How can you buy wholesale real estate from a wholesaler? First, I have to assume that you know the basics of real estate investing and understand cash flow formulas and ROI calculations. Without their knowledge, you might as well close this page and read a comic instead. Since conventional funding for investors has nearly dried up, I would also assume you have cash. Without cash, you cannot buy from wholesalers. Let me explain how wholesalers work.
Hey, why should you read this and listen to me? Well, I’m a wholesaler who’s had my share of flaky “investors” who over-promise and under-deliver. My idea is to under-promise and over-deliver. When I have a wholesale “deal”, it REALLY IS a “deal” for the ultimate buyer (investor) with cash.
A wholesaler is like a bird dog. He or she scouts around their target area looking for “deals.” When the deal is found, it is put under contract in one of several ways. One way is to use a short one or two page agreement that is “assignable.” No matter the deal, it must be assignable. The end result is that the wholesaler will assign your contract with the seller. You will fulfill the role of buyer and pay a transfer fee to the wholesaler. Now there are many variations of what I just described, but suffice it to say that these are the basics of every wholesale offer.
Your first step is to find one or more wholesalers and give them the details of the properties you wish to purchase. Details like specific target neighborhoods, general condition of the property, BR, BA, etc. Of course a price range would be helpful; you can’t just say “as low as possible”. How to find a wholesaler? It is easier than you think. There are probably more wholesalers in your backyard than you think. Have you ever seen those yellow “We Buy Homes” signs on the poles or in someone’s yard? The sign puter is most likely a wholesaler. Have you ever seen Google ads for “We sell cheap houses”. Most likely, the place of the ad is a wholesaler. Craigslist house search ads are most likely wholesalers. Craigslist home for sale by owner may be wholesale with ready to buy offers. Use your imagination and find someone you can work with.
When you find a wholesaler, you need to be sure that you can work together to achieve your mutual long-term goals. Find out what the wholesaler’s goals are for his business and his plans to stop being a wholesaler, if any. A good wholesaler is in it for the long haul and wants to build a successful business out of wholesale.
You should be looking for a wholesaler to build a long-term relationship with. Like you, a wholesaler seeks to build long-term relationships with their buyers. One-time buyers are not the ideal buyers of wholesalers. The first couple of deals you work on together with a wholesaler, use the Ronald Regan method to determine the depth of the ongoing relationship; that’s “trust and verify”. He needs to trust his wholesaler to tell him the truth about everything he wants to know that he knows. You should also check any information you receive from a wholesaler for accuracy, oversights, and errors in judgment. You don’t want a wholesaler telling you they know this neighborhood and the house is worth $200k using inflated or old estimates from Zillow when in reality the area only supports $150k properties. Use your own reliable Internet resources and, if necessary, get down to business verifying what you’re buying. If you buy a defective product, don’t blame your wholesaler; he is most likely a new “investor” himself just looking to get started. It is your responsibility to know what you are getting yourself into. Trust is self-reliant and is a two-way street. He must also be trustworthy and buy the property when he says he will and pay what he agreed to pay for it.
After a few deals, you’ll know your wholesaler’s strengths and weaknesses and can fix them or, if there are too many weaknesses, find another. If you think you would like to work with an established bird dog please visit my website below and check out the ninety seven dollar report you can get for free.