How can you buy wholesale real estate from a wholesaler? First, I must assume that you know the basics of real estate investing and understand cash flow formulas and ROI calculations. Without the knowledge of these, you might as well close this page and read a comic instead. Since conventional financing for investors has almost dried up, I’d also have to assume you have cash. Without cash, you can’t buy from wholesalers. Let me explain how wholesalers work.
Hey, why should you read this and listen to me? Well, I am a wholesaler who has had my share of flaky “investors” who promise everything and deliver little. My idea is to under-promise and over-deliver. When I have a wholesale “deal”, it REALLY IS a “deal” for the final buyer (investor) with cash.
A wholesaler is like a bird dog. He or she scouts around their target area 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 you 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 have just described, but suffice it to say that these are the basics of every wholesale offering.
Your first step is to find one or more wholesalers and give them the details of the properties you want to buy. Details such as specific target neighborhoods, general property condition, 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 Houses” signs on poles or in someone’s yard? The signer will most likely be a wholesaler. Have you ever seen Google ads for “We sell cheap houses”. Most likely, the place of the ad is a wholesaler. Most likely, Craigslist home search listings are wholesalers. Craigslist home for sale by owner can be wholesale with ready to buy deals. 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 your business and what plans he has to stop being a wholesaler, if he has any. A good wholesaler is in it for the long haul and wants to build a successful business from 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 with a wholesaler, use Ronald Regan’s method to determine the depth of the ongoing relationship; that is “trust and verify”. You need to trust your wholesaler to tell you truthfully 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 outdated Zillow estimates when in reality the area only supports $150k properties. Use your own trusted 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; most likely he himself is a new “investor” just looking to get started. It is your responsibility to know what you are getting into. Confidence builds on itself and is a two-way street. He must also be trustworthy and buy the property when he says he will and pay what he has agreed to pay for it.
After a few deals, you’ll learn the strengths and weaknesses of your wholesaler and be able to fix them or, if there are too many weaknesses, find another one. If you think you’d like to work with an established bird dog, visit my website below and check out the ninety seven dollar report you can get for free.