The 6 Basic Steps Of Wholesaling

you

“Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.”

~Robert T. Kiyosaki, businessman and author

So you’ve decided to venture into the world of wholesaling?

You’ll be glad to know that this is a very effective way to build future wealth – if done correctly.

So, Matt Andrews here, to give you a basic overview of the wholesale process. While not super-detailed, this will give you the insight you need to get started with your own research and goal-planning.

As a real estate investor myself, I know your time is short – so let’s get right into the 6 step-process for wholesaling.

#1: Create a Buyers List

You won’t be a very good property wholesaler if you don’t have buyers. (Duh!) My recommendation is to work on this before you work on anything else. Start building a good list of solid, cash investor buyers.

How do you do this?

Well, there are tons of methods. I won’t overload you with all the details, but your key areas of focus will be:

Networking: Join your local Real Estate Investing Association (REIA) and develop connections with title agents, property management companies, hard money lenders, fellow investors and accountants who can keep you “in the know” when it comes to finding potential buyers.

Internet-ing: From placing ads on Craigslist to digging around the MLS, the internet is your best friend.

“Oldies but Goodies” Tactics: Placing bandit signs around your neighborhood of choice or ads in a local newsletter/newspaper will be more effective than you might think.

#2 Find an Inventory Source

If you have a whole lot of cash buyers on your list, that’s great – but if you don’t have anything to sell them, you’re not going to do much business.

There are so many ways to find inventory; no one way is superior to another. The key is finding out which methods work best for you and your target market.

You can go the traditional route of creating direct mail pieces or placing bandit signs around the neighborhoods where you’re hoping to find deals. Or, you can step it up a notch and use online resources.

But if you really want to succeed in finding the best inventory sources, it can be ultra helpful to form connections with lenders, appraisers, real estate attorneys and even other investors (preferably, REIs who are in other markets/areas and are not competing for business with you)…

These people are constantly dealing with properties, and – when they know what you’re looking for – they can provide leads before any of your competition gets wind of them. Score!

Still need help finding deals? Check out my lesson on 14 Sharp Ways to Find Deals, which includes more specific information to help you score the best properties.

#3 Market the Property

Calling all creatives! (And those who maybe aren’t so creative - yet.) Marketing a property isn’t rocket science, but it does require a little creative thinking. If this aspect of the wholesaling process isn’t done effectively, you can kiss your income goodbye.

Marketing a property can be done in a variety of ways (through the mail, online, email, etc.) Just remember, overall, that every detail matters.

Let me say that again... Every. Detail. Matters.

From the wording in your online ads to the placement of the “For Sale” sign in the yard... you need to pay attention to everything.

Ready to become a marketing maven?

Check out these additional tips:

Invest in professional photography for the property (or even a virtual tour video)
Research keywords or phrases to include in your online ads
Spend a little cash on print advertising – these ads reach a specific audience that may not see your online marketing efforts

#4 Find a Buyer

Using your stellar cash buyers list, you’ll need to find a buyer to flip the property to...

If you’re hoping to sell property to a fellow investor – which is often the case – you need to give them a full, detailed description of the property. Basically, everything you know... they want to know. The purchase price and estimated renovation costs are just the beginning.

Check out my article on The Right Way to Market Properties to Investors for more pointers on this topic.

terms This is another time when you can use your connections to “make the match” with the right buyer.

The more deals you do, the more skilled you will become at quickly finding the best buyer. Keep practicing!

#5 Write the Contract

Now that you have the ideal buyer, you need to negotiate a deal. Obviously, the buyer is going to want the lowest price and you’ll want the highest price possible. The trick is to convince the buyer of all the reasons why the home is worth the higher price.

For instance, you want to highlight all the recent upgrades/work you completed on the property (if you did any) and use comps to show that your price is justified.

Once you strike a deal with the buyer, it’s time to write up the contract. Make sure your contract specifically includes:

The property’s address and legal description
Purchase price
Details on closing costs

Now you’re ready to move on to the closing!

And ALWAYS make sure you have an experienced attorney review all of your legal documents and contracts. You need that protection.

#6 Close the Deal

To ensure that the closing process goes smoothly, make sure you have an established relationship with an investor-friendly title company. If you’re working with a title company you trust, it will save you a lot of unnecessary headaches.

Not sure which title companies might be a good fit for you? My lesson, Ask These 5 Questions to Find an Investor-Friendly Title Company, will point you in the right direction.

And now for the best part... it’s time to cash the check! Congrats on closing your deal.

Now on to the next one. :)

Get it? Got It? Good.

In a nutshell, that’s the wholesaling process. Learning about these steps is easy – but mastering these steps is a different story. You have to be able to do all of these steps in the right way, at the right time, and that will lead to success.

Ready, Set, Wholesale!

What are your favorite strategies for the wholesaling process? Share your tips below.

Make a game plan to build your buyers list. Write down the practical steps you need to take to build your cash buyers list and find inventory sources. Block off time on your calendar to devote to these tasks every day.

Don’t reinvent the advertising wheel. Flip through newspapers or browse online to see how other investors market their properties. Make note of the ads that catch your attention and write down what you like about them.

Get going – take action! You can only become more efficient with the wholesaling process if you keep selling. Don’t be scared to get started!