The Covid-19 pandemic forced almost everyone to stay at home. Every activity that wasn’t considered essential had to move from offices, bars, shops, and basically every public space to our homes. Some people were deeply affected by this, either because they couldn’t work or adapt to the virtuality. However, many other people did manage to find different ways to keep working, and new strategies appeared to stay.
This is the reason why, a year and a half after Covid hit us, we’re talking about virtual wholesaling! Mainly if you chose real estate as a side hustle, virtual wholesaling is perfect to start working it in your free time and from the comfort of your couch. Yes, you might need to be a bit more creative, and you’ll still need to dedicate a few daily hours, but hey, at least you can do it on your slippers!
And for you to succeed, real estate investor Josue Llanas shared at his last webinar at Real Estate IQ a cheat sheet, a complete plan with all the steps to start wholesaling houses and master it. If you were wondering where to start, this is what you need to succeed!
Wholesaling is a four-part job: marketing – which includes market research, pulling a list and finding leads –, acquisitions (or sales process, to put it simply), disposition (or selling the deal), and transactions coordinating (or successfully getting all the people involved in the deal together).Josue Llanas, real estate investor and expert wholesaler
Nowadays, between 70% and 80% of the deals he closes are done virtually. And the keys behind his success come down to two: having a system in place and being consistent. “The number one thing for wholesaling, and real estate in general, is that you have to have the right mindset. You need persistence and grit because it consists of hours of repetitive tasks and failure,” he observed. Of course, he wasn’t trying to be discouraging. On the contrary, he intended to be clear about what it takes to thrive since your mindset will dictate your success and growth in the business.
Now that you decided this is genuinely what you want to do let’s look at the 10 steps to build a wholesaling business!
Step 1: Market research
The number one question you need to ask yourself right at the beginning is where you should target. The answer is simple: where buyers are interested in buying properties. You need to find a hot neighborhood. And you can do that by networking and talking to people, or – since we’re talking about virtual wholesaling – by analyzing the MLS.
“Search for a cluster of sold properties. That indicates there’s a lot of demand in the area. Look for areas with a lot of activity and low days on the market,” Llanas recommended. He also advised focusing on one particular zip code at the beginning so that you can focus on the area’s ARV, properties’ characteristics, comparables, and so on. Eventually, you need to be able to come up with a price number by just looking at the area.
Step 2: Pull a list
Did we mention you need consistency? Well, this is the first step to achieving it. Subscribing to a listing will give you a flow of deals coming to you periodically. Then, you filter leads based on your market research and skip trace the final list.
Or, you can always subscribe to Real Estate IQ’s Premium Off Market Leads and avoid paying extra for skip tracing! Our listings arrive at your inbox daily, from Monday to Friday, organized by type of lead – we have 13 different ones, though they vary by location. And they include the contact information (phone numbers and email addresses) of homeowners and a close relative.
Step 3: Select your marketing method
There are many options to choose from here, like cold calling, bandit signs, SMS texting, RVM, VB, PPC, SEO, Facebook, radio, or television. Nonetheless, Llanas suggested sticking to one marketing method and moving to something else once you get extremely good at it.
“I love cold calling. It’s a skill you can develop and apply to any industry. And it’s the number one skill to learn when you’re in sales. Plus, you interact with homeowners and develop a personal relationship. And at the end of the day, people do business with people that they like,” he revealed.
Step 4: Cold calling
Due to the fact that we’re talking about virtual wholesaling – and this is the speaker’s favorite marketing method –, let’s focus for a moment on cold calling. Once you have your skip-traced list, the best thing to do is to use a platform that dials for you so that you can optimize your time.
When someone answers, it’s advisable to have a script that helps you talk to potential home buyers. Also, keep in mind that the first five seconds are the most important and will determine the entire tone of the call. “In my experience, I discovered that dazed and confused is the best opener. As human beings, we have an innate nature to want to help others. This way, you can hook the person on the other side of the line,” Llanas shared.
So, don’t be afraid to start with something like, “Hey, I don’t know if I have the right number, but maybe you can help me out. You wouldn’t happen to know the owner of 123 Maine Street, would you?”
