Accelerator: 3.1 Getting Started With Wholesaling

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Accelerator
3.1 Getting Started With Wholesaling
Cheat Sheet

Wholesaling is getting a property under contract with a motivated seller, and assigning that contract to an end buyer at a higher margin so that you’ll make that middleman income known as a “spread.”

1. Why wholesale
  1. With no money and no credit, you can still be in the real estate business using earned income:
    • Putting in time (as a business or a part time job) is required if you don’t have money or credit.
    • It’s a means to save for investment capital. 
    • It’s a means to save for reserves that will be used on multi-unit rental units.
  2. Wholesaling is cash earned. 
  3. Wholesaling is not debt and there’s no interest or payments required.
  4. Wholesaling is taxable income. 
  5. Wholesaling provides access to more deals (in order of priority)via:
    • Agents 
      1. Saves you time by outsourcing
    • Wholesalers 
      1. Saves you time by outsourcing
    • Direct contact with motivated sellers
      1. Puts more money in your pocket
  6. Develop a wholesale skill set so that if you come across a deal that you’re not interested in, you can wholesale it to another wholesaler or end buyer (buy and hold investor or flipper) for a fee; it’s a great option for you to source deals and cherry-pick the best ones for yourself and wholesale the average deals to others.
  7. Build a wholesale team of virtual assistants.
  8. Over time, take the cash earned from wholesaling and buy a multi-unit property.
  9. Start your wholesaling venture in your local area since you’re already familiar with that market:
2. Main thing
  1. Marketing and sales is the main thing:
    • Marketing is: Finding out pain points and solving them.
      1. Have a budget in place to market to leads.
      2. Must spend money to make money.
      3. Spread $1,000 over a 6 month period. 
      4. As you close deals not only increase the budget, but remain consistent. 
    • Sales is: Getting on the phone and convincing people to move forward with you by explaining their current state of affairs and what the future end state could be.
      1. Make calls to sellers, tenants (offer cash for keys), and buyers.
      2. Learn a few simple sales techniques by visiting our resources.
  2. Everything within your wholesale business needs to be tracked. In order for things to be improved upon, they must be measurable.
  3. Consistency is the key to breakthrough. Meaning, the more you do it, the more results you will see. Consistency also applies to being repetitive; making the same amount of calls everyday, mailing out the same amount of letters or postcards everyday, etc.
3. Staying organized

Organization is key to helping a business function successfully by ensuring operational efficiency.

  1. If your work hours are part-time, you can close on a property within 3 months:
    • Call sellers Monday through Friday during the hours of 9:00 am and 9:00 pm.
    • Timeblock 4 hours per day, 5 days per week for any wholesaling activities including making calls to sellers.
  2. If your work hours are full-time, you can close on a property within 6 months:
    • Call sellers during your lunch time.
    • Timeblock 1 hour per day, 5 days per week for marketing activities, preferably in the mornings. 
    • Timeblock 1 hour per day, 5 days per week for sales activities.
4. Setting up your business

Create your entity:

  1. Decide on a name for your entity.
  2. Go to any of the websites that sells URLs with a DOT.COM extension only:
  3. Be descriptive with your choice of URL, and if it’s unavailable switch up the order of the name or include another description. Example:
    • Webuyhousesatlanta.com or Webuyhousescashatlanta.com or Webuyhousesatlfast.com
  4. Set up a Gmail account with the name of your entity.
    • Set up one email account for sellers.
    • Set up one email account for buyers. 
      1. The email account for buyers is for the VA (virtual assistant) to use, once you hire one.
  5. Set up a google voice for the seller to call you on.   
    • Link the Google Voice to your cell phone or office phone, in which calls can be forwarded to one of your teammates. Also, make sure that call screening is off. 
    • Your buyers need to have your cell phone number to contact you. 
  6. Visit your Secretary of State website and file your articles. You can do this on your own or you can hire an attorney to do this for you. 
    • Locate the tab to create, register, or to form the corporation of your business and complete the application.
  7. Once you file your business with your state, go to the IRS.gov website and apply for an EIN (Employer Identification Number).
5. Marketing
  1. In order to market your business, you’ll need to purchase a list of potential buyers and sellers. Buyers and sellers of properties are considered public knowledge.
  2. Absentee owners (owners who live in a different state than where the property is located) and cash buyers are the types of sellers best to focus on. Cash buyers are fast closers because financing isn’t involved in the transaction. 
  3. List types:
    • Rocketprintandmail.com
    • Batchdriven.com
    • myreipro.com
    • Propstream.com
    • Listsource.com 
      1. Listsource is the recommended choice since it’s the most cost effective list to use. You can set up an account at no charge and search for data that shows areas that are the most active. 
      2. Create an account with Listsource.
      3. Enter the state and then the zip codes of interest in the Listsource geography tab. 
      4. Filter the list to meet your criteria based on the past 12 months by selecting tabs regarding:
        • Geography
        • Property
        • Options
      5. Record the seller and property information you’ve located on a spreadsheet. This will need to be done for each zip code one at a time.
        • Use the Zip Code Market Tracker to notate the zip and the number of sellers/properties available.
        • To save time and effort, purchase a completed list that shows all available properties and sort the information yourself.
6. Sellers
  1. Your focus is best placed on sellers that are not listed with a real estate agent or motivated sellers that are private individuals who are more likely willing to negotiate the best purchase price in contrast to a bank or an individual being represented by an agent. 
  2. You can attract low leads for deals by “driving for dollars,” Craigslist, and by putting up bandit signs or flyers. This is a low payment method. 
  3. You can attract high leads for deals by using direct mail, as well as by buying a list and making calls as mentioned above. 
  4. If you have less than $1,000 to spread over a 6 month period, then apply the low cost methods. You’ll need to determine your budget. 
  5. If you do have $1,000 and want to close earlier than 6 months, then apply the high cost methods.
Words of advice
  • Leverage speed to your advantage in that you’ll close fast so that a motivated seller will want to work with you.  
  • Motivated sellers often entertain not having an earnest money deposit and this is to your advantage. 
  • During the due diligence phase, you may be able to negotiate a lower purchase price with a motivated seller based on the repairs needed.
  • The information on the bandit sign can also be used on a flyer and on a Craigslist ad. 
  • You also have the option to be creative and make your own bandit signs.
  • The less money you have to invest in wholesaling, the more time you’ll need to spend. 
  • Continue to update your OP to manage your time effectively.
  • Apply for Business Credit if you’re in the process of repairing your credit and wholesaling deals. 
  • Make sure you’ve set up everything mentioned regarding your business before moving on the next module.

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