A few grand, it's 10x harder than you think, and you'll run into problems that aren't covered in any books.
SPONSORED: GiganticWebsites.com: We Build Sites with THOUSANDS of Unique and Genuinely Useful Articles
30% to 50% Fastlane-exclusive discounts on WordPress-powered websites with everything included: WordPress setup, design, keyword research, article creation and article publishing. Click HERE to claim.Join over 90,000 entrepreneurs who have rejected the paradigm of mediocrity and said "NO!" to underpaid jobs, ascetic frugality, and suffocating savings rituals— learn how to build a Fastlane business that pays both freedom and lifestyle affluence.
Free registration at the forum removes this block.Yeah ive heard, ive been reading alot on that on biggerpockets.
There's just two things im trying to weigh around in my mind and I would like to get some opinions:
1. Why would a seller sell to a wholesaler that gives them a time frame of 30-60 days vs someone with quick cash, is the seller immediately relived of the property? and considering that the deal is a pass through escrow wont they shy away from the deal, or are they unaware?
2. When that contract expires are there any repercussions? Can you just walk away from the deal? i've read and heard there isn't any consequences but i think thats too good to be true.
Any input is appreciated.
I'm sure people have started with zip and ran it up from wholesale profits.
But what is a reasonable amount of cash to start wholesaling with? Considering contracts and other things needed to close the deal.
Ive read many recommended books from here over the past 4 months and i feel like I'm ready to execute.
Not sure if it is necessary but i will be opening an LLC next week.
I hope some experts on here can shed some light my way, thanks in advance
cheers
Thank you
My last questions would be: how much do you usually put down for the earnest money deposit? like 100 bucks every time? or does it depend on the value of the house. And if your deposit has any influence on theyre willingness to sign
An LLC is good for certain things. Asset protection would be top on the list. Each state has different costs and other terms so you need to evaluate that for yourself. It is a cost vs. value evaluation.Noted. Before anything Im going establish a large buyers list to minimize that. (Im pretty close with a decent amount of investors, landlords, and realtors).
Other than finding a buyer,advertising, and making sure im getting a Great not good deal, what other major hoops should i be looking out for?
Also, do you think an LLC would be beneficial in the wholesaling game?
Very much agreed...
For some reason, people seem to think real estate is a get-rich-quick industry where anyone with a pulse can make lots of money without lots of effort.
I know it's not a popular sentiment on this (or other) websites focused on entrepreneurship, but if you want to learn how to build a successful real estate business -- or any business -- my best recommendation is to get a degree (or some formal training) in business and finance. Find a good business school that has an entrepreneurship program. And/or get a job in the industry, make connections, learn from the ground up and then go out on your own when you have some cash in your pocket and some experience under your belt.
Speaking of cash, if you don't have any, real estate probably isn't the best place to start. You'll see people claiming that they've (and their students) have made tens or hundreds of thousands of dollars in days with no cash and no credit, but in my experience, that rarely ever happens. When it does, it was more due to luck than skill -- and certainly not due to some guru "system" that taught them how to create money from nothing.
If you want to be a real estate investor, treat it like a business. Learn to run a business. Learn to scale a business. Learn to finance a business. Etc. And then the path to success will be clear...
Noted. Before anything Im going establish a large buyers list to minimize that. (Im pretty close with a decent amount of investors, landlords, and realtors).
Other than finding a buyer,advertising, and making sure im getting a Great not good deal, what other major hoops should i be looking out for?
Also, do you think an LLC would be beneficial in the wholesaling game?
The guy who made $148,000 on a wholesale deal just made $50,000 on a wholesale deal on Sunday (2/14/2016). He has not spent any money on marketing to find deals in many many years yet still closes several wholesale deals a month.
You can't use the same old methods for finding deals that everyone else is doing. Or you will have a hard time in a wholesale business.
I really like the "paying off the mailman idea" not sure how ethical that is but I LOVE IT!Here is one of many alternative methods of finding deals ( without spending $10,000 a month in marketing)...
Before I was involved in real estate investing, I was a stay-at-home Mom for TWELVE years. On Tuesday's there was a Mother's Day out program at our church. I could take my young son and daughter there from 10-2 then go shopping or go back to bed.
When I started real estate investing in 1993/1994, I didn't have extra cash to spend on marketing and didn't know how to do marketing anyway. So, I got in my pick up truck then drove around town in the less than median priced neighborhoods looking for vacant looking or run down houses. I'd track down the owner usually by talking to neighbors, get a contract on the property, then wholesale to another investor. Some months I'd do 1 deal. Some months I'd do 3-4 wholesale flips.
Then i thought, if I could just get more eyeballs out there looking for run down houses, I could do more deals and make more money.
So, I asked the pastor of the church if I could hand out a flyer to recruit the Mom's who took their kids to the Mother's Day out program to go drive around looking for houses for me. I knew they had Tuesday's off and would appreciate the opportunity to make money but still be devoted to staying home wih their kids. Most all the Mom's jumped on the opportunity to make some extra money for their family. Some even asked if they could go looking for houses when it was not Mother's Day out day.
I agreed to pay them at least $500 for every house I was able to buy. I usually paid them $1000 or more. The more they made, they more than wanted to go looking for houses.
Instantly, I had more leads coming in and my business doubled.
You can also recruit the FEDex drivers, mail delivery people, and even run ads on craigslist to recruit property locators.
The more eyeballs you get out there looking for deals, the more deals you will do... without spending money on marketing.
You also get to the house and the seller before anyone else even knows about the opportunity so there is no competition. 99% of the time, there is no for sign out front.
I'm sure people have started with zip and ran it up from wholesale profits.
