How To Get Started With Real Estate Wholesaling
Education
The Art And Science Of Wholesale Real Estate: The Beginner’s Resource Guide + Training Solution
What do you do when you want to transform yourself into a real estate investor but don’t know where to start or how to finish well? You create and close a wholesale deal. Real estate wholesaling doesn’t require any financial investment from you. You don’t need a down payment or a strong credit score, and you don’t need to buy and sell any property.
All you need is a distressed property, a motivated seller, and an end buyer who wants to take over.
Acting as the middleman, you can collect a wholesale fee for facilitating a sale where everyone wins – without going back to school, getting stuck with properties you don’t want to manage, having an 850+ credit score, or risking your own capital.
Wholesaling real estate is a quick-win strategy that can help you stockpile ready cash, quit your 9-5 job, and begin building generational wealth. Here’s what you need to know and what shortcut you should leverage before jumping in.
What Is Wholesaling?
State wholesaling is one of the lowest barriers to entry options for a beginner in the real estate business. A wholesaler will coordinate the quick sale of distressed or foreclosing properties between a motivated seller and a cash buyer.
After digging into multiple channels for locating these properties and opening negotiations with sellers, you will create a contract with the seller and a separate contract with the buyer. Terms of the contract will allow you to sell the option to buy property (or “assign the contract”) to a real estate investor who will either flip the home and sell it for a higher price or turn it into a cash-flow rental property.
A good wholesaler is someone with a database of potential buyers and the skill set to find and negotiate with motivated sellers. It’s also someone who isn’t emotionally invested in each deal but who can play the long game and pass up deals that simply don’t work.
Wholesaling vs. Flipping: What’s The Difference?
A house flipper is someone who will take ownership of the home while conducting renovations to improve the market value of the property.
Their goal is to improve the sale price and make money on the other end or to convert the property into a short-term or long-term rental.
The return on investment takes much longer to see when flipping houses and carries more risk.
How Does Real Estate Wholesaling Work?
A Step-By-Step Guide
Learn The Real Estate Laws In Your Target Area
What works in Texas may not work in California. It’s important to understand the requirements and parameters you must meet in order to secure and close a wholesale deal in your target market. Talk with local real estate agents and build partnerships with them for long-term success.
Learn All The Terms Of A Wholesale Real Estate Deal
Even if this is your first wholesale real estate transaction, you don’t want to sound like it. Learn the lingo of the industry and come prepared for every negotiation.
Build A Solid Database Of Potential Cash Buyers
All the sell contracts you can collect won’t make you any money if there are no buyers – or not enough buyers – to sell them to. In order to sell a purchase contract, you need to know where to find cash buyers and develop relationships with them.
Locate Motivated Sellers And Distressed Properties
Perfecting this strategy is the most valuable skill you need to be successful at wholesaling. There is a myriad of places to look for potential properties, many of which most beginners never think of. From searching county records and foreclosure lists to probate listings and evictions, the opportunities for wholesale deals are everywhere, no matter what the housing market looks like.
In the enTREpreneur Academy, we teach our students to leverage at least 15 different strategies for capturing both motivated sellers and cash-ready buyers.
Create A Contractual Agreement With The Seller
Negotiate a profitable deal with the property owner. Calculate a number that is roughly 70% of the current property value minus any repair costs and your assignment fee. Now determine the ARV (after repair value) of the property and make your offer. Too high, and you risk being unable to find a buyer but too low, and you miss the deal altogether. It just takes good math and strong negotiation skills.
Sell A Purchase Contract To A Potential Buyer
The deal is already made, and the price has been decided. Now all you need is a buyer who’s ready to invest in their next flip or rental. Create a separate purchase contract for the buyer, and this is what you’re selling.
Close The Deal And Cash The Check
Once everyone has signed on the dotted line, you’re free to cash your fee and move on to securing the next great deal.
There’s a lot to unpack when learning to wholesale properties
The enTREpreneur Academy has created the end-to-end curriculum to help you nail your next wholesale deal and every other deal after that.
Here’s a snapshot of everything you’ll learn inside:
- All The Wholesaling Terms To Know
- Building A Great Team
- Wholesaling Tools To Help
- How To Find Sellers
- How To Pull Motivated Seller Lists
- How To Contact Sellers
- The Art Of The Appointment
- How To Negotiate With Sellers
- Locking Up The Deal
- How To Build A Buyers List
- How To Ace A Buyer Walkthrough
- Assigning The Contract
- Managing Communication
From starting your search and learning all about the industry terms to structuring and closing out deals, the enTREpreneur Academy curriculum is your comprehensive solution to perfecting a wholesaling business in the real estate industry.
Additional Tips For A Successful Wholesaling Real Estate Investment Strategy
Never Have Only One Deal In The Pipeline
Don’t give yourself downtime to get stuck and frustrated. Keep it moving and keep earning.
Never Stop Trying To Make Connections With Buyers
You’re in the business of connecting other people to financial solutions. This is a people-driven industry. Always be on the lookout for networking and connecting opportunities.
Never Stop Searching For Potential Properties
The information is available from a minimum of 15 different sources. Your list should be an ever-growing, ever-changing asset for your real estate business.
Always Partner With A Reliable And Experienced Mentor
Don’t make unnecessary mistakes or get stuck in deals that aren’t a good fit for your buyers. By working with an experienced realtor or investment mentor who is experienced in the local market, real estate laws, and wholesaling houses, you can navigate the world of wholesaling without unnecessarily sacrificing your time, energy, and resources.
There’s a lot to unpack when learning to wholesale properties, but the enTREpreneur Academy has created the end-to-end curriculum to help you nail your next wholesale deal and every other deal after that. Here’s a snapshot of everything you’ll learn inside:
Frequently Asked Questions About Wholesaling Real Estate
How much money is needed to start wholesaling properties?
You can start wholesaling real estate with exactly $0. You are not taking ownership or purchasing the property. You’re negotiating for the right to purchase the property at an agreed-upon price. You will then sell that right (the contract) to a cash-ready buyer who will take it from there. Some deals may require earnest money, but this can be a nominal amount as low as a few hundred dollars or less.
What can a property wholesaler expect to make?
Wholesalers can expect to earn a minimum of $5k per deal. But depending on the location, the real estate market, and the motivation of the seller, it could be as high as $25k. Your only revenue limitation is the number of contracts you can secure and the number of deals you can close.
What kind of degree or education do you need to start wholesaling real estate?
Some states may require a licesnce but this wealth-building strategy doesn’t require months or even years of traditional education or any college degrees. However, you can avoid many common pitfalls by taking some targeted training or working with a real estate investing mentor.
The enTREpreneur Academy training for real estate wholesaling can be taken at your own pace, and each lesson is just a few minutes long, packed with the specific and highly practical information you need to make measurable progress.
What are the pros & cons of real estate wholesaling?
Pros
- It’s easier and faster than flipping houses
- It requires less time, energy, and money investment
- Low-Risk and low to no cash barrier to entry needed
- There’s no credit check required
- It’s not geographically limited
- You’re helping to revitalize distressed properties for neighborhood improvement
- Property value increases
- Wholesaling is a solution-driven deal that helps all parties
Cons
- Picking up houses at below-market costs can price out first-time home buyers
- Homeowners will get less money than when making an end-buyer deal
- Wholesaling doesn’t work if you don’t have or make connections with possible buyers
- It can take time to find and close perfect-fit deals
- Wholesaling may require a real estate license in some states
- Some deals may require earnest money, which could be lost if you can’t find a buyer