Do I Need Good Credit To Wholesale Houses?
Wholesalers either "double close" on their wholesale deals or they "assign" their contracts to their investor/buyers eliminating the need to ever fill out a credit application!
Since the majority of wholesale deals are assignment of contract you do not need funds with Private Money or conventional funding, traditional credit based borrowing goes right out the window!
SO YOU DON"T HAVE TO GET YOUR CREDIT PULLED! YOUR CREDIT DOES NOT MATTER ONE BIT because you're not the one repaying the loan!
What other style of real estate investing allows you to control hundreds of thousands of dollars of real estate deals even if you have "Bad Credit"?! NONE that I know of!
Also, because most wholesale deals revolve around Private Funding, there is NO CREDIT AGENCY REPORTING! This is because the "Private Lenders do not report to the agencies. So your buyers credit rating NEVER shows any new loans on their credit report!
This helps your Investor Buyers credit rating because their debt to income ratio never changes even though they may have placed several hundred thousand dollars worth of mortgages with the Private Lenders.
This means your investor buyer never looks like his credit limit is over extended! Your buyer can still borrow more money from other hard money lenders anytime he wants, in turn, he can still buy more deals from you!
But, if YOU have blemished credit, YOU can still buy and sell real estate as a real estate wholesaler. You can start TODAY!
Can I Wholesale Houses In My Town?
The answer to today's question is: Absolutely! YES you can wholesale anywhere there are people who own real estate. And that's anywhere USA. There is one all consuming factor that you have to keep in mind when considering wholesaling real estate, and that is:
"You are only looking for motivated sellers", PERIOD! That's the NUMBER #1 RULE of wholesaling! All other sellers are a waste of your time! This is because only a motivated seller is going to sell you their house on the terms that you need to make the deal work. The reason being, only someone who HAS TO SELL is going to sell you their property for 40 to 60 cents on the dollar! Does that make sense?
So, does your town, your city, your county, whatever, have within it any motivated sellers? The answer is MOST DEFINITELY! So it's just a matter of finding these motivated sellers and you will be wholesaling in no time!
How do you find motivated sellers? Well, you market for them using some of the following methods:
* Post cards mailer campaigns
* Bandit signs
* Computer programs that find them for you (programs such as real quest)
* and many other methods, but you get the picture!
Motivated sellers are everywhere once you know how to find them!
And then all you need to do is find a few investors who wish to purchase the GREAT deals that you put under contract with these motivated sellers! You then market to find these buyers just like you did to find the motivated sellers!
Do I Need To Be Able To Estimate Construction Repair Costs To Wholesale Houses?
Almost all of the properties that wholesalers will "put under contract" will need some degree of repair work. These repairs can range from some new carpet and paint to a complete "gut job" where you will have to remodel the entire house inside and out!
Unfortunately we as wholesalers MUST be able to calculate the rehab dollar amount. We must be able to plug this critical "Rehab Value" into our Wholesale Formula Spread Sheets. These spreadsheets tells the wholesaler if he has a real deal on his plate or not!
More on how to calculate your spreadsheet numbers some other time! But for now, just know that this rehab dollar amount is a critical variable when figuring out how much you will offer on the property you are looking at!
So, if you know absolutely nothing about estimating repairs on a rehab project this could be a problem for you. So here's what I suggest you do if your new to the business. CALL A CONTRACTOR TO HELP YOU CALCULATE THE REHAB COSTS! Then, open up your ears and your eye's and pay attention to what the contractor tells you about the project at hand.
Estimating repairs is not rocket science. It just takes a little practice to get it right! I suggest that new investors should be walking through as many distressed properties as they can with a notepad, a tape measure, and an open mind! I can teach anyone in 30 Days or less, how to calculate rehab numbers and have excellent ballpark repair numbers on just about any project.
I have put together some generic project cost sheets that will help put 90 % or more of the repair totals together for you. Just plug my numbers into your Rehab Value Spreadsheet and you will be more than on your way to arriving at the complete project cost totals that you will need. In my e-book "Wholesaling Smarts" I have included this project estimating cost sheet.
You may have to pay your contractor a few bucks for the first few estimates, but do it anyway! Think of it as the price of an education! While the contractor is doing his thing, you should run your own numbers using the cost estimating sheet in my e-book. Then, after the contractor has given you his numbers, compare them to yours to see how you did on your project total. Be patient, it will take some practice, but anyone can learn how to estimate like a pro! After a while, you will never need to call the contractor again, I promise!
YOU MUST HAVE AN ACCURATE REHAB COST VALUE TO PLUG INTO YOUR WHOLESALE DEAL SPREADSHEET, WHETHER YOU ARE ESTIMATING THE REPAIRS OR YOUR CONTRACTOR IS DOING IT FOR YOU. IT'S AN EVIL NECESSITY THAT ALL WHOLESALERS MUST CONTEND WITH IF THEY WANT TO BE SUCCESSFUL WHOLESALERS!
