Intro to The Wholesale Real Estate Contract

When it comes to real estate investing, there are a lot of different ways you can make money. One effective method is wholesaling. This is especially true for those who are new to the game, are not ready to own property yet, want to make low-risk moves, and have limited funds to start out.

What exactly is wholesaling? It is the process of locating fantastic real estate deals under market value and quickly selling them to investors for a profit. While the wholesaler can actually buy these houses, that is not required, as they can get a house under contract without making a purchase.

If you can learn how to put together the right wholesale real estate contract, and if you can find the right people with whom to work, you will be well on your way to achieving the kind of financial success you dream about.

But it is not quite that simple. You need to think about contingencies; you need to understand the housing market, as well, and you must have a strong understanding of real estate law. Indeed, anyone thinking about wholesaling should spend a lot of time researching before making any moves.

Here, you will find more than a dozen articles I have written about wholesaling and the art of the wholesale real estate contract. I am confident that, after you have read through these posts, you will feel more prepared to get in the game.

Once you are done with your research, feel free to reach out to me to schedule a free planning session or to start investing with me today. And do not forget to check out my wide-ranging list of recommendations, my podcast, or both volumes of my real estate investing book.

fishing net

How to Net Over $1 Million a Year Wholesaling Real Estate

 

How to Wholesale Property to Net Over $1 Million a Year

 

There are a lot of people trying to wholesale property out there, but not many can say they make over $1 million a year in profit. Matt Garabedian, who has been wholesaling since 2012, eclipsed the million-dollar profit mark just last year.

 

In our recent conversation, he explains how he completed his first deal, as well as the most effective ways to find wholesale real estate properties, buyers, and the kind of deals you can use to replicate his million dollars a year success.

 

Matt’s First Wholesaling Deal

 

Matt didn’t become a millionaire real estate investor overnight. In fact, it took him 3 years after getting into the real estate business (as a traditional broker) to just close his first deal!

 

After fully immersing himself in a wholesale property mastery course, Matt sent out his first direct mailing campaign, sending out 300 letters to find wholesale real estate properties. He received his first call and the game was on.

 

“I remember sitting in front of [the seller’s] house – I really had no idea what I was going to offer, but I kind of forced myself to make such a ridiculously low offer that I was uncomfortable telling him,” Matt said.

 

“I had to work up the courage to give him the offer, and I think I ended up offering this guy $18,000 for his house. I kind of felt that the property was worth fixed up, maybe $60,000, So I worked up the courage to give him that offer, and he told me, ‘Well that’s not going to work, but how about we do $24,000?’”

 

“I was so excited just to get a counter, I said, ‘Okay,’ and I wrote up the deal, got it under contract, and then asked myself, ‘Boy, now what do I do with this?’ because I didn’t really have the cash buyer for that particular property type, or I didn’t know who would be interested in buying it.”

 

Matt was a broker, so he had access to the MLS to find wholesale real estate properties. He researched the neighborhood and found a comparable property that sold recently and was purchased with cash. He couldn’t find the buyer’s information, but he did find the phone number of the agent that sold the property.

 

At this point, Matt said, “I called the agent and I said, ‘Hey, I noticed that you sold a property in the area recently. I have a house right down the street. Do you think that this particular buyer would be interested in another one?’ He said, ‘What have you got?’ Knowing that I had the property under contract for much lower than what the comps were, I kind of just shot for the moon and I said, ‘Well, I could sell this property for $52,000.’”

“I remember he told me, ‘Don’t tell anybody about this property. We’ll have the money in escrow in a week.’ I [thought to myself], ‘Wow this is amazing.’ I never thought that I could get this type of deal done.”

man in suit handshake

This deal was completed in late 2012 and Matt’s been grinding at the wholesale property business ever since. Again, in 2016, he made over $1 million in profit!

 

How to Find Buyers

 

Matt has found buyers for his deals following the same methodology as his first deal – calling up the agent/buyer of a comparable property in the same neighborhood that was purchased for cash and seeing if they are interested in buying more properties. However, over the years, Matt said, “I’ve been able to development some great relationships with cash buyers.”

 

Traditional wholesale property advice tells you to build a massive list of buyers who want to find wholesale real estate properties, which Matt did. However, he discovered that he was wholesaling the majority of his deals to a tiny portion of his buyers. “I hear a lot of people saying, ‘Go out and build your cash buyer’s list and get 500 names.’ I did that, but I think the honest truth is most of us do our deals with two or three guys. That works for me. I’ve got a huge cash buyer’s list, but I’m consistently showing my deals to two or three investors that I have.”

 

Related: 4-Step Process to Creating a 15,000 Person Buyer’s List

 

In fact, Matt’s largest buyer purchases around six deals from him each month. He met this buyer, who is an owner of an agricultural company, through a personal relationship. “This particular company, it’s two guys that run the company, and one of them I’ve known since I was 16 years old,” Matt said.

 

“He got into the real estate business a little bit before me… A few years ago, I found out that they were buying properties to buy as rentals or flips, so it was kind of an easy partnership, if you will, because we had some history and known each other.”

 

I can attest to this strategy – finding wholesale property investors through personal relationships – because personal relationships were the main source of private money for my first deal, and they continue to invest to this day.

 

Matt met his second most frequent buyer by researching what he calls professional investors. “These are guys that are buying property on almost a daily or weekly basis,” Matt said. “When you start to see repetition and the same LLC or the same entity buying properties, you know that they’re in the business and they’re professional in how they build out their business.”

 

Once Matt finds these wholesale property professionals, he contacts them in one of two ways.

 

First, he meets them in-person at local auctions. “I’ve actually showed up to the auction, and I would go up and introduce myself to that particular person and say, ‘Hey, I’m a wholesaler in the area. I come across great deals. I know you’re at the auction consistently. Here’s my business card. Can we have a cup of coffee?’”

business meeting over coffee

The other way Matt contacts these wholesale property professionals is through mail. “Another [way] would be just sending them a letter and introducing myself and saying, ‘Can we meet up and talk?’ I like meeting face-to-face and getting to know people, and explaining what I do [and] what kind of value I can bring to them. It’s just a natural relationship at that point because you know that they’re looking for deals and I’m looking to sell deals, so it’s not a hard relationship to establish if you’re truly bringing value to the table.”

 

When I asked Matt if he had no buyers, but had a deal, what would be the number one way to find a buyer, he said, “I would go straight to the auctions.”

 

His reasoning was, “You know that these guys are cash buyers and they’re actively looking for wholesale property because they’re standing at the courthouse steps every day fighting over a few deals that end up going to a third-party, and they’re amongst competition.” If you have a deal under contract, going directly to buyers is the best and most natural strategy!

 

Tactically speaking, Matt said, “You can pull courthouse auctions – for my area I use Property Radar. Property Radar will give you the actual location and time of the auction date. If you get there 20 to 30 minutes prior to the auction starting, you [can] just go up and introduce yourself and pass out cards. Or I’ll do like a one-page brochure of the potential benefit to the buyer.”

 

After introducing yourself, Matt explained that you should say, “I’ve got a property on 123 Main St. Here’s the ARV. I’m selling it for this. The rehab is this. Give me a call.”

 

It’s that simple. It’s the best strategy to get in front of a cash buyer right away without having to build a massive list of buyer’s who want to find wholesale real estate properties.

 

Related: 8 Ways to Quickly Build a Buyer’s List

 

How to Approach Finding Deals

 

Another important aspect of the wholesale property industry, besides finding buyers, is finding deals.

 

Matt’s most effective lead generation technique is direct mail. And one the two most important aspects of direct mailing is tracking your key performance indicators. “Know your KPIs,” Matt said. “[It] took me a while to understand that. It’s never advisable just to throw money out the window without being able to track your response rate. You need to be able to track inbound calls, appointments, contracts, and closings.”

 

The most effective way to track KPIs is through the proper CRM system, which is the second important aspect of direct mail. Matt says he’s spent thousands and thousands of dollars developing his CRM. It enables him to not only track his KPIs, but to also split-test different mailing pieces to see which format is the best. “I can split-test my direct mail now and see based on what type of mail piece I’m using…For instance, if I’m using one mail piece to an absentee owner, I’ll split-test it with even the color of the letter or postcard to see what’s getting the best response rate.”

 

unsigned contract and penMatt said, “If you can dial in your CRM and your KPIs, which are both equally important, I think that’s going to be a huge advantage to anybody out there that is competing against other investors or wholesalers or other investors in the area, because you’re able to look at your KPIs and say, ‘Well, I’ve sent out X amount of letters to this mail type and I’ve sent X amount of letters to split-test sample B, and sample B for whatever reason is returning much more. So I’m going to focus on that and maybe look at what I could tweak on sample A to get a better response rate.”

