The Art of Wholesaling by:Ryan Walls
Wholesaling is a simple concept that has been around since the days of Adam and Eve
. One person has something to sell and another wants to buy. A wholesaler puts these deals together. You will get paid to be the middle man.
Let's look at it in simpler terms. When you buy groceries you are buying them for more than the store paid for them. The store is the middle man. They buy groceries for less and sell them to you for more.
You are going to do the same thing, only with real estate. You're going to find homeowners in distress and put them together with rehabbers. Rehabbers are investors who specifically buy houses to fix up and sell retail. They are always looking for deals. If you can supply them with a steady stream of properties, they will keep you very busy.
Seems simple enough doesn't it? It truly is if you do it right! So how does one do this right?
Follow the following steps and you will be on your way to hefty paychecks.
First, you must find homeowners in distress.
There are many ways to advertise what you do:
Run ads in the paper that state, "I buy houses for cash", place business cards size ads in school newsletters, call local churches and charities to let them know that you are a real estate investor who helps folks that are behind on their mortgage payments, place "I buy houses" signs on street corners, wear hats and T-shirts stating what you can do; call homeowners listed in the public records who have filed for divorce, bankruptcy, or foreclosure, landlords that have recently evicted tenants, folks who have not paid real estate taxes and people going through probate; place magnetic signs on your car; go door knocking, etc.
There are many reasons why people find themselves in distress: Job loss, illness, downsizing, job relocation, divorce, death, pay cuts, and more. Just searching for foreclosures limits your business. Do not limit your thinking - Buying houses from people who were transferred, unable to sell the property before the move and can't afford to make two mortgage payments. Even though the payments were current, the situation was headed for distress. Again, do not limit your thinking!
Once you find a homeowner willing to work with you, then the next step is to execute the contract. Fill it out making yourself the buyer. Give the homeowners a $10 deposit when signing the contract. Yes, homeowners will accept $10, or give them a deposit and request that they do not cash it until you have all the conditions met (inspection done, mortgage secured, etc). Once the contract is signed, get busy finding another investor (a rehabber) who will buy the property wholesale.
To find an unlimited supply of rehabbers, run an ad in the local paper that states you have houses in foreclosure. When they call, get their contact information and keep it in a database. Each time you get a property under contract, contact the investors on your list. If the property is priced right, it will sell. Another great source for rehabbers is to attend local REIA (real estate investor association clubs) group meetings. You can find your nearest one at nationalreia.com. These are monthly meetings by real estate investors, mortgage brokers, real estate agents, title companies and hard money lenders, and others specifically looking to work with real estate investors.
Once you find a rehabber, simply assign the sales contract to him or her, and this person will close on the transaction in your place. Inform the owner in writing of the name of the person who has accepted the assignment of contract. You'll get paid an assignment fee for putting the deal together. The closing will take place at a title company or an attorney's office. The rehabber can arrange the entire closing. All you have to do is show up and collect your assignment fee check.
How much is a typical assignment fee? It strictly depends on where you live. Typically, an assignment fee is about 10% of the retail value of the properties in your area. If you live in an area where houses sell for $100,000 in retail condition, you can expect to make $10,000 per deal. Likewise, if properties sell for $500,000 in retail condition, you can make $50,000 per deal. If you live in an area where properties sell for $50,000 in retail condition, you may consider moving your farm area.
A typical deal looks like this:
You find a homeowner in distress
You sign a sales contract with the homeowner for $55,000.
You assign the contract to a rehabber for $65,000
The rehabber closes the deal in your place
You collect the check for $10,000
The rehabber fixes the property and sells it retail for $100,000
It can't be that simple, there must be a catch? There is you actually have to get off your duff and do it. Finding homeowners is simple enough. Finding rehabbers is very easy. Driving to a closing is even easier. The key is to be diligent in the process. It may take 100 conversations with distressed home owners to get a contract. Most folks talk to five or six homeowners and quit, believing that this doesn't work. Just know that once you close your first deal, the next one will come easier. You will have confidence and momentum in your favor. No matter how long it takes to get one homeowner under contract, stay focused. The result will be a win-win situation for everyone. The homeowner will be out of distress, you will make money helping them and the rehabber will sell a "like new" house to a new family. Wholesaling is a "no lose" situation.
Can it really be done with no money? Not exactly. You will need a deposit to give to the homeowners to secure the contract. You also may have to spend money advertising for homeowners or rehabbers. If money it tight, call people, knock on doors. Door knocking has been used as a sole source of finding deals at the beginning of many investors' careers. Contacting charities and churches is free. Magnetic car signs run about $30. Even if money is tight, it is still possible to be a successful investor. Business cards can be as inexpensive as $25. Vista Print (vistaprint.com) will print your business cards for free and only charge you the cost of shipping. So it is possible to find plenty of distressed homeowners even with a small budget.
Real estate investing is an amazing way to make a living. The rewards are so much greater than financial. Helping homeowners to get a fresh start give you an incredible sense of accomplishment.
The question now is: Do you want to make a difference in the lives of others? If you answered yes, become a real estate investor! Just do it!!
About the author
For more information on Ryan Walls and his powerful strategies, visit
http://www.HugeProfitWholesaleDeals.com http://www.articlecity.com/articles/business_and_finance/article_9967.shtml
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