myEmpirePROIn this lesson, I will bring you up to speed with wholesaling real estate step by step with respect to how things are changing very fast in the digital age.
I will also review the 5 steps to successfully wholesaling real estate for massive profits in upwards of $25,000 per deal.
My first deal was a $10,000 check from way back in 2005.
My biggest check ever was $82,000 in one single deal and I’ve averaged $25,000 – $30,000 per deal.
What has changed with Wholesaling Real Estate lately?
As you may or may not know, we are in a digital age.
So we all must adjust in marketing accordingly.
One of the worst mistakes I see newbie wholesalers make is not paying attention to how consumers move with the times.
They subconsciously assume that people’s behavior remains the same when it comes to media consumption.
Target Audience for the Wholesaling Real Estate Business.
The business of wholesaling real estate is ultimately about marketing and the target audience are distressed real estate property owners.
The goal is to find deep discounted properties and it is simply unlikely that a non-distressed owner would be willing to give away a whole house at a deep discount.
What is considered a deep enough discount for wholesaling a piece of real estate?
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In order to make the deal worthy of your time, life and energy, the property needs to be acquired at at-least a 35% discount off its after repair value (ARV).
In other words, if the property is worth $200,000 after it has been repaired…
You cannot afford to execute a purchase contract on it at more than 65% of the ARV as a real estate investor who is wholesaling the deal.
65% of the ARV will be $130,000 which is your initial maximum allowable offer (the MAO).
But that’s not it; there is more and it’s important.
I keep talking about the value after it has been repaired. Right?
But who is paying the repair and how do you estimate the repair cost? More on that later in this lesson…
But you can check out a free tool we created for this at:
Let’s get into the 5 steps…
Step 1 – Data Access & Analysis
Up until recently, there are many gurus that are still teaching people to go to the county government building to search property records.
This is an archaic way of doing things in a digital era of business building.
With a laptop and an internet connection, you now have access to over 150 million property records….
Which include distress indications such as
- Foreclosure
- Vacancy
- Occupancy
- Delinquency
- and more.
Access to property data is key in the wholesaling real estate business operation at least at some point where property evaluation would be necessary.
The software I personally use can be found at:
Don’t allow gurus to talk you into wasting your time and life on archaic methods and strategies.
You can access 150 million records for free and for less than $4 per day on an ongoing basis.
Step 2 – Contact Creation
Where does all this $25,000 per deal in wholesaling real estate come from?
People.
To be precise, the more value you serve to people, the more positioned you are to make money in any type of business.
A house does not produce money in and of itself without the people who own it or at least who are in charge of it.
So in addition to the property data and records, you will need to establish some form of contact with the people in charge.
Traditional vs Digital Marketing; Which is Better?
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With traditional marketing methods, you would be initiating contact by first finding property owners’ contact information with a process called skip tracing.
But with attraction marketing within the context of digital marketing especially, you can position for the owners to reach out to you.
Step 3 – Lead Generation
Ideally, you want to wrap steps 1 and 2 into step 3 as one piece of the process.
As you grow in life and business, you will continue to appreciate how much more valuable time is than money.
When you are young in business, gurus can still get away with selling you on strategies like cold calling and driving for dollars.
But life truly sucks if you are like 99% of people that these terrible and archaic strategies will never work for.
What is a Lead in Wholesaling Real Estate?
A lead is generated when an interest to sell by a legit owner is now attached to a piece of property.
So when you drive for dollars and write down addresses, that is a very expensive form of data collection and not lead generation.
Because no contact has been made, much less… interest to sell generated.
And as for cold calling, the fact is that we, as a generation of people, no longer appreciate strangers calling our phones…
Or unsolicited messages being left in our voicemail box.
But I get it.
It’s a numbers game for as long as you can patiently stick around for the process.
All Marketing Strategies Work for Wholesaling Real Estate But….
The real question is if a strategy would position you for consistency which is the number one ingredient of a successful business.
It is a fact of life that some processes are archaic and old school in nature.
You should know that… as you are competing in a real business world.
With attraction marketing, you can create valuable bates for the target audience where they can simply complete a form with their:
- Seed data (property address)
- Contact Information (a valid phone number)
- and interest to sell (a lead)
That business model will obviously save you time, energy and resources than it would take to build from scratch.
Would you rather do a 3-1 step process or 3 separate steps individually to achieve worse results.
That’s not a trick question.
Step 4 – Contract Execution
Once an interest to sell a.k.a the lead is generated, you then have to generate a maximum allowable offer (MAO) to negotiate with.
The number we generated earlier from the product of 65% and the ARV was a good start.
But our chances of finding these kinds of deals are attached to the likelihood of these properties needing repairs.
So we need to adjust that original number of $130,000, with the estimated repair cost (the ERC).
Repairs are good because it helps in negotiations and also represents our opportunity as investors to add value to these neighborhoods, properties and their owners.
Remember; The Direct Source of Our Income is the Value We Add to this Marketplace.
How do you generate a repair estimate?
As an investor who is only focused on wholesaling real estate, inviting contractors over and every-time you need repair estimates is not exactly productive.