 

Related: Guide to Automatically Wholesaling Over 20 Deals a Month

 

Best Ever Advice: Be Aggressive

 

All the advice and tactics in the world mean nothing unless you aggressively take intelligently directed action, which is Matt’s Best Real Estate Investing Advice Ever. “Be aggressive, but always have an exit strategy, and be okay with the worst-case scenario.”

 

Matt said, “If you analyze the deal and you assume that all hell was going to break loose and the numbers were going to go the opposite way of what you hope and anticipated, you’re still okay with the deal, and you have an exit strategy once you figure out how you’re going to go about your [deal].” This is an absolute must for any deal – follow your instincts, but do not move forward on anything unless you are prepared with contingency plans!

 

Conclusion

 

The three main ways Matt finds buyers for his wholesale property deals are:

 

  • Calling up the agent/buyer of a comparable property in the same neighborhood that was purchased for cash and seeing if they are interested in buying more properties
  • Through personal relationships
  • Researching professional investors and contacting them in-person at the auction, or sending them a letter in the mail

 

Rather than build up a massive buyer’s list, Matt recommends finding two or three go-to buyers and focus on building a solid relationship with them.

 

When it comes to finding deals via direct mailing, the two main points to focus on are:

 

  • Tracking your key performance indicators
  • Creating the proper CRM system

 

Matt’s best ever advice for someone in the wholesale property game is to be aggressive, always have an exit strategy, and be okay with the worst-case scenario. If you have more questions about how to find whole real estate properties, you can contact me for a planning session.

 

Was this blog on the ins and outs of wholesaling helpful? If it was, feel free to share it using the social media buttons on this page.

Guide to Automatically Wholesaling Over 20 Real Estate Deals a Month

 

Guide to Wholesaling Real Estate – Even Over 20 Deals a Month!

 

Wouldn’t it be extraordinary if you could create an automated wholesaling process that pumped out hundreds of leads and tens of thousands of dollars a month with minimal ongoing effort? David Dodge, who has over 8 years of real estate experience working with fix-and-flip and buy-and-hold investors, has implemented such a process. In our recent conversation, he explained how teaming up with local wholesalers and automating his marketing and leads process is the reason why he is consistently wholesaling real estate for 20 or more deals a month. Along the way, this guide through David’s experience will help you develop a strong answer for “what is wholesale real estate?”

 

The Wholesaling Team

 

Initially, David was a solopreneur. Eventually, he teamed up with three other local wholesalers to start wholesaling real estate at a larger scale. “Our business is actually unique,” David explained. “I have three partners… One guy’s been [wholesaling] for 30 years, one guy’s been doing it for 10. I’ve been doing it for 8 and my other partner’s been doing it for about 4.”

coworkers fist bumping

Why did they team up? The main reason was economies for scale. David says, “We were all sending letters to the same people. We got together and said, ‘Hey guys, let’s build a business so we’re not really competing with each other, but also it will allow us to instead of each spending $3,000 a month on marketing, we could put it in a big pot and hit more avenues.’ That’s what we did.”

 

Combined, David says, “[currently] we’re spending $8,000 a month on marketing. 80% of that is direct mail – mostly letters and we do a little bit of postcards. The other 20% of our marketing budget goes towards online advertising.” All four were spending thousands of dollars a month mailing to the exact same investors, so teaming up saved them all a lot of both money (~$12,000 a month to ~$8,000 a month) and time.

 

With the four partners having different skill sets and experience levels, they broke the responsibilities up accordingly.

 

  • “[Two partners] are really focused on listed, [on-market] properties,” David said. “Those guys are sending a ton of offers.”
  • To aid in the on-market operation, they also hired a few interns. “We also have a couple of interns that work for us and they’re 100% commission. All they do all day is just scrap the MLS and scour it for the most part and send offers to properties that have been on the market for a long-time or just have certain keywords that we look for.”
  • David and the fourth partner focus on the off-market deals operation, which are the people that call in from their direct mail and online campaigns.

 

They’ve been wholesaling real estate for about 7 months, and at the time of our conversation, they were on pace to complete over 20 deals in February 2017.

 

Related: All You Need to Know About Building a Solid Real Estate Team

 

It’s All About the Follow Up

 

The advice is cliché, but David believes the follow-up is key to success in wholesaling real estate. David elaborated, saying “we are doing 15 to 20 deals a month and I can foresee us in 4-6 months doing a minimum of 20. Maybe even closer to 20 a month because every month we’re getting hundreds of leads that come in. Sometimes we’ll get 10 to 15 a day! They may not like our offer… 9 times out of 10, maybe 19 out of 20 really, they’re going to say ‘no you guys are crazy.’ So we have a follow up schedule where we’ll call, text, or email every week or two. Some people are on a 6-month follow up schedule…As you get more and more leads in your CRM, you just got to stay consistent and keep calling them. Eventually, people’s motivation changes for a million different reasons.”

 

In other words, those 9/10 or 19/20 “no’s” don’t mean, “no, I won’t ever sell.” It’s more like “no, we don’t want to sell right now.” By continuing to follow up on a consistent basis, you’ll be at the top of their mind. So, when they are motivated to sell, you will have increased your chances of getting the deal.

tan house for sale

 

Related: Use This Follow-up System and Have 30% More Offers Accepted

 

The Automating the Process

 

Another important aspect of the wholesaling real estate process is answering the phone and screening the leads. David has outsourced this process by training virtual assistants (VA). “We’ve hired some virtual assistants…[They] are great because they answer the phone on the seller side, they vet the deals for us, they provide us a MAO, and if it’s a deal, they’ll send us comps and set the appointment. If it’s not a deal, we put it into a follow-up schedule [discussed above].”

 

What is MAO? MAO is the acronym for maximum allowable offer. “A MAO is a very simple formula,” David explained. “MAO equals your ARV, which is your after-repair value, and then you multiply that by a multiplier. Typically, you’re going to start at 0.7. If it’s a good area or a hot area, you can go higher – 0.8 to 0.85. If it’s a warzone, you go down to 0.3.” ARV and the multiplier are the first two parts of the formula. The next two pieces are repairs and assignment fee, which are subtracted from the ARV times the multiplier. Here is the formula in its entirety:

 

MAO = ARV*(multiplier) – repairs – assignment fee

 

“Our VA’s have been trained on how to run that report,” said David. “It’s very simple: somebody will call up with a property on 1012 Part St., for example, and they’ll be motivated to sell their house. The VA will run comps – they have access to the MLS – and they’ll determine what the property will be worth after it’s all fixed up (the ARV). Then they’ll do the multiplier and subtract out repairs, which you can do very easily based on square footage or maybe they’ll send one of us out to go do a repair estimate. Then [they] will subtract that out and subtract out our fee, which can be anywhere from $2,000 to $30,00, depending on the neighborhood, the house, all that type of stuff. Then we’ll make our offer.”

 

Automating the phone calls and MAO calculation enables David and his three partners to focus the majority of their time on finding deals and their wholesaling real estate process!

Example Wholesaling Real Estate Deal

For those still wondering what is wholesale real estate, here is one of David’s case studies. In this case, he purchased a house for $160,000 a few weeks ago in 4 days from lead to close! The VA’s calculated a $300,000 after-repair value and $80,000 in repairs.

 

At first, the sellers were not too pleased with the $160,000 offer price. When hearing an offer, David explained, “People in the beginning always think ‘you guys are crazy. You’re trying to steal my house!’ or ‘you guys are trying to pay me 60 to 70 cents on the dollar for my house.’” But, David says that’s the name of the game. “We’re investors. We don’t pay retail, period. But, we pay as-is, we buy cash, and we close fast!”

 

Back to our example and how David handled the seller’s initial objections: “I went out and met with the seller,” David stated. “I said, ‘ listen. You can hire an agent and they may or may not sell this property for you. I hope they do, but there’s no guarantee. They aren’t the one buying it. They’re just trying to make a commission. Then you’re going to have seller concessions. You’re going to have appraisals. You’re going to have inspections. Good luck. However, if you just want to walk away, I’ll give you $160,000 and we can close by Friday.’” This conversation occurred on Monday of that same week.

 

The sellers were four kids that inherited the property and after they looked at their options, they decided to take the money and run. “It was a win-win,” David said. “We got the house at a great price. They got cashed out in a week and they didn’t have to deal with it anymore.”

handshake on sold home

Now it is David’s responsibility to wholesale the deal. He sent the deal out to his buyer’s list at $180,000 and will hopefully make $15,000 on that deal. Can’t argue with his wholesaling real estate process!

