Wholesaling real estate can be a lucrative side income or full-time occupation. Connecting a seller and buyer and taking a “finder’s fee” without having to tie up your own capital in a property can be a great way to do deals quickly. But how do you start wholesaling real estate? To someone who has just heard of it, it may seem more complicated than it really is. At the same time, there are certain things that you don’t want to overlook. This guide is all about how to start wholesaling. The most important thing is to take action and put in the work. As with many sales-centered occupations, how much time and effort you put into wholesaling will affect how successful you are and what you get out of it. Let’s get into it!

How Do I Start Wholesaling Real Estate?

Wholesaling real estate always starts with finding a good deal on a property. Finding undervalued properties and interested sellers is the lifeblood of wholesaling – without that, you’re not doing any deals and making any money. To find out whether a property is undervalued, of course, you need to do market research – find out what similar homes in the area go for on the market. This is known as “running the comps,” with comps being real estate slang for “comparable sales.” You can do this before or in parallel to finding these properties.

To find properties and potential sellers, you can engage in several different types of marketing. This can mean putting up bandit signs, sending out direct mail or e-mail offers, using Facebook, Google, or classified ads, and in general doing what you can to attract potential sellers. The most basic way to start is by “driving for dollars” – simply getting in your car and driving around, looking for run-down, neglected, or abandoned properties. When you find one you’re interested in, you can place a flyer on their porch or in their mailbox or simply knock on the door and speak to the owner directly.
In short: Start wholesaling real estate by finding undervalued properties for sale.

How Much Money Do I Need to Start Wholesaling?

Wholesaling can be a forgiving way to start making money in real estate as the initial upfront investment can be very low. A minimum sum would be roughly $2000 to start with. This sum would cover a consultation with a real estate lawyer, the drawing up of a wholesale contract, and payment of “earnest money” on a property (a good idea in some states to cover your legal bases) or basic marketing expenses.

You could, in theory, start wholesaling with no money at all. But unless you’re confident in your ability to draw up a watertight contract yourself and find properties, as well as end buyers, without spending anything on marketing, it’s best to have some money to invest. The main costs of real estate wholesaling are marketing costs. Fortunately, marketing expenditures are something that can be scaled up and down with relative ease. You can advertise whether you have $500, $5000, or $10,000 to spend. Generally, the more you can spend on marketing, the faster you can attract motivated sellers and interested buyers, and the faster you can get your deal pipeline up and running.

How to Create a Successful Business Plan for Wholesaling Real Estate

A successful business plan before you start wholesaling real estate should include a few main elements. First, you should define the geographic area where you plan to engage in wholesaling. When you’ve done so, determine what your market strategy for acquisitions will be. What kind of properties are you looking for? What prices do these properties go for on the open market? What will your market strategy for sales be? This should include both directions – towards sellers and buyers. Where and how will you advertise?

An in-depth business plan will also include the pre-purchase procedure. How will you deal with the seller, when will you inspect the property, when will you start marketing the property to potential buyers? Not least in any good business plan are the financials. You should break down what your costs and expenditures will be, how you will manage them, when you expect to recoup the initial investment, what the numbers would be for breaking even or profitability, as well as potential financial risks. The more detailed you make your business plan, the easier it will be to create and follow a system for wholesaling properties. A business plan should also be a living document – as circumstances and goals change, so should the business plan.

Get Started with Wholesaling Real Estate: Step by Step

Here are the steps to getting started with wholesaling real estate:

  • Look for distressed properties and approach the owner(s), ask them to sell.
  • Whether you approach the seller or they approach you, do your due diligence – inspect the property and estimate rehab and repair costs.
  • If you feel confident that you can make a profit, negotiate a price and put the property under contract. Include an assignment clause in the contract.
  • Market the property to buyers and real estate investors, find a buyer before the closing date.
  • Negotiate a deal with the buyer.
  • Assign the contract to the buyer and collect your fee.
  • Close on the wholesale property!
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