pooling resources together with a partner to finance a property

If you don’t have your financing set up beforehand, it’ll be hard to take advantage of these opportunities when they come up, especially when dealing with uncertain market conditions simultaneously.

For example, if the market crashes and you’re trying to get a loan from a bank, they’ll be much more hesitant to give you the money. Whereas if you have a hard money lender lined up, they’ll be much more willing to finance your deal.

6. Know Your Numbers

In an uncertain market where things can change rapidly, you need to be extra conscious of unnecessary business costs harming your cash flow. Are you spending too much on lead generation? Can you do without the tech subscriptions? Have an honest conversation on how you can keep expenses down to protect your cash flow in an unstable market.

Moreover, know your numbers well enough to make quick and sure deals without costing you dearly. Things like being clear on your maximum offer price, estimated repairs, and expected profit margin all play into the success of your wholesaling investment opportunities.

Say the market crashes and property values drop significantly—you’ll find yourself in a situation where the property is worth less than what you paid, depleting your chances of any profit margin. Only by knowing your numbers well can you adjust accordingly and still come out ahead.

Being Certainly Profitable in Wholesale Real Estate Investing

By following the tips we’ve outlined in this article, you can ensure that your business is as resilient as possible to market fluctuations. So whether you’re a seasoned investor or just starting, remember to increase your lead conversion rate, get your finances in order, know your numbers, and have a plan B.

With these strategies, you’ll weather any storm and continue making money by wholesaling.

Do you need more help? Then, get a membership, subscribe to our newsletter, and join our upcoming meeting! We’ll discuss key industry trends and expert tips—you wouldn’t want to miss out.

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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.

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