 

If you’re an experienced investor who wants to create your own plan for wholesaling, apply for a planning session with me today. If, however, you want a more passive investment opportunity that requires little work from you, apply to work with me on one of my apartment deals!

wholesale real estate

How Double Closing Can Help You Become a TRUE Wholesaler

Real wholesaling done right is rare, and only a few people in every market really do it. What do I mean? All wholesalers are NOT the same. Those who have learned the art of double closing are a cut above.

 

Sean Cole, who has been wholesaling since 2012 and has completed over 350 deals that have generated over $2.5 million in gross profit, is one of those rare wholesalers. In a recent conversation, he explained why all wholesalers are not the same, as well as what he does to differentiate himself from other investors and how you can do the same.

 

All Wholesalers Are NOT The Same

 

The question of “what does a wholesaler do” can be answered by demonstrating how those who practice double closing are different. For example, Sean believes there is a distinction between “wholesaling” and simply assigning contracts. The main difference is that the former has skin in the game, while the latter does not.

 

“I think that wholesalers get a bad rap because they don’t have skin in the game,” Sean speculated. “Maybe they don’t have the ability to close, but when I come to the closing table, I pay for every house.” Sean continued, saying “what we try to do is differentiate ourselves from a lot of beginners that are just figuring out the business that call themselves ‘wholesalers’ but they’re really just assigning contracts.”

 

Rather than assigning contracts, Sean follows the double close wholesaling strategy, which is also referred to as the simultaneous close.

 

How Does a Wholesaler Engage in Double Closing?

 

Sean outlined the double close process in five steps:

  • Find Property: “We go out and find a property that’s a good deal for an investor.”
  • Due Diligence: “[Next], we do all of the due diligence necessary. It is real due diligence. It is not a 3,000 square foot house that we say needs $10,000 in work to be a half million dollar house.”
  • Create Rehab Budget: “We go through the house, [and] we put together a detailed rehab budget for the house with a breakdown of where that money is going to be spent.”
  • Find a Buyer: “Then we find an investor that wants to buy the house and fix it up and we sell them the house.”
  • The Double Close: “We also close on the purchase. I buy the house in the morning and sell it to [the investor] in the afternoon, and I make a little bit of money in the middle for doing that work.”

 

Sean explained that “[double closing] is pretty similar to what people would call wholesaling, but we are not just moving contracts around. We have skin in the game on a buying house. We have the ability to close, and we do close and buy every house that we resell.”

 

Essentially the main difference between Sean’s double close strategy and assigning contracts is that Sean actually “flips” the property, rather than just “flipping” a contract.

 

What Advantages Does a Wholesaler Have With the Double Close?

 

Sean provided four advantages of double closing over assigning contracts:

house flipping

 

  • Skin in the game: “One of the big advantages is having skin in the game for our customers understanding – the folks that we’re buying from and that we are selling to – that we have the ability to buy.”
  • Fix-and-Flip Back-up Plan: “We aren’t out buying a house that we wouldn’t rehab ourselves.” For example, last year, Sean had a property under contract that he couldn’t find a buyer for. Since he was going to close on it anyway, he just closed it, fixed it up, and resold it himself.
  • Advertising Flexibility: “There are a few advantages that revolve around some real estate advertising laws here in Cincinnati. If you’re assigning a contract, you can’t really talk about the house at all because you’re selling a contract, not a house. But for us, we are actually selling the house, so we’re able to do some things a little differently with advertising.”
  • Hide “Assignment” Fee: “It also let’s us hide from our customers. Sometimes we find really great deals where we can make a lot of money. If we do an assignment, that’s disclosed to your buyer upfront. We’ve had situations in the past where folks decided not to buy a house after they saw how much money we make. When you double close, it’s not private forever, but it’s private until after the transaction closes.”

 

Ding ding ding!! That last point – hide the assignment fee – is HUGE. I’ve heard and read many stories about wholesalers who’ve had their fees cut at the very end because the end buyer saw how much money they were making off the deal. I’m sure the seller was thinking, “wait a second. I’m getting a good deal but you’re getting too good of a deal. I don’t know about that!”

 

Conclusion

 

There is a difference between “wholesaling” and assigning contracts. According to Sean, true wholesalers are the ones who engage in double closing. The double close involves actually purchasing the property at closing and then “flipping” the property to an investor later that same day.

 

There are four advantages that the double close has over assigning contracts:

 

  • The wholesaler has skin in the game, which is comforting for both the investor selling the property and the investor purchasing it.
  • If the wholesaler can’t find a buyer, they can take down the property themselves, rehab it, and sell it.
  • Since the wholesaler is selling the property and not selling a contract, they have more flexibility when advertising the property.
  • The biggest advantage: the buyer won’t see the wholesaler’s “assignment fee” at closing.

 

If you have the capital for double closing, based on these advantages, I would highly consider adopting that strategy! If not, another strategy would be to continue assigning contracts and save up your assignment fees until you are able to follow the double close strategy.

 

 

Still wondering “what does a wholesaler do”? Unsure if a double close will work for your situation? Please don’t hesitate to comment here. Then see how one successful wholesaler is earning 20k a month in profit!

an aerial view of homes in a neighborhood

How a Wholesaler w/ 4 Months Experience is Netting $20K in Monthly Profits

Max Maxwell has been an active wholesaler for only four months, but he is already netting $20,000 in profits each month. In our recent conversation, he provided a few tips on how he was able to quickly achieve such a high level of success with wholesale real estate deals, even with very limited previous real estate experience.

Become Obsessed

When Max started out, he had to do something to compensate for his lack of experience and becoming obsessed with perfecting how to wholesale houses was his solution.

 

“Do whatever it takes. Become obsessed with the niche that you decided to pick…I mainly focus on probates in my market because after doing [it] for a while, I found that nobody else in my market is doing probates…I love probates, so I want to become the probate expert in my market so that I can answer anything that an attorney can answer and [be able to present] all the options that a person has…There are many nights where I have to force myself to go to sleep because I am obsessed with wholesaling.”

Reverse-Engineer It!

After finding his niche as a wholesale investor, and making the commitment (and giving himself the permission) to become obsessed, Max sought out a solution to reverse-engineer the wholesale process. “Find out the best deal in your market. A deal [that] your seller or another investor [has done] and say, ‘what’s the best deal you’ve ever had? Explain [it] to me in detail,’ and then find out what list these people would be one and what life events happened to trigger the sale, and [then] attack that. Go right after that and reverse engineer it and just make it your baby.” For Max, his baby is probates. What is yours?

Always Pick Up Your Phone

Max also provided invaluable and commonsense advice on why you should always pick up your phone. “I always answer my phone. I never let it go to voicemail because it takes a lot of guts for somebody to pick up the phone and call you. And most of the time, on the other line, you’re about to hear a problem, so you’ve [also] got to be a good listener.”

 

By following this advice regarding the last deal he did, he was able to go from phone call to close in 2 business days, which netted him $10,000 in profit. So, as a wholesale investor (or anyone involved in buying and selling real estate), next time your phone rings and you have the urge to let it go to voicemail, remember that there could potentially be a $10,000 deal waiting for you on the other line!

retail market & rental properties

One Quick Trick That Adds 25 Cash-Buyers to Your Buyer’s List

Last month, from a conversation with Cody Hofhine, we learned his process to make $250,000 profit in your first year wholesaling, with step two being to “Build a Big Buyer’s List.” Now, Cody is back to outline, step-by-step, a trick to finding cash buyers for real estate.

Step 1: Go to Craigslist

“The fastest way to put 25 cash buyers [for real estate] on your list today [is to] get on Craigslist and go to the ‘rental’ section, look for the ‘real estate’ section, and then look at the ‘for rent’ section.” Once there, you’ll find two different types of listings: (1) it will be the actual homeowner (landlord) that’s renting the house or (2) it will be a property manager.

Step 2A: Approach for Property Manager Listings

Pick up the phone and call the number listed for the property manager. “All you’re going to do is tell them, ‘hey, I am a local investor, I come across deeply discounted properties all the time. Do you have landlords and investors that you manage their properties currently that are looking to add more properties to their portfolio?”

Cody then goes on to explain the results he has seen from this approach: “9 times out of 10, that property manager is going to say yes. And the reason why is because if you can push that property to the property manager and then the property manager can push it out to his investors, he himself just picked up another home that he can then manage, so he’s building his portfolio in turn as well.” With just one phone call, you could come away with 25 names, or 100 names for that matter! All you need to do now is rinse and repeat, and you’ll have a massive cash buyers for real estate in no time.