Cash Flow And Wholesaling Houses
The best thing about wholesaling houses is that there is no risk involved and you can proceed with the same with little or no-money down. This is because in the wholesaling real estate, you do not have to take ownership of that property. All you have to do is to take the property under contract, and simply assign this contract to another buyer who will close on the property in your place.
Finding The Property
Finding the right real estate investing property for wholesaling houses primarily depends on your advertising strategies. Once you finalize the price with the homeowner or buyer, you have to prepare a sales contract between you (buyer) and the homeowner (seller). It is better if you use the contracts from the Board of Realtors because they are quite easy to use and people are familiar with them. However, in many areas, the Board of Realtors does not sell contracts to the public. Check with your local Board of Realtors first and if they do not sell the same, you can find a real estate contract from major office supply stores. Now, while you are filling out the contract, make sure that you put your name properly in the buyers name with the words and/or assign after that. Only then you will be able to assign the contract to the rehabber.
Building The Buyers List
Buyers list in wholesaling houses is the list of the rehabbers who buy wholesale real estate investing properties. In order to prepare a potential list, you can start with running an ad in the paper. This ad must convey a typical message, which is to the point. For example, you may use phrases like a great deal for rehabbers. After you have run an ad, investors will start calling you. Keep records of each call, and note down the contact information in a database, such as their name, number, fax, and email. Keep the ad running at least for sixty to ninety days.
Negotiating The Deal With The Rehabber
Negotiation is very important in both the cases. First, when you buy the real estate investing property from the homeowner under a contract, and the second, when you sell the property to the rehabbers. Obviously, the first time, the motive of your negotiation must be to finalize the deal at as low a price as possible, while the second time, the motive must be to finalize the deal at as high a price as possible. You need to be at your best in negotiating the deal in both the places. After all, this will substantially affect your overall profit.
Closing Time
Once you agree on a final price, you can move towards a closing, using your investor-friendly title company. Why title companies? Well, they are the ones who take on all your worries and do all the work for you. Your task is limited to finding a good deal, wholesaling the same to your rehabber, and going to the closing. After that, title companies will take charge and will do the rest.
Thus, here we see how simple it is to make a successful real estate investing deal and earn money in wholesaling houses.
Why Choose Real Estate Wholesaling Over Buy-Fix-Sell And Owning Rentals?
This is a very simple question for any "hardcore" real estate wholesaler to answer! There are a lot of reasons why, but here are the best reasons to choose real estate wholesaling over ALL OTHER types of Real Estate investing styles:
1.) Super Low Risk! Really it's really NO RISK at all! Wholesaling has none of the A-Typical risks that most every other style of real estate investing confronts the investor with such as:
* Shelling out Holding Costs on vacant property
* Getting burned by crooked contractors
* Tenants that do not pay
* Tenants that destroy your property
* Not finding a buyer after rehab and having the property "eat me alive"
2.) You need No "real" Money to Wholesale real estate, EVER! * You can wholesale if you have can afford $ 1.00!
Let's look at Buying fixing and selling, or some of you might call this "Flipping Houses" just like they do it on the popular TV show Flip This House! This is a very risky type of investing for new/inexperienced real estate investors to pursue!
So many things can go wrong when you try to buy-fix-sell houses. Major things can happen in the following areas:
* Pay to much for the property because you do not know the market
* Under estimate the repairs that need done to the property and then get in over your head with contracting costs
* Or get burned by a shoddy rehab contractor
* You're not able to sell at a profit and either break even or worse lose your rear end on the deal and have to either bring your own money to the closing table just to sell it at a loss or lose the property to foreclosure and destroy your credit rating!
* Lowering your debt to income ratio on each deal your doing Learn to Wholesale Now let's look at Buying and Renting real estate ! Some investors like this "long-term-wealth" strategy. But this style also has HUGE draw backs such as:
* Constant worrying about rent collection in order to pay your mortgage on the property
* Dealing with costly annual maintenance issues (roof leaks, furnaces that need repaired or replaced, landscaping issues, Bad water heaters, etc.
Wholesaling Real Estate has NONE of the issues that Buying-fixing-selling real estate or that owning a rental portfolio represents! Although these other styles of real estate can make you wealthy. It does not come with a great deal of RISK, CONTINUOUS HEADACHES AND STRESS!
This why I have chosen real estate Wholesaling as my favorite real estate investment vehicle! Now you know why!
Wholesaling Houses – 3 Easy Tips To Get You Started
Wholesaling properties can be easy and can be hard. It just depends on some simple principles. This article will help to get you started on learning to wholesale properties with 3 easy tips.
Before we get stared we need to answer the questions: What is real estate wholesaling? What does a real estate wholesaler do? What are wholesale properties?
A real estate wholesaler buys a house from a property owner at a discount and then resells the property to someone else who will either fix it up and flip it to an end user or hold it for investment property as a rental.