Step 5: Get a wholesaling CRM
A Customer Relations Manager (or CRM) is essential for real estate professionals. We’ve already talked about what CRMs are and why they are important, but Llanas emphasized their role for wholesalers. Why? Well, because it takes roughly seven to eight phone calls to one seller to close a deal. So, the money is definitely in the follow-up.
“The CRM is the backbone of your business. Having somewhere to store all your leads is crucial to the success of your business because you don’t know if the lead you contact today will end up selling to you in 6 or 12 months,” explained the speaker. In addition to this, he encouraged everyone to get a CRM. Even if real estate is just a side hustle to you, you still have to treat this as a business. And if the money is in the follow-up, how will you keep track of all your leads, notes, and calls without one?
You can opt for free choices like Podio and add some built-outs to make it worthwhile for your purposes. Or you can check out our CRM Integration, which is based on Podio, but we do the integrations for you!
Step 6: Acquisitions
Now that your CRM has everything organized, it’s time to move to acquisitions. Llanas indicated that this is the most important component of your company. It’s the step that will keep the deal flow going and the one that will allow you to scale your business.
We mentioned at the very beginning of this article that acquisitions are like the sales process. Thus, what you have to do here is negotiate with potential sellers. How could you do it? The speaker detailed all about it in this article: “How to close a deal applying psychology.” In short, you need to develop a strategy and convince the potential seller to sign a contract with you.
Step 7: Transaction coordination (part one)
Suppose you convinced a motivated seller to sell their property and put the place under contract. The next step is to send the executed contract to the Title Company so they can clear it. Also, you order a survey, if required.
At this point, you should also prepare yourself to advertise the home to potential sellers. To do it virtually, Llanas recommended Facebook groups. “You can find almost everything in there these days. I do a lot of my business on Facebook. For instance, you could join groups in the area and contact people to go take some photos and install a lockbox,” he detailed.
Step 8: Dispositions
Until now, you have the contract and the assets to advertise the property. But how do you sell a deal? Llanas had several ideas to do it virtually:
- Ask the title company which investors are frequent clients, get their information, and offer them the property.
- Post the details of the property on Facebook groups and Craigslist.
- Search for active realtors in the area on the MLS, contact them and ask them if they have an interested buyer.
- Go to tax records in your property’s zip code, see what buyers have been acquiring most properties, skip-trace them – our On-Demand skip tracing comes in handy at this point – and contact them.
- Upload all emails of potential buyers and agents in that zip code, and send them an email blast.
Step 9: Transaction coordinating (part two)
Once you have an assignment agreement or purchase agreement signed, you should also send it to the Title Company. When they confirm the paperwork is legit and everything’s ok, schedule the closing with both the buyer and the seller.
This step primarily consists of phone calls with all parties involved to ensure everyone is on the same page and nothing will prevent the closing.
Step 10: Close the deal
Yes, it’s payday! After the transaction is finished, you’ll get the commission for wholesaling the property. Llanas advised wisely reinvesting profits. “You want to scale, but you want to do it systematically. If you put too much money on marketing, for instance, you’ll have all these leads but no time to contact them, so that money ends up going down the drain,” he warned.
To that effect, the real estate investor suggested allocating at least 25% into marketing at the beginning and 20% to GnA (software, subscriptions, and dues). “This way, you’ll grow slowly but surely,” the speaker assured.
This is it! These are the ten steps to follow if you want to start wholesaling houses. Most of them apply to virtual and on-site wholesaling, and some of the advice is specific to the first one.
When you reach the last step, all you need to do is rinse and repeat. In order to succeed, don’t forget to be consistent, have a system in place (like our CRM Integration), and get the best data in the market on your side. “The most difficult part of wholesaling is staying on top of acquisitions while doing other things. So, make sure you don’t take your eye off it because it’s what brings in the money,” Llanas concluded.
Want to know more about wholesaling? Then you might want to check out this basic steps to close a deal, and this beginners’ guide to make a profit without investing!
Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is designed to be legal or financial advice.