WHOLESALING REAL ESTATE WITHOUT BUYING IT

It’s time to think about wholesaling if you want to get started making money in real estate fast. Since the wholesale process differs from more conventional forms of real estate transactions, closing a wholesale deal for the first time is a significant achievement for any investor.

Are you unsure where to begin? This step-by-step wholesale real estate wholesaling guide has everything you need to make your first wholesale deal a success.

The Basics:

Wholesaling Real Estate is about finding distressed properties (in need of repairs or default on their mortgages or foreclosed on or even inherited & doesn’t want it) owned by motivated sellers.

See if the owner is willing to sell their house at a lower price, and for you to sign a contract in order to buy their property.

The next move is to put the property on the market and search for buyers.
The aim is to sell (or assign) the contract to a cash buyer for a price that is higher than the seller’s asking price.

The difference between the price you gave the seller and the price a buyer is willing to pay is your profit as a wholesaler, minus any expenses you incurred along the way, such as ads.

Is Money Needed To Wholesale Real Estate?

If you’ve ever been put off from getting involved in real estate investment because you don’t have a lot of money or a bad credit score, you should know that you can start wholesaling real estate right now. A wholesaler is not allowed to purchase property because they delegate purchase contracts directly from sellers to end buyers. As a result, meeting various financing eligibility criteria, such as income level or credit score, is not an issue. As a result, wholesaling is a fantastic way to develop useful skills and gain knowledge of the real estate industry while still saving money and improving your credit score.

Also seasoned investors may use wholesaling to fund other types of real estate transactions. An investor who prefers to make all-cash offers on rehab deals, for example, might turn to wholesaling to replenish their personal capital in a hurry. Understanding how to wholesale real estate step by step is a credible way to transition into other forms of investment strategies for these purposes.

Steps TO Wholesaling Real Estate:

Locate the Properties – Sites like Craigslist, FSBO, & Homesbyowner. Can even hire somebody to find properties for you & either pay them when you profit or for every lead, but check your states laws before settling on a payment arrangement. A few other ways are: buy mailing lists, send out letters & postcards, attend real estate networking events, put out “bandit signs”.
Contact owners – You’ll have to pick up the phone and contact people because you can’t wholesale a property without first making an offer. Bear in mind that certain property owners might be hesitant to work with a wholesaler. After all, this is a non-traditional ways to selling real estate that they’ve never heard of before. However, if they’re motivated, there’s no need for much salesmanship. So instead, empathize with their difficulties. Always keep in mind that the aim of contacting sellers isn’t to convince them to do anything. It’s to see if they’re genuinely motivated, which just around 1 in 10 are. It’s not a concern if they aren’t! Quickly move on. Now to present yourself, there are two options: A. You should tell the owner right away that you’re a wholesaler. That means informing them of your plan to find a new buyer and sell the contract to them in order to benefit from the transaction. B. Is to sign a contract with the owner that does not include the word “wholesale.” Homeowners are also told by wholesalers that the buyer is their partner. Although this activity isn’t illegal, it is a little hazy. Check your state for wholesaling laws & proceed with caution. Remember: Your negotiating aim is to persuade the owner to sell the property for a low price. Simple real estate contracts can be found online and modified to meet your needs, or you can have an attorney in your state make the required changes.
Determine value of the property – If you want to purchase a property for less than market value, you must first determine what the market value is. If the owner is asking for the amount that the home is worth, you shouldn’t spend much more time talking with them. If you ask them how low they were willing to accept, and they give you a number that is $20,000 or more under the market value, than you got something.
You should find out about what similar houses in area or nearby have recently sold for. You’ll have a range in mind of what the house you’re looking at will sell for after any required renovations are done once you’ve found at least three prior sales that meet this criterion. The easiest way to obtain this information is through a real estate agent. You may also use Zillow.com to conduct your own quest. Only make sure to locate the comps yourself rather than relying on their Zestimate, which is often inaccurate.
Estimate repair costs – When you’re selling to an investor rather than an owner-occupant, why would you do this? The explanation for this is that it’s an outlay that would hurt their bottom line, so you’ll have to lower the price to compensate. When touring the property, take a contractor with you or make a list of everything you see that would need to be repaired & read off to a contractor to get an estimate.
Negotiate a price & get it under contract – It’s now time to talk to the seller about an offer. You’ll need to know how much the repairs will cost, as well as how much the house will sell for in the future. Calculate: 75% of the house’s after-repaired value subtract repair estimate subtract $5,000 for you fee equals the remaining amount that is the most you can pay for the home. Here’s an example: the house is worth $100,000 after repairs, so you reduce it to 75% ($75,000), then deduct the $15,000 in maintenance costs and $5,000 in benefit, taking the total price down to $55,000. You can always start the negotiation lower, but that is the most you can pay and still get paid for your time. If the seller agrees (and 1 out of every 4 motivated sellers will), sign a purchase agreement and give yourself 30 days to close.
Find a buyer -Now its time to find someone to buy you out of the deal and close with the seller on the house. Since your deal with the seller expires in 30 days, you’ll need to operate fast. However, because you’re searching for cash buyers, they’ll be able to close easily because they won’t have to apply for a loan or jump through any of the hoops that would be needed. Where & how: If you have a list of local real estate investors, contact them right away via email or phone to see if they’re interested; Attend local real estate investor networking activities to meet more people and advertise the property for sale; Distribute flyers with details about the house; Advertise the property for free on Craigslist or Zillow; and can also find creative ways to find buyers. But, regardless of what you do, the real power is in creating a buyer’s list so that when you do it again, you can immediately contact as many qualified buyers as possible.
Close – Finding a title company to manage the closing is the final move. You want to meet someone who knows what wholesaling is (as many don’t). Within a few days, the right title company will be able to conduct a title search for you. A title check is needed to determine if the property has any liens or other unexpected encumbrances. In the interest of time, don’t wait until this is completed before announcing it to your customers. If you’ve found a buyer, put them in contact with your title company, which will handle everything from arranging the deal to raising funds from the buyer to writing the settlement document. When both the seller and the buyer have signed the final closing papers, the title company will register the deed, and you’ll get paid! Your funds will be sent to you via check or wire transfer.

Conclusion

You’ll be miles ahead of most inexperienced wholesalers if you follow our step-by-step guide to wholesaling real estate. That’s because a lot of people make the mistake of jumping right in without doing their homework and learning about the wholesale process. You’re already setting yourself up for success by immersing yourself in research on the art of the deal before you begin.