Keys to Real Estate Wholesaling success

Wholesaling is a great entry point into the field of real estate investing, & is a great way to generate capital needed to market and find more deals, whether for more wholesaling, to fix & flip or to buy & hold. By finding under-valued properties with motivated sellers & either selling them outright or assigning the contract to a buyer, without doing any repairs on the property, wholesaling is a great way to learn your way into of real estate investing, while making money in the process. But what is really involved in being a real estate wholesaler? What do you need to do regularly, or even daily, to achieve your real estate wholesaling goals? What does a typical day for a real estate wholesale investor look like?

Here’s an overview of the many critical tasks involved in becoming successful at wholesaling real estate.

How Wholesaling Real Estate Works

Wholesaling real estate is a process that consists of finding a property with potential, putting that property under contract, and selling the rights to sell that property to another investor for a finders fee. Real estate wholesaling is a great way for anyone who can commit to the initial education, the time needed, and the ability to wear many hats to generate capital, and can be especially helpful to real estate beginners to help get their businesses up and running if need more liquid capital in the beginning of their business.

There are two ways to successfully close a wholesale real estate deal. There is the double-close, which is when a buyer actually purchases a property, closes on the deal and the re-sells the property to different buyer. Next, there is the “assignment of contract”, which is when a buyer puts a property under contract and adds an assignment clause to the contract that allows them to pass (sell) the rights to another buyer. The original buyer that got the property under contract is then paid by the buyer to purchase the right to purchase the property, for a percentage of the cost of the property or a set fee.

If you are wondering what it takes, keep reading for an explanation of the key elements needed to run a successful real estate wholesaling business.

Real Estate Wholesaling in 3 Steps

Most investors choose to become a real estate wholesaler as a first step, before anything else. It can be the fastest, easiest and most risk-averse exit strategy when executed flawlessly, and requires a subset of the skills needed to successfully run a fix and flip business. A great real estate wholesaler isn’t born, they are created. Becoming a real estate wholesaler will require a lot of hard work, a detail-oriented mind, and good systems to find distressed properties and motivated sellers and set them up with solutions that fit their needs.

Here are the three main tasks required for any effective real estate wholesale business:

1. Find active buyers

Traditionally, real estate investors will need to have a deal lined up before they can do anything, but wholesaling is the exception. In fact, even prior to finding a deal, it’s good practice for wholesalers to cultivate, maintain, & groom a buyers list. A buyers list is a list of potentially interested buyers for future deals.

In a perfect world, wholesalers will already have active buyers lined up for the deals they are going to have in the future. An active buyer is one that is both looking for an investment property, and has access to the funds needed to close out a deal. If a wholesaler has a well groomed active buyer’s list, they can notify interested buyers, assign the contract & close the deal as soon as possible. That’s an important key to success - lining up active buyers first will make wholesaling much simpler. This is where having a trustworthy network comes into play. Investors on a quality wholesaler’s buyers list will be ready and willing to take the deals you send their way, while providing you steady profits.

2. Find Motivated Sellers

Now for the other side of this equation. There is no deal without a seller. Once the wholesaler has a solid buyer’s list, the next thing they should do is find a property worth wholesaling. The key to this is to find a seller who is motivated to sell their property, and has a problem that you can help them solve. Whether that’s an inherited house, a divorce, unexpected expenses, a need to move ASAP, a landlord who just wants to get out of the business, or a multitude of other reasons, finding a seller who benefits from selling their house in a way other than the traditional real estate agent, posting on the MLS, performing showings, is key.

There’s no difference between finding wholesale properties and properties for renovations. After all, the property is probably going to be wholesaled to an end buyer who will end up rehabbing it. When wholesaling, though, the wholesaler needs to be fully transparent & to clearly define their role in the transaction – they are selling the contracted right to purchase a property, not selling the property itself.

3. Coordinate the closing

You may have guessed it, step three is to match up the buyer & the seller, and generate a profit for doing so. Once a real estate wholesaler has found the two interested parties, it’s time to execute one of two strategies: either a double-close or an assignment of contract, and coordinate the closing.

How To Be A Successful Real Estate Wholesaler

Becoming a successful real estate wholesaler is a common first step in mastering the real estate investing industry. Resultingly, it will require investors to obtain a great deal of knowledge about the industry. First, investors will need to develop an intimate familiarity with the real estate industry, including getting to know the language, the processes, systems and the ins-and-outs involved. More importantly, however, real estate wholesalers will need to build a trustworthy network. As many in real estate are fond of saying “Your network is your net worth.”

That buyers list we prevously mentioned will play a critical role when assigning contracts or conducting double-closings. First and foremost, real estate is a people business. The people you partner with can make or break your success as a wholesaler. What are the key traits of a successful wholesaler? To explain, let’s take a look at a day in the life of a wholesaler looks like.

Successful Real Estate Wholesaler Activities

The key to success is to execute all of these steps in your business as frequently as you can, ideally daily.

• Execute a repeatable routine
• Research what’s new in your local market
• Marketing - work on your brand
• Assess your current & potential deals
• Network
• Make offers
• Groom your buyers list
• Close deals
• Build your team

Depending on staffing, it may not be possible to work on every aspect of your business every single day. However, performing these activities on a daily basisis a good goal to work towards, if you’re not there yet. Regardless of your experience, starting the day off with an effective morning routine is crucial for those who want to be successful real estate wholesalers. Here’s a cadence that includes all of the elements needed to be a succssful wholesaler.