Step 2B: Approach for Landlord Listings

Pick up the phone and call the number listed for the landlord. For Cody, the primary objective is to purchase the property, and the secondary objective is to get a name for his buyer’s list. So when the landlord answers, he will talk about the property first:

  • Cody – “Hey, I’m out in front of your house right here at 123 Main St. Is it still for rent?”
  • Landlord – “Oh yeah, it’s right in-between tenants.”
  • Cody – “Okay, well I’m looking for a property in this area, are you interested at all in selling this property?”

At this point, Cody will just sit there and listen. He proposed the following example: the landlord “is in-between tenants, so there’s a chance that he might be frustrated with what maybe the last tenants just did to the property. Maybe they just dumped concrete down the toilets or whatever it may be. So you might be able to get a deal that way.” If that is the case, great. But since we are learning how to build a buyer’s list, let’s presume the conversation continues like this:

  • Landlord: “Oh you know what, I actually like this rental. Not looking to sell it. It does a great job for me. I love it.”
  • Cody: “Well I am a local investor. I come across deeply discounted properties all the time. Are you looking to add more rentals to your portfolio?”

And analogous to the property manager conversation, Cody says, “9 times out of 10, these landlords will say, ‘absolutely, let me know about it.’ Get their name, their number, and email address, and it’s as easy as that.”

Why Build a Buyer’s List?

Many newbie wholesalers come to Cody and say, “how do I find my first deal? What is the best way to find my first deal?” If you don’t have the end in mind (in the case of wholesaling, this end would be having cash buyers for real estate deals you find) it doesn’t matter how many deals you have or how good the deals are because you won’t be able to sell it to anyone. So, before even finding your first deal, you have to start by building a cash buyer’s list. Build up a massive list so that you are able to easily sell those properties and do whatever you need to do in order to make a profit.

Cody’s two-step process is a great place to start, but here are two more techniques to aid in building a massive buyers list:

Blog Post – 4-Step Process to Creating a 15,000 Person Buyer’s List

Blog Post – 8 Ways to Quickly Build a Buyer’s List

wholesaling neighborhood real estate

Should a Newbie Wholesaler Focus on Short-Term Revenue or Long-Term Relationships?


Many newbie investors, when asking for advice, are told to focus on wholesaling to generate quick revenue before doing anything else. As a result of fast, easy revenue being used as the guiding principle, transactions are approached through the lens of “what is the most amount of money it can make?”

 

Stephen Watson, a wholesaler who has completed over 200 real estate transactions, doesn’t think this advice is ideal. In our recent conversation, he explained that there are certain scenarios where he could have made a lot of money, but in order to achieve long-term success, he shifted to a “how am I going to be of value to everyone in the transaction and make it a win-win” mentality, and why you should do the same.

 

Focus on Adding Value, Not Making Money

 

As a wholesaler, there are many one-off deal opportunities where you can make a quick buck. However, it is difficult to foster long-term relationships with this “means-to-an-end” attitude. For example, many of Stephen’s wholesale deals have been stressful and emotionally taxing on all the parties involved. If he only looked out for his own self-interests rather than focused on making the transaction go as smoothly as possible, he believed that he may never have gotten the opportunity to work with the buyer or seller again. Typically, everyone just takes a break from working with each other for only a little while, but during that little while, there may have been multiple opportunities missed!

 

Obviously, we need money in order to survive and thrive, so this is a very difficult mindset shift to make. But, since we get paid by providing value to the marketplace, there are countless ways to make money as a by-product of adding value to others. For example, instead of finding a deal and then locating a buyer, reverse the process and build a relationship with a cash-buyer first. After finding a buyer, figure out what problem they have and how you can fix it. Maybe they have a lot of money but don’t have the time to find great deals that matches their buying criteria. If that is the case, you can become the one person that understands their criteria. Now, instead of approaching potential sellers as someone with no experience and no money, you can say, “I am the acquisitions person for XYZ.”

 

Exchanging Your Time for Money

 

Essentially, when starting out as a wholesaler, you can make up for both a lack of experience and lack of money through teamwork. Find a person or a group/company that provides the money and experience, and you provide value with your time. There are basically an unlimited number of ways you can leverage your time in order to make money. Stephen knows a closing coordinator, for example, that doesn’t have any money or mobility. But, they exchange their time by coordinating closings via phone calls and makes $1000.

 

Another example – Stephen is starting to focus on how to be more knowledgeable on specific subjects in order to be able to recognize more wholesaling opportunities. And for the subjects that he doesn’t understand, he at least wants to know the right questions to ask and who to ask for the answers. He is compiling a list of different experts, like specialized attorneys for divorce, probate, title, etc., and expediters at the city level, so that if a potential buyer has a question or problem that he can’t solve, he knows where to turn. This puts him a big step ahead of everyone else that only comes in an asks, “how much money do you want” or “what is your deal criteria.”

 

Expanding your knowledge is also advantageous because it allows you to focus on how to structure a deal on a transaction-by-transaction basis, instead of trying to force every deal into the one strategy that you know. So, when faced with an unknown situation, you have the knowledge (or who to ask) and the creativity to try to make the deal work, rather than having no choice but to walk away.

 

 

What is Stephen’s Best Ever Advice? Try not to treat people like numbers. Once you start approaching transactions that way, people will know that you actually take pride in what you do, that you are always looking for ways to help others, and that you are always preparing for situations before you run into them.

wholesale

How to Wholesale 25 Deals a Month Spending $0 Out-Of-Pocket on Marketing

Wholesale Real Estate Investing: 25 Deals a Month Spending $0 Out-Of-Pocket on Marketing

Want to learn how to wholesale real estate? Well, then, meet Phillip Vincent, a wholesale real estate investing professional with over 500 completed real estate transactions. He created a business plan that allows him to wholesale 25 deals a month. In our recent conversation, he explained the strategy and how he is able to follow it while spending zero dollars out-of-pocket on marketing costs.

 

two story home for sale

 

The Reverse Wholesaling Process

Mastering marketing is important for anyone who wants to learn how to wholesale real estate! For example, instead of following the standard wholesale real estate investing model (market for deals, find motivated sellers, and then assign contracts to rehabbers), Phillip does the reverse. First, he finds rehabbers that want a consistent flow of deals. Then, the rehabbers pool together their marketing funds. Finally, Phillip uses the marketing funds to find motivated sellers. His only out-of-pocket costs are his time and the costs of any team members that he employs to help him with the process.

 

After 2 weeks of marketing his services to investors, Phillip was able to fill up his 25-investor roster in the St. Louis market. During those two weeks, he explained that he wanted to conduct the investors’ marketing and acquisitions for them, that he wanted to make $5,000 to $7,000 on every deal, and he wanted them to put up the funds for marketing. It worked! Under his arrangement, each investor pays $2,000 a month, with a 6-month initial commitment, so Phillip has a marketing budget of $50,000 per month to work with. He has been following this strategy for only 2 weeks, and he has been able to close 1 deal with 19 more deals under contract.

 

calculator and financial document

 

Addressing Potential Investor Objections

The most common objection that rehabbers have to this wholesale real estate investing strategy is, “why am I paying for the marketing?” When Phillip paid for his own marketing, he had to purchase properties at a deeper discount in order to make a $15,000 to $20,000 wholesale fee to cover the marketing costs and other relevant expenditures. However, when the rehabbers pay for the marketing, Phillip can pay the seller slightly more, which means he is walking away from less deals, and he can sell the deals to rehabbers at a lower price, since he is only taking a $5,000 to $7,000 wholesale fee.

 

For example, the first deal that Phillip closed following this method was a small ranch with a retail value of $80,000. The owner owed $61,000, she was a heavy smoker, and the house was full of items. If this were a typical wholesale deal, Phillip would have passed. However, since he found this deal using his investors marketing funds, and since he only needed a $5,000 wholesale fee, he was able to make it work. The seller ended up bringing over $30,000 to the closing table to get the house sold, and Phillip wholesaled the property to his investor for $42,000! The investor stated that he would have paid $48,000, so Phillip probably could have squeezed a little more profit out of the deal too.

 

business meeting with paperwork

 

Another problematic aspect of this wholesale real estate investing strategy is that one investor could purchase all of the deals, because these are on a first-come-first-serve basis. When Phillip finds a deal, he sends out a starting price and a “buy-it-now” price to the pool of investors. Whoever can hit the “buy-it-now” or highest-price first will be awarded the deal. This means that one investor could scoop up every deal.