But what is a reasonable amount of cash to start wholesaling with? Considering contracts and other things needed to close the deal.
Ive read many recommended books from here over the past 4 months and i feel like I'm ready to execute.
Not sure if it is necessary but i will be opening an LLC next week.
I hope some experts on here can shed some light my way, thanks in advance
cheers
A few grand, it's 10x harder than you think, and you'll run into problems that aren't covered in any books.
You don't act as a wholesaler. This is my opinion and only my opinion. If you tell them your going to try and sell their property 99% of the time they will tell you to F off. The way I do it is I work for a house buying company, I have to run everything by my "boss" I have very good relations with my cash buyer. I'll comp the house out and guessitmate repaires by what they say, if i think it can be a deal I'll go check it out, I usually bring my cash buyer along as he knows his rehab numbers. Everyones numbers will be diff. If he likes it, I'll lock it up and assign the contract to him. You prolly won't make as much as if you were to do it by yourself and shop the contract around. I sleep well at night knowing the day I sign the contract with the seller someone already wants it and I have it pre sold.
My contract has an inspection period, after the inspectiong period if I back out I'll loose my earnest money deposit.
NP, any other questions feel free to ask.
I have heard of people making money wholesaling properties. There are many obstacles to work through though. This business gets a bad rep from people that tie up properties under false pretenses and then cannot sell them. Most sane people will not allow a wholesaler to tie up the property without a pre-determined buyer.
It takes more capital and experience to buy and flip, but I like the model better.
Earnest money is usually in the thousands. It really depends on your reputation and seller desperation though.
I started wholesaling last year. It took me awhile to get going but I finally started doing some deals. I agree that you can sell most of your deals to a few reliable buyers over and over but I also think having a deep buyer's list can be advantageous. I've run into a couple of wholesalers that had decent (not great) deals and couldn't find a buyer. If you have a strong buyer's list you can add value by simply blasting their deal out to your buyer's list. If you find a buyer, you can split the assignment fee with the wholesaler who put the property under contract.No need for a large buyers list. You said your pretty close to some investors, call them up and ask them exactly what they are looking for, and what neighbor hoods they want, then go out and find it. Ask them for very specific areas, from what street to what street. Drive the streets and write down every address of every house that needs work or looks dated. Go homes and look them up on your county assessors site, mail them. This will be one of your best lists. Whenever I enter a new market I do this, it will take hours and hours. You seriously only need 2 or 3 SERIOUS buyers. If you find a deal, a true deal, they would buy it...why wouldn't they? I have two different people that buy all my rehab deals a 1 guy that buys all my tear down deals.
I started wholesaling last year. It took me awhile to get going but I finally started doing some deals. I agree that you can sell most of your deals to a few reliable buyers over and over but I also think having a deep buyer's list can be advantageous. I've run into a couple of wholesalers that had decent (not great) deals and couldn't find a buyer. If you have a strong buyer's list you can add value by simply blasting their deal out to your buyer's list. If you find a buyer, you can split the assignment fee with the wholesaler who put the property under contract.
Usually JV or co-wholesale deals like this aren't home runs but they pay the bills and in some cases, require very little work, especially when you have a great buyer's list. I'll gladly take a couple grand to send out an email or two. If you have a great buyer's list, and you cross paths with other wholesaler's who need help moving their deals, you can cut yourself into their deal by finding them a buyer. Just make sure that they're actually deals with some meat on the bone because no matter how great your buyer's list is, nobody is going to buy a bad deal.
What are some alternative ways that you have heard of?If wholesaling is done the old school way, then it is true that you will be lucky to make $5,000 to $10,000 per deal in less than a week. Still not bad.
But there are a lot of newer strategies for finding and selling wholesale properties which net a much better profit. Even more profit than a rehab.
Last week I did a coaching call with a guy who made $148,000 net profit on a wholesale flip. The week before that I did a coaching call with a lady who made $27,500 on a wholesale flip.
You can't use the same old methods for finding deals that everyone else is doing. Or you will have a hard time in a wholesale business.
And, if you want to make substantial profits, you should not just assign your contract. There are much better ways to sell the proeprty which will maximize your profits.
Wholesaling is an excellent way to get started. You don't need much cash, no credit and no partners.
There is much less risk than rehabbing properties because you don't need to actually buy the house or fix it up.
I believe it. Three weeks ago, I made $60K on a wholesale deal that I purchased expecting to make $50K as a flip. It happens...and when you have experience, a big network and cash to do marketing, it's really not that tough.
That said, for everyone like the two people you mentioned (and for every person like me), there are probably 100 people who try to do wholesaling deals who never do a single one. Why? Because a good wholesaler needs to be better than all the flippers and landlords they are reselling to. A wholesaler needs to find the deals I'm looking for (and hundreds of other investors like me are looking for) -- which is tough when I'm spending $10K/month on marketing and they don't have any money to spend -- and even if they find a deal, they then need to convince the seller to sell to them instead of me (or the dozen other investors who have contacted that same seller) -- which is extra tough because as a flipper I can pay more than any wholesaler.
I talk to dozens of people per week who have bought wholesaling courses, gone to seminars, purchased coaching, etc., and then never did a deal. They quickly realize that wholesaling without money or experience is like an amateur poker player with a tiny bit of cash sitting down at table full of professionals with large bankrolls. Sure, the amateur will occasionally get lucky and win a hand, but 99% of the time, he's going to walk away without his little bit of cash and having nothing good to show for it.
If someone wants to attempt to be in that 1% of people who can become successful wholesalers with no cash and no experience, I wish them good luck. But, there are plenty of other ways to make money that have higher chance of success and require less effort (in my experience).
Join Fastlane Insiders.