Learn More At FortuneBuilders:
Wholesale Real Estate For Beginners: What Is It & How Do I Start?
Follow FortuneBuilders on Social Media:
*Facebook: https://www.facebook.com/flipthishouse/
*Instagram: https://www.instagram.com/fortunebuilders/
*LinkedIn: https://www.linkedin.com/company/fortunebuilders
*Twitter: https://twitter.com/fortunebuilders
Attend Than Merrill’s Real Estate Class Near You:
https://event.fortunebuilders.com/class/?utm_source=youtube.com&utm_medium=referral
VIDEO TRANSCRIPTION:
Real estate wholesaling consists of finding a discounted property, putting it under contract, assigning the contract to a potential buyer, and charging that new buyer a fee; usually around 5 to 10 percent of the sale.
STEP 1: Find a property to wholesale.
The best wholesale deals come from distressed properties, as these properties are often priced well below market value. Distressed properties often need serious repairs or are owned by individuals who are highly motivated to sell. Motivated sellers can include individuals facing foreclosure, estate heirs, absentee owners, or properties with liens, for example. You can find distressed properties by networking with real estate professionals in your area, creating bandit signs, driving for dollars or setting up a direct mail campaign!
STEP 2: Make an offer.
Be sure to approach every seller delicately and be transparent about your role as a wholesaler. Discuss why working with a wholesale investor is beneficial to homeowners when trying to negotiate a low price. Gain the seller’s trust by explaining how you plan to handle the entire process from inspection to close.
STEP 3: Assemble your team.
Every real estate wholesaler needs a title company, contractor, and appraiser in their rolodex to ensure their transaction runs smoothly. An appraiser will make sure you’re paying a reasonable price for the property, a title company will run a title search, and a contractor will help you accomplish Step 4…
STEP 4: Assess the property’s needs. Visit the property with your contractor to create a scope of work and estimate of repairs. You will eventually pass this information along to your end buyer as well as an estimated ARV, or “after repair value”. Doing so will show the buyer the full potential of the property thus increasing your chance to profit.
STEP 5: Find your buyer and negotiate the deal. The best way to find a buyer is to network with like-minded professionals in your market. Attend a local REI meeting and pass out your business cards to everyone from contractors, to attorneys, to other investors. Explain that you’re always on the hunt for a great deal and looking to build your buyers list. After finding an interested buyer, it’s time to talk terms. Determine a “finder’s fee”, usually about 5 to 10% of the sale price.
STEP 6: Close the deal. There are 2 ways to close a wholesale deal: an “assignment of contract” or a “double close”. To perform an assignment of contract, wholesale investors must add a clause to their contract that states they have the right to sell that contract to an end buyer for a fee. A double close, on the other hand, consists of actually purchasing the title of a property and almost immediately reselling it to another buyer. A double close is very similar to a traditional buy and sell, it just happens at a much faster pace.
Will you give real estate wholesaling a try now that you’re familiar with the process? Reveal your experiences in the comments below!