 

But, to mitigate this, Phillip split his market, St. Louis, into 5 zones – with 5 rehabbers in each zone. One of the five investors could still technically purchase every single deal. However, all of Phillip’s investors do 8 to 15 rehabs per year, or approximately one per month, so none of them will be buying more than one property per month.

 

What are your thoughts on this wholesaling real estate investment strategy? What additional questions would you need answered before feeling confident enough to implement this strategy?

American currency with blue overlay

How to Wholesale Your Way to $250,000 Profit in One Year

Profiting from Real Estate Wholesale Deals

Wholesaling can be a great entry point into real estate investing, a way to gain supplemental income while pursuing another real estate niche, or a full-time profession. Most of the real estate investors I’ve interviewed on my podcast got their initial start as wholesalers, so many should know how to wholesale real estate.

One individual that’s achieved very high levels of success as a full-time wholesaler is Cody Hofhine. In fact, he is on pace to assign over $1 million worth of contracts this year. In our recent conversation, he provides a 5-step roadmap on how he started a wholesale business from scratch and earned over $250,000 in the first year.

Related: How to Net Over $1 Million a Year Wholesaling Real Estate

Step 1 – Have an Abundance Mindset

The first, and most important step to success in any business is to adopt the right mindset. Before Cody found his first deal, spoke with his first seller, or added the first name to his buyer’s list, he read two books: The Four Spiritual Laws of Prosperity and The Go-Giver, Expanded Edition: A Little Story About a Powerful Business Idea. Upon completion, he made the commitment to adopt an “abundance mindset.” Essentially, this means that, if you focus on giving to and helping other people, you end up getting a huge return on your investment. Whether it’s donating X% of your income to charity or giving a huge tip at a restaurant, he is always scanning for opportunities to contribute.

Having this abundance mindset and helping others as often as possible will start to rollover into how you wholesale. Cody never meets with a potential seller and tries selling himself. He goes in there with the sole intention of helping. He has replaced the word “sell” with “help” in his mental vocabulary. When he has that mindset of always looking for ways to help others, the byproduct is walking out with completed real estate wholesale deals.

Related: How Skateboarding Legend Tony Hawk Accomplishes the Impossible

Step 2 – Build a Big Buyer’s List

Many newbie wholesalers come to Cody and say, “how do I find my first deal? What is the best way to find my first deal?” However, if you don’t have the end in mind (in the case of wholesaling, this end would be having a cash buyer) it doesn’t matter how many deals you have or how good the deals are because you won’t be able to sell it to anyone.

Therefore, before even finding your first deal, you have to build a cash buyer’s list. Then you are able to easily sell those properties and do whatever you need to do in order to make a profit.

For the tactics behind building a massive buyer’s list, here is a 4-step process a wholesaler used to build a 15,000 person list, and here are 8 ways to quickly build a list

Related: One Quick Trick That Adds 25 Cash-Buyers to Your Buyer’s List

Step 3 – Learn the Legal Rules

Real estate wholesale deals are a great tool to make a lot of money, but it is governed differently in every state. Make sure that you wholesale according to your state’s law. The best way to accomplish that task is to hire a great real estate attorney.

You will also want to find a great title company. You don’t want to personally do a closing, nor can you, so it is important to find a title company that is well versed in performing the type of wholesale closing that is legal in your state. After you have found a real estate attorney, they are usually already tied to a good title company as well, so it is a win-win.

As for the rest of your team, Cody recommends that, in the beginning, get out there and learn to wear all of the hats. Get your foundation set first, and then focus on delegating aspects of your business to team members.

Related: Attorney’s Advice – Control Everything in a Real Estate Transaction

Step 4 – Find Phenomenal Deals

Finally, after all of the foundational work is accomplished – you’ve adopted the abundance mentality, built a buyer’s list, and learned the rules – it is time to start finding real estate wholesale deals.

Cody’s favorite and most effective method for finding deals is direct mail marketing. However, there are endless marketing strategies to choose from. Pick a strategy that you are most comfortable with and then make the commitment to adhere to that strategy week after week.

Related: How to Find the BEST Deals with the LEAST Amount of Marketing

Step 5 – The Secret to Stellar Seller Conversations

Cody believes that wholesaling is simple. If there is anything complicated about it, it is the wholesaler. It can be as easy as always remembering that wholesaling is a people business.

If someone responds to a piece of marketing, they are doing so for a reason. As a wholesaler, it is your job to find out why they reached out to you and not the hundreds of other wholesalers, investors, or real estate agents in the marketplace. The best way to accomplish that is also very simple: ask and listen.

Whenever Cody meets with a potential seller, he sits down with them for a minimum of 30 minutes and only talks about them. In doing so, he quickly builds a level of trust, and since people do business with people that trust, this gives Cody an advantage over the competition. After 30 minutes, transitioning to discussing the deal is an easy conversation. Now, he is on a friend-to-friend basis, which is a situation that most other investors aren’t going to achieve.

Related: Guide to Automatically Wholesaling Over 20 Real Estate Deals a Month

Conclusion

To replicate Cody Hofhine’s success and earn over $250,000 in your first year as a wholesaler, the 5-step process is:

  1. Adopt an abundance mindset
  2. Build a massive buyer’s list
  3. Learn the legal rules
  4. Find phenomenal deals
  5. Master seller conversations

To flesh out your strategy, whether it’s related to real estate wholesale deals or apartment syndication deals, we can sit down and work together. Just contact me today!

virtual wholesaling

The Ultimate Guide to Virtual Wholesaling

 

Jared Vidales operates a virtual wholesaling business that completes 15 virtual deals per month. Although, when he first began wholesaling, he only focused on his local market, Arizona. After partnering with an online marketing genius, Jared took wholesaling into the virtual realm, which he has been able to turn into a profitable, full-time real estate business. Fortunately, in our recent conversation, he provided a specific approach that any investor can follow to learn how to virtual wholesale real estate and replicate his online wholesaling success. This includes the leads process, building a team, and a step-by-step approach from lead generation to assigning the contract.

 

big house for sale

 

Leads for Virtual Wholesaling

The main reason why Jared decided to take wholesaling online was due to the substantial difference between the typical offline leads and online leads. When Jared was wholesaling deals strictly in his local market, his offline lead generation approach was the same as everyone else’s – direct mail, door knocking, bandit signs, etc. The problem with offline leads is that they are proactive. Therefore, not every letter, door knock, etc. will even result in a lead, let alone a deal. However, with online leads, it is reactive. Every online lead that they receive is completely motivated. It is someone that is actively googling “how to sell his or her home.” Therefore, almost everyone is going to sell. It is simply a matter of whether or not there is equity in the deal and if the deal can be monetized.

 

The Virtual Wholesaling Team

One of the important parts of learning how to virtual wholesale real estate is knowing how to build a solid team. Currently, Jared’s team consists of 5 employees, and he is looking to hire 2 more. For businesses that require employees, you must take overhead into consideration. You cannot scale the business unless you have the deal and cash flow to support it. If not, you are going to be underwater.

 

business meeting for architects

 

Initially, Jared and his partners were performing all the job duties. They were answering and making phone calls, making offers, getting the contracts, and selling the properties. At that point, the lead volume was very low. However, as the company started ranking higher on Google, leads also grew. Subsequently, it was too much for them to handle the increased volume of calls, the increased amount of deals to manage, and the increased number of closings.

 

As a result, they made their first hire – a leads manager. The leads manager was the first hire because Jared and his partners wanted to remove themselves from any of the inbound/outbound initial phone contacts. Contacting leads is extremely easy to automate through scripting. This hire allowed the partners to focus on more critical tasks – negotiation and selling the deal.

 

The second hire was an acquisitions person. Their responsibility is to call homeowners, negotiate deals, build rapport, and lock up contracts.

 

After creating the leads management and acquisitions team, Jared and his partners found that the next critical task was managing titles and finding buyers. Therefore, the next hire was a transaction coordinator, whose responsibilities include managing the title process from start to finish, as well as being the point of contact for the seller. They also hired a disposition manager, who focuses solely on selling properties.

 

The final hire was an underwriter, whose role is to calculate the purchase price.

 

The Virtual Wholesaling Process

On average, Jared and his team receive 40 to 50 leads per day. To support such a high volume, he has created a process that every single incoming lead flows through.