Execute a repeatable routine

Successful people know the importance of having a productive & consistent morning routine that primes them for success throughout the day. You want to tailor your morning routine around actions that empower you and get you energized, focused, & ready for the rest of your working day. Basically, it should be focused on any activity that helps you feel focused, confident & ready to do your best This might include activities such as:

• Exercise
• Eating a healthy breakfast
• Journaling
• Planning your monthly, quarterly & yearly goals
• Meditation

Research what’s new in your local market

There’s no substitute for knowing your local market inside & out. Not only will it help you to become better at judging the profit potential of deals, it will also will help you find innovative ways to acquire leads. Local market research includes:

• Knowing the price points of specific neighborhoods & subsections
• Studying your competitors
• Tracking market inventory - the number of houses officially listed for sale on the MLS
• Understanding & keeping current on zoning laws
• Building a contact network of key real estate professionals (agents, lenders, brokers, contractors, closign agents, attorneys, stagers, real estate photographers/drone videographers, etc.)

Marketing - work on your brand

It’s nearly impossible to be a successful real estate wholesaler without also being a successful marketer.This requires a two-pronged approach. First, you must create branding assets to build wholesaling real estate business credibility. This includes things like:

• Business name and logo
• A website and blog
• Active social media platform presence (Facebook, LinkedIn, Instagram, YouTube, etc.)
• Business cards – physical & virtual (.vcf)
• Seller information packet
• Buyer information packet
• Investor information packet

Though most of these assets (aside from active social media) will likely not bring in a huge amount of leads on their own, they do give your business much-needed authority in a crowded real estate marketplace, so that other marketing assets will have a place to which to point interested parties.

Next, you must actively market your business, identifying the solutions you provide and the target audience you help. You will want to have numerous lead-generation strategies running simultaneously, & should monitor them strategically to see which ones work best for you. Popular wholesale marketing options include:

• Direct mail campaigns
• Text campaigns
• Email campaigns
• Social media advertising
• Craigslist
• Bandit signs
• Driving for dollars
• The MLS

Assess current & potential deals

Once you’ve got leads coming in, it’s time to sift through your options and narrow down which properties you’ll make offers on, and which ones just don’t make sense for you. Though this process will take consistent time, & will involve ruling out many properties that don’t meet your criteria, proper deal evaluation can save you a whole lot of money in the end. Evaluating properties to see how they align with your wholesale strategy includes actions like:

• Gathering information about the seller (their motivation, current debt, bottom-line price)
• Gathering information about the property (condition, listing status, square footage)
• Determining MLS market comparisons for the property
• Determining Off-market comparisonss for the property
• Coming up with an estimated resale price

In addition to assessing potential deals, regularly assess the deals that you have lined up, to see if anything has changed. Market values and other impactiful factors change regularly, so keep current and assess (at least weekly) if your deal has changed.

Networking

“Show me your friends and I will show you your future.” Who you know will impact how successfully you work. Keep in touch with yorur contacts, and make new contacts regularly. The more people you know and establish a good working relationship with, the better you will grow your business. Here’s a brief overview of just a few of the professionals you will need to work with.

• Private investors
• Hard money lenders
• Other wholesalers
• Real estate agents
• Title agents
• Mortgage brokers
• Probate attorneys

Make Offers

The single most common thing holding back the novice real estate wholesaler, is that they simply don’t make enough offers. Since you never know which offers will be accepted, it’s imperative you spend a good portion of your time making more offers, and getter better at this skill. To do this, you will need to:

• Learn how to assess what a seller really wants, emotionally & financially
• Research the seller and/or agent you might work with
• Develop & improve your skills as a negotiator
• Prepare & coordinate your financing
• Know what to look for when you walk a property
• Have a system to rapidly run your numbers so you know what to offer, when to walk away, and when to run

Groom your buyer’s list

Create a buyers list as early as possible, so you’re ready to move swiftly to sell a property upon closing of a deal. Keep in touch with those buyers,and constantly improve your list with active buyers. When looking for new buyers, check out these sources:

• Craigslist
• Facebook & Meetup real estate investing groups
• Auctions (you will find very active buyers here!)
• Local REIA meetings
• Networking events
• Trade shows
• Referrals from your network of contacts

Close Deals

Closing deals is the best part, since this is where you see profits. No matter what kind of wholesale closing you do, whether it’s an assignment of contract or a double-closing, here are some approaches to help you reach closing faster than you thought possible:

• Create a detailed, accurate cost of repairs on the property
• Instill urgency in potential buyers with a deadline
• Confirm financing by examining a proof-of-funds letter
• Signing or assigning all proper sales agreements and legal documents
• Have an escrow team ready to get into closing as soon as possible

Build your team

Once you’ve got your real estate wholesale strategy down, it’s time to build out your team, & take time-consuming tasks off your To Do list. While usually you must perform this task yourself in the beginning, - to get to know the process – you should then be able to document your process and train soeone else on how to perform it fr your business Here are some time consuming but necessary tasks that can be handed off to others within your organization as you grow.

• Initial vetting of seller leads
• Managing bandit signs
• Implementing direct mail campaigns
• Email & text maketing campaigns
• Posting to Craigslist
• Making inbound & outbound phone calls
• Social media presence & marketing
• Writing blogs
• General administrative duties (responding to emails, scheduling meetings, etc.)

Note that the last thing you want to outsource is anything related to a negotiation. This is where your biggest profits lie and is where the foundation of your long term business lives.

Summary

The more you can strategically plan your days around the high-impact activities detailed above, all of which which directly advance your real estate wholesaling business, the more you will find your business growing, and the better you will find your ability to manage the business during this growth. Stay focused on education, awareness, and performing the most important tasks, grow your team, and focus on intelligently and strategically growing your business, and success will be inevitable.