How to Wholesale Real Estate

This article will show a beginning Real Estate Investor how to become a Wholesaler. This is commonly the easiest way to break into the Real Estate Investing industry, and should teach you the basics to becoming a professional Real Estate Investor!

Instructions

Difficulty: Moderate

Things You’ll Need:

• Computer
• Internet
• Cell Phone
• Contant Contact Email System

1. First, you need to understand the basics of real estate. A great way to do this is read a few books.
   I recommend the following:
   -Who Moved My Cheese by Spencer Johnson (Great For Dealing With Change and Fear)
   -Rich Dad Poor Dad by Robert Kiyosaki (Great For Understanding How The Rich View Money)
   -Flip by Rick Villani and Clay Davis (Great For Understanding How To Find, Fix, And Sell Houses For Profit)
   -The Pre-Foreclosure Property Investors Kit by Thomas Lucier (Great For A Basic Understanding Of Foreclosures)
   
   In the beginning you might want to pair up with a more experienced investor and offer to help them find discounted properties for them for free if they teach you the basics of contracts, escrow, and creative financing!
2. Build A Buyers List. Over the last 5 years I have built my buyers list up to almost 60,000 names, email address, and phone numbers. At first this might sound impressive, but you really only need a handful of experienced investors that don't have the time (or their time is just too valuable) to spend hunting down great deals! These will be your pool of buyers. A great place to start when building a buyers list is your local Real Estate Investor Organizations. Also, if you put out ads on www.craigslist.com and www.backpage.com that say:
   Investors Wanted...Local Property Wholesaler Selling Homes At Huge Discounts! Reply with Name, Phone Number, and Email Address to be added to our investor list.
3. Start Networking And Joining Other Wholesalers Lists. This is HUGE. The wholesale game (I am assuming its the same in Arizona as any other state) is a small community that knows of each others deals on a daily basis. Maybe they can't sell their property, but you just might have a buyer. Call that wholesaler and ask them if you can send it out at their price to your buyer and if they buy will they pay you a $3000 assignment fee? This is typically how you can start getting properties to blast out until you come up with the systems to lock down properties directly from the homeowner! When you gain more experience, the ultimate goal to being a wholesaler is going to a homeowner, putting their property under contract, and flipping the contract with either a double close or an assignment to someone on your investor list!
   
   CAUTION: Don't fall for the game where someone sends out a property to the world, you then mark up their deal without asking, and send it to your list! Reason, and I promise this will happen eventually, one of your original deals will come back to you 10-20-even $30,000 more than what you have it under contract for. It makes us all look bad. Real investors will not appreciate seeing the same property from 10 different sources with 10 different prices!
4. Get Some Property Locators (Birddogs). These will be your eyes and ears on the streets. Let everyone know that you are an investor looking to buy properties for cash (even if you have none) and want to make a deal. Offer some type on monetary compensation if they put you in touch with motivated homeowners. ( Now, before you all get up in arms because bird dogging is illegal without a real estate license, the way I get around this is to have all of my Property Locators place the property under contract and sell me the Option to buy the property for say $3000.) Property locators might need some training on your systems, but after that, they do their own marketing to find these motivated homeowners. Finding good locators is hard, so once you do, pay them well!
5. Make Great Money Wholesaling Real Estate Lock Down The Property And Flip The Contract. This is where the intricacies of wholesaling comes in and it starts to become difficult for new investors, and Realtors to understand. An Example will help:
   
   A Property Locator comes to me and informs me that Hank Homeowner is about to go into foreclosure and wants to sell quickly for cash. My Property Locator gives me his information, and informs me he has quite a bit of equity. Hanks home is worth $250,000 and he only owes $170,000. The foreclosure is one month away and his arrears are $10,000. We sit down and Hank immediately says he wants to sell and wants $225,000. I believe his home needs at least $20,000 in repairs so I give Hank 3 choices.
   
   1. I pay all cash and am willing to give him $184,000. ($250,000-repairs of $20,000 * 80% of that value gives me $184,000)
   
   2. I pay Hank $5,000 in cash, pay off his arrears, and Wrap his mortgage in order to take over his financing. I then put him through a credit repair program, and let him rent the property back from me for 2 full years with an Option to buy the property back from me for $225,000.
   
   3. I pay Hank nothing, but partner up with him placing his home in a trust with me as the beneficiary, bail him out of foreclosure, and fix up, and sell his house for as much as possible splitting the proceeds with him.
   
   Hank chooses option one, but wants $190,000.....I say deal and let my Property Locator put the house under contract selling me an option to buy the property from him for $2,500 with a closing 14 days from contract. This is where the fun begins. I then blast out Hanks property to my investor database for $210,000 knowing I will accept $200,000-$205,000. One of my investors wants the deal for $200,000 so I execute my option, then I assign my contract to the end investor placing myself on the HUD as a Realtor getting paid $7,500 with the remainder going to my Property Locator for his option fee. If your not a licensed agent, you go on the HUD as receiving an assignment fee. I then repeat this whole process as many times a month as I can!

Tips & Warnings

• Before I started www.kleverinvestor.com, I was a birddog for other investors. I received a list everyday of homeowners in foreclosure and door knocked to get deals. This is very difficult to do but definitely teaches you a lot about your local community, house prices, deal structuring, and investing. This basic knowledge helped me graduate to the next level of investing which was wholesaling. Now I have my own rental portfolio and continue to wholesale multiple deals a month!
• If your looking to invest in Arizona, go to www.kleverinvestor.com and join my mailing list. I am currently selling properties at 60%-75% LTV in some really great areas of town.