The U.S. boasts one of the most promising real estate markets globally, gaining a record $6.9 trillion in 2021 alone. Things are certainly looking up for real estate, and everybody’s trying to hop on the real estate bandwagon. The problem is real estate investments need loads of cash, or so you thought?
Real estate wholesaling presents a simple way to break into the real estate market without significant capital. However, it’s no direct ticket to fortune and requires hard work and commitment to pull off. You’ll also need a firm understanding of the entire process before you can make a killing from the venture.
If you’re looking to jump into wholesaling houses but don’t know the first thing about it, we’re here to help. Today’s post is the ultimate guide on wholesaling real estate for beginners.
What Is Wholesaling in Real Estate?
Real estate wholesaling is a real estate business strategy where an investor enters into a contract for a piece of property, then sells it later at a profit. The investor doesn’t sell the property but acts as a middle person, connecting the owner to a buyer. It sounds simple enough, but it’s a lot harder than it seems.
The wholesaler will first enter into a contract with the property owner. Later on, the wholesaler will sell the contract to a buyer at a profit. The wholesaler keeps the profit and gives the rest of the money to the property owner.
It’s worth noting that there’s no point where the wholesaler buys the property in question. The property owner only gives the wholesaler the property to sell on their behalf. The properties are mostly distressed, off-market homes that are typically hard to sell.
How to Start Wholesaling Real Estate
If you’re keen on being a real estate wholesaler, you need to really know your stuff. Here are a few tips to get off on the right foot.
Research Your Local Market
The first step in real estate wholesaling is extensive research on your local housing market. Visit the local neighborhoods and get a firm idea of house prices in your region. Also, assess the types of available properties and which ones sell the most.
What’s more, you want to learn as much about wholesaling real estate as possible. The more familiar you are with the process, the better placed you’ll be for success. Liaise with big names in the real estate niche so they can mentor you on the entire process.
Build a Robust Buyers List
Creating a buyer’s list is the next step once you have a firm idea of your local housing market. A buyer’s list is a list of potential buyers to whom you’ll sell properties. As mentioned above, wholesalers are intermediaries, connecting property owners to buyers.
Having a strong buyers list will help you know where to take your contract when you find food deals. We recommend finding the buyers first before finding the property to sell to foolproof your endeavor.
Here are a few strategies you can employ to build your buyers list:
- Put up bandit signs
- Attend real estate events
- Look for buyers on social media
- Try email marketing
- Attend networking events
Building a good buyers list may take quite some time. However, remain consistent in your efforts, and you’ll create a proper list in no time.
Find Off-Market Properties
Next, you’ll have to search your local area for any distressed properties on sale. The problem is that you won’t find distressed properties on typical listings. This means you’ll have to do a lot of digging to find the said properties.
The types of properties you’re looking for include:
- Abandoned homes
- Distressed residential buildings
- Properties that are ripe for foreclosure
- Properties of recently deceased individuals
While sellers are often eager to get rid of these properties, finding them is easier said than done. Most wholesalers find success in networking and real estate events or cold-calling property owners. Also, try looking into Craiglist to see whether you can find a property or two.
You can also search public records for properties of recently deceased individuals or homeowners facing foreclosure. You can try the “driving for dollars” strategy if that doesn’t work.
Driving for dollars is a strategy where you take a drive through neighborhoods and take note of distressed and abandoned properties. Write down the addresses of the properties in question and even talk to the neighbors. Later on, you can search online databases to determine who owns the property and get their contact information.
A bandit sign works like a charm if you place it in the correct location. Bandit signs say things like “we buy houses” or “sell your abandoned home here.” Conveniently place your sins, and you’ll be getting calls from people looking to sell their properties.
Negotiate a Selling Price and Sign a Contract
Once you find a property for wholesaling, you must negotiate the purchase price with the sellers. You’ll need solid negotiating skills to strike a good deal for the house here. Focus on bringing up solid arguments for lowering the purchase price.
If you agree on the price, the next step is to draft a contract and sign it. Liaise with a legal expert and draft an agreement ASAP before another wholesaler ruins your chances. You can read more on manausa.com to determine why contracts are crucial for wholesaling real estate.
Market and Sell the Property
The final step is finding a suitable buyer for the property. You’ll need to refer to your buyers’ list to find a suitable buyer for the property. Transfer the contract to the buyer and keep the profit.
Real Estate Wholesaling Made Easy
The information above should help make real estate wholesaling a walk in the park. Ready your tools and get started on your real estate wholesaling venture today. What are you waiting for?
Don’t forget to check out the other posts on the site for more informative reads.
Also published on Medium.