 

When a lead is received, the lead management department determines whether or not it is a good fit. The benchmark for incoming leads is two-fold. First, every inbound call must be answered. Secondly, anyone that submits an online web form must be called within 5 minutes. Jared finds that, for every minute after 5 minutes, the ability to make a deal significantly decreases. When calling the lead, the goal is to qualify them and gather all the property information (i.e. property condition, motivation level, etc.). After the call, the lead management department will upload all of the information to the CRM.

 

The next step of the process is underwriting. The underwriter, using the information uploaded to the CRM and market research, will come up with a fair purchase price. Since this is a nationwide virtual wholesaling operation, it is the underwriter’s responsibility to learn and understand the respective market. To accomplish this task, the underwriter reaches out to the local real estate agents, investors, contractors, etc.

 

man with laptop and notepad

 

After the underwriter has determined what they will offer for the property, the lead moves to the acquisition department. Using the number calculated by the underwriter, they will negotiate the purchase price and structure a contract. Overall, the acquisitions department’s goal is to get as many deals to fit within their specific buying model as possible.

 

If the contract is accepted, the deal goes to the transaction coordinator. They will call the homeowner, introduce themselves and the company, tell them who they are, and reiterate the purchasing process. You do not want a homeowner to be in the dark on the process! If so, they will be calling constantly wanting to know what next steps are, exponentially slowing down the process. Therefore, the transaction coordinator eliminates all of those questions up front. Also, they are responsible for the entire title process.

 

Finally, the lead will be sent to the dispositions manager. Their sole focus is on selling properties. They are constantly on the phone, managing existing buyer relationships, making new buyer relationships, and finding buyers to assign the properties too.

 

And, those are the basics of virtual wholesaling! Now that you know how to virtual wholesale real estate, you can get started – all from the comfort of your own home! If you would like to really gain some free time and become a passive investor in one of my apartment deals, or get my advice on your real estate business plan, just click here and apply.

team sport netting

4-Step Process That Netted $180,000 in Wholesale Profits Year 1

In my conversation with Brooks Mosier, who is a wholesaler that completed 45 deals totally in $180,000 in revenue during his first year, he explained the 4-step process that he follows that enabled him to achieve a high level of success in such a short period of time.

 

Step 1 – Obtain a List of Motivated Sellers

 

Brooks obtains his mailing lists from many different sources, including:

 

 

Essentially, Brooks will mail to any list that he can get his hands on!

 

 

Step 2 – Prepare Motivated Sellers List

 

Every Thursday, before sending out the mailers, Brooks scrubs his list. He removes all the “do not mail” names, as well as duplicates. Any “do not mail” or duplicate names that are left on the list are money down the drain. Since Brooks conducts mailing campaigns on a weekly basis, the additional expenses could add up quickly. Therefore, spending the extra effort to scrub the list is well worth time investment.

 

 

Step 3 – Send Postcards to Motivated Sellers

 

Brooks has found that postcards are the most effective form of direct mail marketing. Every Thursday, he sends out approximately 2,000 post cards to motivated sellers.

 

He has found that sellers are constantly being bombarded with postcards and yellow letters, so timing is key. According to Brooks, to stay at top of mind of the sellers, sending out mailing campaigns frequently and consistently is what’s most important.

 

Instead of manually creating 2,000 postcards per week, Brooks uses Click2Mail’s mailing services. Click2Mail allows you to quickly create your own postcards, upload your scrubbed list and automatically put in mail merge fields for the property address and seller name that is referenced on the post care. Click2Mail’s production time is only one day. If you were to upload today, the mailers would be sent out by tomorrow!

 

 

Step 4 – Determine Investment Strategy

 

After a successful first year of wholesaling, Brooks and his partner brought on a third team member, who happened to be one of their buyers and a successful fix-and-flipper. The trio combined forces and morphed into adding retail flips and turnkey flips to their arsenal, on top of wholesaling.

 

Therefore, as leads begin to come in, after negotiating a contract price, Brooks and his team will determine which investment strategy they will pursue. The decision is based on three factors: (1) price point, (2) amount of rehab required and (3) location:

 

  • Price Point below $50,000 = Wholesale

 

  • Price Point $50,000 to $80,000 = Depends on the area
    • Good area = Turnkey flip
    • Bad area = Wholesale

 

  • Price Point $80,000 to $110,000 = Turnkey flip
    • If there is a ton of work that needs to be done = Wholesale to mom-and-pop fix-and-flippers

 

  • Price Point over $110,000 = Retail Flip
    • If there is a ton of work that needs to be done = Wholesale to mom-and-pop fix-and-flippers

 

While Brooks and his team utilize all three strategies, depending on the price point, rehab required, and location, the most profitable strategy is retail flips. However, they keep the other two strategies so that they are able to maximize the number of deals they can pursue.

 

 

garden labyrinth

The Pros and Cons of Wholesaling to Hedge Funds

 

In my conversation with Saj Babu, who began wholesaling in 2012, he explained the step-by-step process of wholesaling deals to hedge funds, as well as the pros and cons of this particular real estate investing strategy.

 

Saj’s real estate strategy is to find deals in markets that have already been selected by large hedge funds, conduct the financial due diligence, and wholesale qualified deals to these hedge funds. The following is the detailed process that Saj follows after finding a deal:

 

  1. Due Diligence

 

Before bringing the deal to the hedge fund, Saj qualifies the deal by determining how much work needs to be done and what the properties after-repair value will be.

 

  1. Get Qualified Deal Under Contract

 

If the property passes Saj’s initial due diligence period, he makes an offer and puts the property under contract.

 

  1. Property Inspection

 

After Saj puts the property under contract, the hedge fund analysts and contractors go out to the property for an inspection. Saj isn’t required to be present during the inspection. However, he usually elects to attend in order to gain more knowledge on the inspection process and to hang out with the contractors to see what they are going to do and how they are going to do it. The knowledge gained and relationships built with the contractors sets Saj up for future real estate endeavors.

 

  1. Determine Repairs

 

During and immediately after the analysts and contractors inspect the property, they determine the exact rehab checklist. Hedge funds will rehab the property in such a way that they will receive the highest dollar value in that subdivision or quarter mile radius. They will not go into a property and slap on a coat of paint and throw on some flooring to simply make the property habitable. Hedge funds want to get the highest sales price or rent as possible, so this goal reflects the level of rehab. They will put in a little bit more work than usual, knowing that the asset is going to bring them more value down the road.

 

  1. Verify Saj’s Information

 

Once the exact repair checklist is determined, the analysts will verify that the information that Saj provided, i.e. the rehab numbers from his initial due diligence, matches their projected budget. When Saj first started working with hedge funds, his numbers weren’t accurate at all. He came in at an amateur level, so there was a learning curve. Since he didn’t know how much repairs like flooring, painting, etc. actually cost, he was using a simple $10-$15 per square foot calculation for rehab costs. However, after working with the hedge fund analysts and absorbing all the information he could during the inspections, he was able to understand exactly what the hedge funds were looking for and how they calculated the repairs costs. As a result, his initial due diligence numbers became more and more accurate over time.

 

  1. Back and Forth Negotiation

 

If needed, and especially in the beginning, since Saj’s rehab numbers were inaccurate, he goes back and forth with the analysts to agree upon the wholesale price. Once everyone is on the same page, they move on to the next phases of the process, which are no different than any standard real estate transaction.

 

 

After gaining some experience wholesaling to hedge funds, Saj is able to provide an honest list of the pros and cons:

 

Pros

  • Extremely Quick
    • They have their purchasing process down to a science, so you know exactly what you are going to get
  • Higher Purchase Price
    • They pay a lot more for properties than a typical cash buyer

Cons

  • Unstable
    • When hedge funds are looking to buy, they are purchasing in mass quantities. Therefore, they expect a consistent pipeline of deals coming in.
    • When hedge funds stop buying, they still expect you to continue to bring them deals. However, they won’t be able to close on them until they have replenished their funds.
      • They may be “frozen” for a few weeks or a few months

 

 

All in all, hedge funds never want to turn off their “deal-receiving switch,” but when their engine turns back on, it is churning! They close extremely quickly and will pay a premium for the properties, but you may bring them a deal a week after closing on an amazing deal, and they won’t be open for business.

 

direct calls for real estate deals

Three Marketing Methods to Wholesale 250 Deals a Year

 

In my conversation with Michael Del Prete, who has wholesaled more than 250 deals in the last 4 years, he provided a list his 3 go-to marketing methods, one being a low cost, low effort method that has resulted in 17 deals, with more to come in the future.

