Wondering how to put your first property under contract as an up and coming real estate wholesaler? Before we delve deeper into the joys and fun of real estate wholesaling let me give you a heads up on what to expect. Wholesaling is not a get rich quick kind of career. You actually must…work hard and smart to accomplish your goals.
This is a great career opportunity for you if you are starting out with little to no money. Maybe you are looking for a business opportunity where you do not need much capital to get started and wholesaling is perfect for you. Furthermore, real estate wholesaling is a great way to learn the ins and outs of real estate investing and the industry as a whole.
What Is Wholesaling?
Angie is a young 27-year-old wholesaler based out of Las Vegas, NV, which is one of the hottest real estate markets in 2021, and she has an upcoming wedding in 8 months. Recently, Tia contacted Angie’s Las Vegas real estate wholesaling office. Tia is a 25-year-old Data Scientist who has just received her Masters in Data Science. She was recently offered a job in Silicon Valley and must relocate within the next 60 days. However, there is a problem because Tia needs to sell her home in Henderson, NV as soon as possible. This is when she contacted Angie’s wholesaling service after seeing a Facebook Ad online.
After hearing Tia’s dilemma Angie knew she had the perfect buyer. Angie met Jonathan just two weeks prior while grabbing her morning cup of Chai Tea Latte from Starbucks. Jonathan advised that he has been investing in real estate for the past two years. He is currently looking for a property in the Henderson area.
Angie setup a time to meet with Tia to view the property. Along with her she brought a purchase agreement. Tia advised the asking price of $310,000 for the house. With $40,000 in renovations the property is worth $450,000. After discussing terms Tia decided to sign the purchase agreement (contract) to receive an amount of $310,000 at closing.
Jonathan viewed the property from videos and pictures that were sent to him by Angie. Title Inspection of the property was ran the next week after signing the contract. Jonathan decided that he loves the property and wants to invest. Closing on the property was done with a local Title company. Angie charged a fee of $15,000. On the back end Jonathan will receive $85,000 profit after flipping the property and paying Angie. Tia has received her check of $310,000 within 30 days. She was able to make a successful move for her career.
Deal Evaluation > Purchase Price $310,000 (Current Value)
Ø Renovations $40,000
Ø Market Value (After Repair Value) $450,000
Ø Contract Fee $15,000
Contracting A Property: Step-by-Step
1. Assigning the purchase agreement
This agreement outlines the terms between the wholesaler and the seller (home owner). Included is property information, terms & conditions, buyer & seller information, along with closing date. This purchase agreement allows the wholesaler to assign the contract to an end buyer (Investor). The end buyer must follow the terms of the agreement.
2. Within the purchase agreement is the assignment clause. The assignment clause grants the wholesaler the right to assign the contract to a third party.
3. Find a Seller
There are a variety of ways to find motivated sellers. A good way to find motivated sellers is to first build a buyers list and figure out what they are wanting. Research to determine if this kind of inventory is available. This gives you a clear idea of what sellers to target. Marketing methods for finding sellers include, bandit signs, social media ads/post, networking, and driving for dollars.
4. Find a Buyer
Buyers can be found almost anywhere. One way that many wholesalers build their buyers list in via social media, local REIA meetings, researching the owners of other local investment properties or even real estate attorneys and connecting with loan officers. The key is to always be ready to network and exchange contact information wherever you go.
Things To Remember When Marketing The Property
Prior to marketing the property you should have done your due diligence and have sufficient understanding of the condition of the property. You should know the relevant information the buyer is looking for in order to successfully sell the house. You should know the repair costs and other details regarding the market to make the deal more attractive to buyers.
When it comes to wholesaling real estate it will definitely be challenging. However, you can be a success with proper strategy, good marketing that grabs attention, capture the client’s interest, spark desire and motivate action. Consider what makes you stand out, what are the true desires of your clients? What do they expect from you and the service you are offering? All of these things should be taken into account when contracting properties. It’s all about the mindset you have. Everyone knows someone who owns a house and with persistence in executing your strategy you will succeed.