There are many tips that we could discuss but we will cover three that the beginner wholesaler should consider.
Tip #1 - Choose Your "Farm".
Select a geographical area that you will "farm". By "farm" I mean an area in which you will find your wholesale deals. Your farm can be anywhere but for beginners it's recommended that you choose a place that is convenient for you. You will need to go there frequently. You will need to drive the area and get to know it well.
Tip #2 - Know What A Deal Is.
Wholesale properties are bought at a substantial discount and resold for a moderate profit for yourself but with enough room for the buyer to make a profit when they rehab the property and resell it or rent it. Depending on the economy and the area, you may need to get the property under contract at 60%- 65% of the after repair value. The after repair value (ARV) of the house is based on the comparable sales of similar houses within a radius of .25 miles or less and within the last 6 months or less.
The buyer will need to spend money on repairs and other costs. This amount will be considered when setting the selling price as well as the price you will pay for it. This may sound confusing at first but as you gain wholesaling experience, it will become second nature.
Tip #3 - Develop a Buyers List.
Once you develop your farm and have found a deal, you must have a buyer to be able to sell the property and make your money. This takes several approaches.
Attend local real estate investor meetings. Network and let people know that you are a wholesaler. Collect investor's business cards. Ask if you can put them on your email list to let them know when you have a deal. You will never get a "no" to that question. You can collect names and info from people who call about deals that you advertise. You can call ads in the paper and if they are for sale by investors, get their info and ask if they like to be on your email list. It can be a slow process but you will be surprised how it will grow over time. The more the better. There are ways to build your buyer's list on the internet that will be covered in a later article.
These are just three basic tips for the new investor who wants to start wholesaling houses. There is a lot to learn but it is learnable. Wholesaling can be a fun and profitable business.
How To Build A Real Estate Wholesaling Buyers List
This is a very important to understand! Because without INVESTOR/BUYERS for the Real Estate that you have put "Under Contract" with the MOTIVATED SELLERS you have found, you will NEVER wholesale a single property!
There are 2 things, 2 must-have ingredients that all Real Estate Wholesalers need, and they are:
1.) Motivated sellers who have agreed to sell us their property at a deep discount!
2.) Investor/Buyers who want to buy those properties that we put under contract with the Motivated Sellers!
Without BOTH of these Wholesale Deal factors present, there will NEVER be a Wholesale Deal. EVER! Does that make sense?
So how do you go about finding these Investor/Buyers who have been searching to purchase wholesale priced property, just like the property that you have under contract with the Motivated Sellers?
The answer is a simple! The answer is MARKETING! You market for these individuals, it's that simple. You put the word out, and you tell the real estate investors of the world that have GREAT Wholesale Priced Investment Properties for Sale!
How do you market for these individuals? That's really the question you should be asking yourself! There are several "Key" ways to do this. Here are a few of the ones that I have had GREAT success using and am still using today as I write this:
* Online classified advertising! It's FREE, and it's POWERFUL! There have been studies completed that tell us that 7 out of every 10 Investors are looking on the internet when searching for their next property! Wholesalers need to be actively advertising their inventory online. I use several Free online classified sites such as:
* Craigslist.com * Backpage.com * Rehablist.com
just to mention a few of more popular sites. There are about 50 additional sites that my company lists our properties on absolutely FREE each week! Its boring repetitious work, but it pays off big time!
* There is also Ebay.com which is a pay-site, but gets HUGE traffic looking at your inventory. And there are several online real estate auction sites where we auction-off some of our property's.
* Real Estate Wholesaling Websites! Every Wholesaler should have his own real estate investing website, PERIOD! An absolute critical MUST HAVE if you want to be taken seriously as real estate wholesaler! Your company's website should be advertised on EVERYTHING that you do when marketing you business so the world can find your website and buy your properties!
There is also:
* Classified Advertising in the local and regional newspapers
* Direct Mail Postcard campaigns targeting Absentee Owners and
active Landlords who are actively searching for more units to buy!
* Real Estate Investment Club members join your areas local club.
* Bandit Signs
* Vehicle lettering
* Business cards
And many other marketing methods, but I think you get the picture!
What you're ultimately trying to do, is use all of these marketing methods to drive your traffic back to your Real Estate Website to shop your available property inventory online!
So as you can clearly see from these few examples of how to market for your investor/buyers, that almost everything you will be doing revolves around the use of the internet and your investor website!
If you do not have a computer you should make it your next purchase! Then get yourself online and get a real estate website immediately! Every single successful real estate wholesaler that I have ever met is doing the majority of the things that I just talked about.
If the world does not know that you are there, you are "out-of-business" before you even get started!
So the answer to the question "How do I find the Buyers who want to buy my Wholesale Property? is MARKETING, MARKETING! YOU FIND YOUR BUYERS THROUGH YOUR MARKETING EFFORTS! PERIOD!
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