 

Michael uses three main methods to market for deals. The most expensive method is direct mailing campaigns. Currently, he sends out between 4,000 and 6,000 letter every month. Michael obtains his mailing lists from the following methods:

 

  • Title Companies – Title companies want your business, so they will give you free lists if you agree to use them for your deals
  • Online Lists – Michael purchases lists from online sources, including sites like MelissaData and ListSource
  • Driving for Dollars – Over time, Michael builds lists of vacant land and distressed properties by simply driving around the city
  • City data – Michael obtains lists from the city that contain the names of individuals that are behind on their taxes
  • Property Radar – Michael uses Property Radar to obtain lists of pre-foreclosures

 

All in all, Michael’s direct mailing campaign expenses are approximately $3,000 per month.

 

Another marketing method that Michael uses is bandit signs. He is transitioning to focusing more on buy-and-hold investing, where bandit signs are not as effective, but he still has them out there for his wholesaling business. Since he lives in a hot, competitive market, he puts 50 signs up every week. When doing a bandit sign campaign, you need to be consistent and have a lot of signs out there if you want to have your phone ringing with leads.

 

While direct mailing and bandit signs have been successful, Michael believes the most in self-generating leads by building relationships. When you focus on building relationships with a handful of serious cash buyers that do a lot of fix-and-flips, not only will you have a go-to source to sell your deals too, but when they get into a situation where they have opportunities that they don’t want, don’t need, or if they are falling behind, they will send those deals to you.

 

Michael has gotten 17 deals just by building relationships with people. Simply having a good name and being out there building relationships will generate leads and referrals

 

Building relationships is easy. Michael’s strategy is to always schedule a meeting when someone calls, whether they are an experienced or novice investor. He will schedule a handful of ½ hour meeting all in a row, sit down for a couple of hours at Starbucks, and will get to know people, talk shop, and try to put a deal together.

 

To know where to go with the conversation, he will pre-qualify them on the phone prior to meeting by asking the following questions:

  • How long have you been around?
  • How many deals have you done?
  • What are you working on now?
  • Do you have any active projects?
  • How long have you been in the business?
  • When did you go your first deal?

 

Based on these questions, Michal can get a vibe for where they are at in their careers, which will let him know where to steer the conversation when meeting at Starbucks. For someone that is already an experienced investor, during the meeting, his outcome is to determine what they are looking for:

  • What zip codes do they invest in?
  • What neighborhoods?
  • How much do they put into repairs?

He digs into what the investor wants so that he can go out, find a deal that fits their criteria, and deliver.

 

Even if they aren’t doing anything or are just getting started, that doesn’t mean that he doesn’t want to talk to them. But, he will steer the conversation in a different direction. If they are newer, his outcome is to try to educate them and be resource by:

  • Providing them with local networking meetings to attend
  • Telling them to go talk to local investors he knows
  • Giving them “how-to” tips
  • Letting them know what he is currently doing and what he sees is working in the market
  • Providing them with specific action actions (i.e. bring a deal to the table, get a seller on the phone, start building a buyers list, etc.)
  • Telling them that if they take his advice and act on it, they can feel free to reach out to him with further questions

 

When working with newer investors, Michael’s rule is that the more time they put into themselves and their business, the more time he will give them. 99% of the people he meets with will jump in, pick his brain, but are “time vampires” that quickly disappear. He used to give his time away all the time, but as he gained more experience, he started being more selective. But, as long as he sees them taking action, caring, and wanting to invest in themselves, he has no problem being a resource.

 

 

top secret envelope

Wholesaler’s Secret to Success: Take Action!

In my conversation with Daniel Versteeg, who has been wholesaling for 4 months and has already completed 6 deals, he explained what he believed to be the most important character trait required to be a successful wholesaler: ACTION TAKER.

 

If you looked up “action taker” or “hard work” in the real estate dictionary, you would be greeted with a smiling portrait of Daniel, because this guy has taken MASSIVE amounts of action in his first 4 months as a wholesaler. After exhausting the majority of his marketing funds on unsuccessful direct mailing campaigns in Denver, he needed to find an inexpensive source of leads, or else he would be in deep financial trouble. Therefore, he took to Zillow and started cold calling for-sale-by-owners to attempt to get a deal under contract. After two hundred calls (yes, TWO HUNDRED) and being cussed out on multiple occasions due to low ball offers, Daniel was finally able to get a deal under contract. The deal put $8,000 in his pocket, but the 4 lessons he learned were priceless:

 

  1. What is the key question to ask seller?

 

The first lesson Daniel learned is that the key question to ask a seller is “why are you selling?” In doing so, Daniel realized that he could use the seller’s response to negotiate the best contract price. For example, for the deal that he finally got under contract, the reason why the seller was listing the property was due to structural issues. Therefore, Daniel knew that the seller would have a hard time finding a buyer for the property because “structural issues” are on many peoples “deal breaker” lists, so he was able to beat them down on the price.

 

  1. Wholesaling is not easy

 

Does making 200 cold calls seem easy? Well, Daniel would say “heck no.” With his 4 months of experience, he has come to realize that wholesaling is not as easy as the gurus make it out to be. You have to put in a lot of effort and time, especially when building a foundation, but Daniel believes that the rewards you will reap will ultimately be worth all of the hard work!

 

  1. Be prepared for rejection

 

When making 200 calls and getting only one deal, that means that Daniel was rejected 199 times! Therefore, if you want to be a wholesaler, you must be prepared for rejection. Whether it is a soft “no thanks” or if you get cussed out, you have to keep picking up the phone until you find that deal!

 

  1. Take Action

 

Based off of 4 months as a wholesaler, Daniel’s best real estate investing advice ever is that you must take action! You can have the best mindset and have the most knowledge in the world, but money is not going to automatically come to you. If your goal is to build a real estate empire, mindset and knowledge will only get you to the door. And you have to take the MASSIVE action required to open and walk through it. Also, when taking massive action, you have to understand that you are going to make mistakes. As long as you learn from them, fix them, and keep pushing the boundaries of your comfort zone, you will ultimately come out on top!

 

 

real estate buyer list

4-Step Process to Creating a 15,000 Person Buyers List


 

In my conversation with Will Corey, a wholesaler and fix-and-flipper that has bought and sold over 500 properties, he outlines a simple process he followed that has allowed him to create a buyers list of over 15,000 people and a list of 100 “go-to” buyers. How did he do it? Well, Will’s golden ticket to creating a massive buyers list was LinkedIn!

 

While Will obtains contacts for his buyers list the old fashion way, in person networking, he stumbled across a 4-step process using LinkedIn that has allowed him to drastically increase the number of emails on his buyers list in a relatively short amount of time.

 

Step 1 – Search “(insert market name) real estate investors”

 

The first step is to go to LinkedIn’s search function and type in “(market name) real estate investors.” If you are an investor in Phoenix, like Will, you would type in “Phoenix real estate investors,” and the search results will bring up hundreds of Phoenix based investors and real estate professionals.

 

Step 2 – Connect with Applicable Contacts

 

The next step is to look through the search results and only “Connect” with real estate investors, developers, or anyone else that would be in the real estate game.

 

Step 3 – Export LinkedIn Connections

 

Once you have added all of the applicable real estate connections, LinkedIn has a system that allows you to quickly export your LinkedIn connections contact information and compiles it into an Excel spreadsheet containing the email addresses from every single one of your connections. Here are the 5 steps to exporting your contact list, starting from the LinkedIn Homepage

1 – Hover over the “My Network” tab and click “Connections”

2 – At the top right of the page, click the “settings” icon (see icon below)

3 – Locate the “Export LinkedIn Connections” at the top right of the page and click
4 – Select the file type you want to export the contact list to (.CSV file by default)
5 – Click Export

 

Once you click export, LinkedIn will send you an email with your file.

 

Step 4 – Add LinkedIn Contacts to Your Buyers List

 

Finally, simply import the contacts from the Excel file to your buyers list. Since these contacts didn’t opt-in to your email list, when sending out emails, Will recommends adding a disclaimer offering to take them off of your list if they want to unsubscribe.

 

 

phone book list

8 Ways to Quickly Build a Buyers List

In a conversation with Connor Steinbrook, who is an online poker star turned real estate investor that specializes in wholesaling and fix-and-flipping, he provided 8 different techniques on how to quickly build a buyers list.

 

  1. Post squeeze pages on online classified sites

 

  1. Drive traffic to squeeze pages via social media

Like Connor, you can even hire virtual assistants to run all of your social media sites and marketing platforms.

