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What is Wholesaling Real Estate and How Do I Start?
Maybe you’ve had an interest in investing in real estate but were unsure how to begin. Perhaps you have even heard some terms being used but weren’t sure what they meant. Among your questions most likely is What is wholesaling real estate? Or Where Can I learn how to start wholesaling real estate? You could go purchase some wholesaling real estate books.
Or, we could break down wholesaling real estate step by step to help you get started. Wholesaling is a great place to start investing in properties, especially for those who are short on funds. It’s less involved than land lording and much less of a hassle. There are no tenants to have to deal with and transactions are quick and smooth. There are several ways to get started investing in real estate, without even having to raise any capital. It’s pretty simple really. Let’s talk about how to start wholesaling real estate.
How to Start Wholesaling Real Estate Step by Step
Most wholesaling real estate books will sum it up in five basic steps. While the concept is simple, it can take time and effort for proper implementation. It is important to think strategically to succeed. Here is a basic wholesaling real estate step by step method. This will help answer your questions about what is wholesaling real estate? It will help you get started.
Step 1: Build a Marketing Strategy
This can take a while to develop, but you’ll need a detailed marketing plan. There are a lot of tools you can use to market. Depending on your region, some may work better than others. Online or inbound marketing might include SEO, Pay Per Click ads, lead magnets on your site, social media platforms, or online business directories. Offline strategies might include bandit signs, flyers or brochures, direct mail, door hangers, door knocking, billboards or local ads.
Depending on the area you work in, the response can be different to strategies. It’s important to find the ads and strategies that work best for you and your budget. Start with a plan and try the options until you find the one or ones that work the best.
Step 2: Create a Buyers List
Right after you ask, what is wholesaling real estate, you may ask what is a buyers list? This is basically a list of investors who are trying to find opportunities to invest in properties in a specific region. Usually, you will simply compile names, email addresses and phone numbers of investors you feel might be interested in purchasing properties from you. The list will be constantly changing the longer you work in real estate. Now you may be wondering how to start wholesaling real estate buyers lists. There are several ways to collect information from investors.
- Bandit Signs – These signs are at busy intersections or neighborhoods. They are put up by investors. Call them and ask if you can add them to your list.
- Webpage – Use a web page as a lead magnet to collect leads from investors.
- Craigslist – Use local keywords to find potential cash buyers. Ask them if you can add them to your list of buyers.
- Internet Search – Just a simple Google search can yield a list of possible investors you can ask about being added to your buyers list.
Step 3: Making Negotiations
This is an important step and can make or break wholesaling real estate contracts. You’ll want to know the running rates for comparable properties in the region. You’ll need to negotiate two prices. One will be with the homeowner, offering him a price for the property. The other one is with the potential buyer. Remember that you want to make a profit on the price, so figure your wholesaling real estate contracts accordingly. What is wholesaling real estate without negotiating prices for the investor and the homeowner? You want to set the purchase fee for the home at a rate you can offer it to the investor for a higher price, so you can profit from the difference. Make sure to gather all the numbers when making calculations. You’ll need taxes, repairs needed, and insurance estimates, as well as any monthly rental income.
Step 4: Creating Wholesaling Real Estate Contracts
Once you find a property, you want to get it under contract as soon as you can. This is important, so you can protect yourself. The buyer on the contract is you – or your LLC. You’ll need to add a contingency in the contract explaining that if you cannot assign a contract for a specified amount by a certain date you are not obligated to make the purchase. The main goal of creating wholesale real estate contracts is to negotiate a price with the seller that you know is going to work for you. You also want the prices to be in a range that also helps the investor make some profit too.
Step 5: Assign the Contract and get the Deposit
Communication is key. Make sure your investor understands exactly how the transaction is going to occur. Put deadlines on offers so the deal can move forward in a timely fashion. Usually, you will collect a deposit as a down payment from the investor. This ensures his interest and it is non-refundable, so you are not stuck if they bail on you. Hold on to it until the closing process is complete.
Conclusion – What is Wholesaling Real Estate?
Hopefully, this answered your question about what is wholesaling real estate. The key to success when following this wholesaling real estate step by step sample is the investor. You’ll learn more from working through the process than you will from any wholesaling real estate books. Your most valuable tool is the buyers list. They are in reality the funding for the purchase.
Here at Salt Lake Wholesale Homes we’re real estate investors, and we are always looking to work with more wholesalers. We would like to connect with you and collaborate on real estate purchases. Want to build your buyers list? Check out our website, or give us a call at 801-810-8756.