If you need to earn some extra cash to get started investing in real estate, wholesaling is a great way. Even if you are not sure of values, repair cost, potential rents, etc. you can still wholesale as many properties as you can find as long as it’s a deal. To get started you can team up with someone who is already closing deals and has a ready list of buyers. You can get an education and get paid for finding properties. Whoever you team up with can help you negotiate the sale and terms and they will follow the deal through to closing or payday as we call it! There are many ways to find deals and plenty of deals to go around. I wouldn’t suggest starting with REO properties as now the Lenders will not allow you to assign your contract so you have to have the cash or fast financing to close in your own name or do a double closing and that can become tricky especially for someone starting out.
If you are going to be in the business of buying houses, be IN THE BUSINESS! You will need cards, flyers, post cards, bandit signs, sign on your car, etc. I would rather have 10 ways to find 1 house than 1 way to have to find 10 houses.
Making the offer. I’m a firm believer that if you’re not embarrassed by your offer then it’s too high. Never put down the seller or the property though. You have to be very tactful in presenting your offer as to not offend anyone. You can always go up but you can’t come down. Well, that’s not entirely true but that’s another article. The good thing about teaming up with someone who is already closing deals is that they can do the negotiating with the seller and probably get a better deal than someone starting out. We have actually had wholesalers bring us a deal and after talking directly with the seller we were able to negotiate a better deal than the person who brought it to us so everyone in the deal made more money.
Finding buyers. You need to start building your own buyers list or you could just continue to work with who ever you are already teamed up with. We have people who continue to send deals to us even though they could do it on their on. The reason they continue to send their deals to us is that we have been blessed with the people we do business with and we can generally sell a house in a couple of hours…yes I did say hours and we generally close in 5-10 days although some deals take longer but we have closed in as fast as 2 days. The reason we can sell so fast is that we make it easy to buy. The investor gets 100% financing including the rehab cost and they even pull cash out of the deal on the refinance after repairs. Then they still rent the property out at a positive cash flow.
Entity structuring. You should form a corporation to use for wholesaling. You don’t want to be classified by the IRS as a dealer by doing deals in your name. If that happens, you lose many of the benefits of investing for long term when you start holding properties. You also want to put the properties you are going to hold in a separate entity. See your advisor.
We have created a training course that we use to teach our employees to buy real estate directly from our office. We buy 10-15 houses a month and we do all of our business by telephone, fax, Fed Ex, email and internet. The course is now available to other investors and you can get more information at www.UltimateBuyingMachine.com.