 

  1. Create YouTube videos with annotations linked to your lead capture page

 

  1. Post ads to Craigslist

 

  1. Put up bandit signs

 

  1. Go to other, larger wholesaler property showings and network with the investors that are viewing the property

 

  1. Go down to the city auction and network with the investors in attendance

 

  1. Google

Step 1 – Type “We Buy Houses (insert city name)” into the search field

Step 2 – Hit “search” and the results will include both paid advertisements and top organic searches

Step 3 – Click on Top Hit

Step 4 – Capture email address and add to buyers list. There are two ways to obtain an email address

  1. Many companies will have their email addresses listed directly on their site.
  2. If email isn’t listed, then you will have to call the company. If you have to go the phone route, it is important to be respectful of their time, so don’t ask for their buying criteria because you are just going to annoy people.
    • The only goal of the phone call is to capture their email address, which can be done rather quickly.
    • When you call them up, say, “hi, my name is XXXX and I came across your information online. I am selling discount properties in your area. Would you like to be added to my buyers list?”
    • If they say yes, ask them to text you their email address so that you don’t write it down wrong.

Step 5 – Repeat

  • You can build a 100-person buyers list in a week following this process

 

global wealth

How to Make $840,000 in Wholesaling Profit in 12 Months

In my conversation with R.J. Bates, who focuses on wholesaling and has done over 100 transactions, he outlined what has allowed him to both net $840,000 in profits after all expenses in the past 12 months and replicate this business model in other markets: building relationships and maintaining integrity.

 

R.J. believes that the key to his wholesaling success can be attributed to the solid relationships he has created and his ability to make sure that he never puts his integrity at risk, even if it results in having to pass up on an awesome deal. The majority of R.J.’s clients are out-of-state investors, so since they don’t know anything about the market, they put a lot of trust into R.J.’s capabilities. In order to ensure that he maintains the investor’s trust, R.J. relies on:

 

A strong understanding of the target market

 

R.J. has lived in his target market his entire life, so he understands the areas, neighborhoods, and subdivisions inside and out, as well as where to and not to invest.

 

Ensuring that the numbers are as accurate as possible

 

In order to ensure that his numbers are as accurate as possible, R.J. relies on the solid relationships that he has formed. First, unlike many wholesalers who work with multiple agents, R.J. has created a very close relationship with a single agent. She is actually more of a business partner than a real estate agent. In R.J.’s eyes. having one agent is advantageous because the financial analysis process is extremely repeatable for each transaction. R.J. can trust his agent to pull the comps the same each time by adhering to the same sets of criteria, like only looking at properties that are within a certain percentage of square footage, that sold a maximum of 90 days ago, etc.

 

Also, R.J. has built solid relationships with contractors. In combination with his construction background, this not only helps him understand where the rehab estimate numbers are coming from, but he can also use his expertise to know if the quotes are fair or if they are being pulled out of thin air.

 

Replicating his business model in other markets

 

Everything goes back to building relationships and maintaining integrity with his investors because this has allowed him to create a solid business in his home market, but also it is allowing him to replicate his business model in other markets. Since the majority of R.J.’s investors are passive and out-of-state, they expressed their interest in investing in other markets, one of which being Seattle. Seattle is an extremely hot market, but it is hard to acquire properties, so there is a huge demand for wholesalers to find off-market deals. Therefore, R.J. is in the process of replicating his business model in the Seattle market.

 

His first and most important step was finding a reputable real estate agent to be his boots on the ground. R.J. tasked his current real estate agent with the job of finding a new agent and discovered that Facebook was the easiest and most efficient way to accomplish this task. R.J.’s agent posted a message to large, nationwide realtor groups, stating the success she was able to achieve with R.J.’s business in the last 12 months and asking for anyone from the Seattle area that has experience working with investors to reach out to her. As a result of this post, they were able to quickly acquire 15 to 20 leads from agents in the area, who explained how many deals they have done, what opportunities they are looking for, and what their long-term career path looks like. Using this information, they were able to narrow down the field to a couple of potential candidates, and ultimately, selected an agent that would work within their Seattle business model. Through this relationship, R.J. was able to find a title company that he felt most comfortable with and will begin the process of finding off-market deals and wholesaling them to his investors.

  

real estate wholesaling adivce

How He Netted $100,000 From a Single BANDIT SIGN!

In a conversation I had with Matt Aitchison, he explained to me how he was able to net $100,000 from his very first flip by performing a single bandit sign campaign.

 

Matt obtained his real estate license immediately after graduating from college and began to create a traditional real estate company. Once that was up and running, he decided that he wanted to start investing in real estate on the side in order to bring in an additional stream of income.

 

A few days later, Matt woke up at 4 A.M. and drove around the rougher parts of his town to throw up a bunch of bandit signs. The very next day, he had his first lead. He received a phone call from a guy that said he had just gotten into town and was only going to be there for a week. Talk about perfect timing! He explained that he was in town because his mother was sick and he was helping her move closer to him so that he could take care of her. His mother was a hoarder, so her son really wanted to rid himself of the property. He told Matt “if you give me $75,000, can close by the time we leave in 7 days, and help us find a moving truck, the property is yours.”

 

Since this was Matt’s first deal, he didn’t really know how to run the numbers properly. However, he had met a couple of serious real estate professionals, through the course of starting his RE agent company who understood how to run the numbers, understood the real estate industry, and understood construction. After discussing the deal with them, they all said that he had found a gem!

 

Matt did understand how to run comps, and he discovered that the property was worth $140,000 in its current condition.

 

Since Matt was 22 years old and was already in $20,000 in debt, his next step was to figure out how he was going to pay for the property. He ended up doing a joint venture with an experienced flipper that he had met through networking. The flipper’s role in the partnership was to help secure a hard money loan through his lending contacts and to project manage the entire deal in return of 20% of the profits.

 

Matt was able to get all of his ducks in a row in less than 7 days and was able to pay the owner’s son the $75,000 in cash that he was asking for. Matt put in an additional $25,000 in renovations and sold the property for over $200,000.

 

All it took was the act of getting up at 4am on a single morning. This one act was the catalyst that started a chain reaction, which ultimately produced over $100,000 in profit! However, when Matt got up that morning, he wasn’t telling himself that he was putting up the bandit signs so that he could find a deal that would net him $100,000. He was simply taking action that would put him in the best position to succeed, and then he took advantage of an opportunity that presented itself.

 

The more action you take, the more opportunities you get presented with, and the better chance you have at succeeding. It really is just a numbers game!

 

 

When is a time where you took what at the time seemed like a simple ACTION, but it ended up resulting in a HUGE payoff?

 

 

Be Persistent but Not Annoying: 2-Step Process for a Wholesaler Cold Call

Ring, ring, ring…

Joe: Hello

Mystery caller: Hello, is this Joey?  (p.s. I hate being called Joey)

Joe: …yes, this is Joe. Who is this?

Mystery caller: Hey Joey, my name is blah blah (I won’t use real name). Do you like off-market deals?

Joe: …yes but I buy large apt communities, do you have any of those?

Mystery caller: Oh yes, I sure do, what is your email address?

Joe: it is XYZ. I can’t talk now but you can email them to me and if they are of interest I will follow up with you.

Mystery caller: sure thing Joey

Joe: I go by Joe

Mystery caller: bye!

45 seconds later I get an email with properties.

Then I get a text 2 minutes later that says “ Hey Joey, it’s XYZ we just spoke regarding me emailing you multifamily offerings to your email of XYZ. Well I just sent over opportunities for you via email so please get back to me at your earliest convenience! My email address is XYZ.”

…THEN, 2 minutes after I get a text I hear…Ring, ring, ring….

Wholesaler: Hello, Joe (I smile, small victories…), I wanted to call and tell you I emailed you the listings.

Joe: Yes, I know, I got your email. And I got your text saying you emailed me. I am very busy right now but will look at your email within the next two weeks and if it’s something I want to pursue will follow up. If not then I won’t.

Needless to say, I didn’t follow-up with him.

Ok, some takeaways:

Instead of peppering me with correspondence if the wholesaler instead took the following 2-step process I would be much more inclined to work with him on future deals even if these didn’t pencil out.

Step 1: Introduce himself and tell me he has off-market properties he’s wholesaling but, before he shares them with me, he’d love to learn more about me and what I am purchasing.

Step 2: after learning that he decides to send or not send me the properties. If he doesn’t send them to me I would have a lot of respect for him for doing so because he’s showing he will screen the stuff he sends my way.

BONUS: doing some research on background of people you’re calling by doing a simple Google search. And listening to the responses to adjust accordingly (Joey vs Joe).

Are you a wholesaler? If so, how do you approach your cold calls?