July 22, 2021

How to start wholesaling in Real Estate?

Taking your first steps in the real estate business is exciting. You’re full of expectations, and the chances to succeed seem to be everywhere. However, there’s a small detail that could turn out to be quite discouraging: most of the time, you need money – either your own or borrowed – to make an initial investment. Well, this is not entirely true: here’s the ultimate strategy to invest without money nor credit!

This is an approach that doesn’t require to have money or a real estate license. All you need is a positive attitude and a little bit of patience. You’re going to negotiate with people that are losing their homes,” warned real estate investor Sonia Medrano at Real Estate IQ’s webinar “Invest in real estate without money and credit.” By now, you must be wondering what this strategy is, so enough with the mystery.

The way to invest in real estate without having to spend a single dollar is wholesaling. “This strategy is quite different from the rest and consists of flipping a contract. Your work limits to finding a property, signing a contract, and flipping it with an investor. Hence, no money comes out of your pocket,” encouraged Medrano.

Real estate events.

How does wholesaling work?

There are three actors involved in this strategy: the seller, the buyer/investor, and you, the wholesaler. Your job is to find investment opportunities, secure them under a contract, and sell them to an investor. He or she is the one who’ll pay the closing costs (like the Title Company’s fee), and the rehab, if necessary. Moreover, the investor will be in charge of selling the property afterward.

The first thing you need is vision. You have to focus your mind and heart towards your purpose, that one thing you genuinely want to do with your life. Think about where you see yourself, not in five years but this year. Once you’re convinced, be patient, empathetic, and caring.

Sonia Medrano, Real Estate investor

If you have decided to be a wholesaler, it’s time to find properties. You can do it for free, following one (or several) of these strategies:

  • Let people know that you buy houses in cash.
  • Use every free means of communication available to promote yourself (from changing your WhatsApp status to improving your LinkedIn profile, take advantage of every social media platform you can handle).
  • Make connections with Uber drivers and all sorts of other professionals that are in touch with many people daily.

Nevertheless, if you have the chance to spend a little money, you could speed up the process of finding homes by subscribing to property listings, like the ones we offer at Real Estate IQ. “This will be an investment, without a doubt. Keep in mind that 90% of the job is solved by subscribing to the right list that feeds you information on a daily basis,” observed the speaker.

For instance, Real Estate IQ’s off market listings will arrive at your inbox every day with fresh and valuable data about off market properties. These are homes that haven’t reached the market yet, but whose owners are known as motivated sellers since they’re having trouble with their mortgage payments or inherited a house, among other reasons.

As for investors, Medrano assured that networking is the ideal way to find them. “At networking events, you’ll meet investors, lenders, other wholesalers – that can become your partners –, Title Companies’ owners, insurance agents, and more. Joining real estate investors events is the best choice, without a doubt,” she observed.

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“I found a deal. Now what?”

Once you chose a deal, it’s time to contact the homeowners. You can do this by visiting the address, sending letters, or – if you are subscribed to Real Estate IQ’s Premium Off Market Leads – use its skip tracing information to call them and send them emails.

“Keep in mind that the sellers are facing a hard time, so they might not be very receptive. If this happens, don’t take it personally, they’re not mad at you. It’s crucial that you leave them your contact information and that you make it very clear that you’re there to help them solve the situation,” advised the speaker. In addition, she emphasizes the need to be humble and empathetic and introduce yourself so that sellers can tell you’re a noble and honest person.

On the other hand, you should also choose the right time to contact owners. For example, if you’re working with a pre-foreclosure list, they may be at home in the morning since it’s quite possible that they’re unemployed, and for that, they’re unable to pay the mortgage. Nonetheless, if you prefer knocking on doors, weekends are safer days to find people at home.

When you finally set up a date with a distressed seller, don’t forget to bring the contract and comparables with you. Besides listening to them and explaining the selling process, make sure to let them know that you’ll have to go back to the property with investors.

The contact will contain information on the parties and the property, but be careful! Leave the property price you negotiated with the owners out of the document. The only price that should be included is the ARV (in other words, the property price after the repairs). After the sign, you have to take the contract to a Title Company to ensure everything is correct. While on this topic, Medrano said that you should find a wholesaler-friendly Title Company to know how this investing strategy works.

The Title Company is also in charge of closing the deal with the investor, and he or she will pay for the costs. When assessing the property, be sure to take a contractor with you so the repair costs are as accurate as possible and your profit doesn’t get affected. With the correct numbers, you’ll be able to define your commission and, at the same time, leave room for the investor to benefit, as well.

“Wholesaling is one of the easiest strategies to capitalize ourselves. Once we start earning money, we’ll be ready to invest,” Medrano concluded.

Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is designed to be legal or financial advice.