If you do that, you will end up wasting a lot of contractors’ time who never get a real project from you.
Words get around quickly in the small real estate community and your reputation as a time waster can mess you and your business up quickly.
So I use a 3 level system namely low, medium and high level repairs to give a quick and good-enough estimated repair cost to your cash buyers.
Just disclose to them that they need to do their own due diligence; most of them will.
3 Levels Repair Estimate System
Low level repairs involve only cosmetic repairs such as carpet and painting to make the property competitive for quick sale on the market.
With mid or medium level repairs, you are indicating that the property also needs a brand new bathroom and kitchen.
And finally with high level estimated repairs, you are indicating that this is full gut rehab that includes new walls, roof and sidings in addition to everything we mentioned before.
With that understanding and the information given to you by the property owner during negotiation, you can use this free tool at:
…to come up with a preliminary repair estimate to negotiate a deal.
What if You Don’t Find an Interested Cash Buyer for the Deal?
HAVE YOU SEEN THIS: More Video on our YouTube Channel
No worries.
The deal you lock in on your contract should be made contingent on a satisfactory inspection of the property anyway.
It creates opportunities for you to be able to renegotiate if necessary.
But the preliminary estimated repair cost (ERC) is good enough to adjust your initial maximum allowable offer (MAO) which was $130,000.
So if you come up with a preliminary ERC of $37,000 using the free tool, your final MAO to negotiate with the seller will be:
$130,000 minus $37,000
That’s $93,000.
Step 5 – Deal Disposition
Once you get that property under contract at your MAO or lower, the rest is easy.
Because the original data tool I share with you earlier has a database of all the active cash buyers in the United States.
A typical cash buyer or investor will do their calculations like this.
ARV of $200,000 multiplied by 70% and adjusted for an assessed ERC of $37,000… that’s $103,000.
You locked in the deal at $93,000
So that leaves you a difference of $10,000 that you can keep for yourself.
Once you start getting good with negotiations which is part of step 4, you can secure a difference of even more money for yourselves in these deals.
As I said earlier, I’ve done up to $82,000 from one deal.
So anything is possible when you are constantly feeding your pipeline with leads.
Conclusion!
If you figure out steps 1-4, local investors and agents will worship you because you are creating business and effectively adding massive value to their businesses.
So localized strategic partnership as a skill will add so much more value to your business.
Use these resources to get started.
Download my 2 books for free.
SMART REAL ESTATE WHOLESALING and
REAL ESTATE MONEY SECRETS from
www.SmartRealEstateWholesaling.com
You can take it a step closer to your first deal by setting up your lead pipeline in 11 days with:
7 Steps of Wholesaling Real Estate Step-By-Step 📍
In this lesson, we will go through wholesaling real estate step by step in a way that you can actually use as a checklist for your business.
As a refresher, wholesaling is the art and science of…
- Finding deeply discount properties,
- Locking it in a purchase contract and
- Assigning the equitable rights secured by the contract to an able and willing buyer in exchange for an assignment fee.
In essence you get paid handsomely for finding the deals; the highest I got from one single deal to date is $82,000.
So here are the 7 steps to achieving this over and over again.
(1) Get List of Distressed Owners
Why would someone want to sell you a whole house at a deep discount?
Let me give you just 5 reasons:
- Need repairs and can’t afford it.
- Facing foreclosure and/or Owe too much liens against the property can’t afford to pay up.
- The property is vacant and eats up annual property taxes.
- Out of Area and/or Tired Landlord
- Unwanted Inheritances and much more actually.
So the first step is to get access to this public list of potentially distressed property owners.
You can also build websites… with these 3 functions.
(2) Contact with Offer to Buy
The 2nd step is to and find their contact information and contact this owners via one or more of a few methods namely;
- Ringless Voicemail
- SMS Text Messages
- Direct Mailing
There are other ways to reach out but I personally prefer and recommend the inbound marketing methods above as it allows you to pique their interest first.
Those who respond are your leads.
(3) Negotiate a Deep Discount
(<= 75%)
Once a lead responds back or once your marketing generates responses, you simply need to get on the phone, make an offer and negotiate a deal.
Here is a free maximum allowable offer (MAO) calculator to make that easier.
See below for the rest of the 7 steps:
- 4. Lock under contract
- 5. Assign
- 6. Close and Cash out
- 7. Rinse & Repeat – Systems
To get the full gist, RSVP and attend this free online workshop.
Below is a question for us to address with this lesson…
“I need your advice.
I got a house under contract till mid-May.
Buyer is getting a VA loan for the property but that can take up to 30 days (It’s been 5 days).
The seller can be a bit difficult.
How do I prepare the seller for a potential extension or how do I go about it?”
Enjoy the video.
(1) Get List of Distressed Owners
(2) Contact with Offer to Buy
(3) Negotiate a Deep Discount
(4) Lock under contract (<= 75%)
(5) Assign
(6) Close and Cash out
(7) Rinse & Repeat – Systems
Using the smart wholesaling formula, all you need is $300 but it can take a lot less if you don’t value time and have time to invest in manual marketing methods.
Real estate wholesaling is very simple. Now with regards to “easy”, it really depends on how much you value mentorship.