How can you buy real estate in bulk from a wholesaler? First, I must assume that you know the basics of real estate investing and understand the cash flow formulas and ROI calculations. Without the knowledge of these, you could also close this page and read a comic instead. Since conventional investor financing has almost run out, I must also assume you have cash. Without cash, you cannot buy from wholesalers. Let me explain how wholesalers work.
Hey, why should you read this and listen to me? Well, I am a wholesaler who has had my share of unsuspecting “investors” who promise everything and deliver little. My idea is to promise less and deliver more. When I have a wholesale “deal”, IT REALLY IS a “deal” for the end buyer (investor) with cash.
A wholesaler is like a bird dog. He or she scans around your target area for “deals.” When the deal is found, it is put under contract in one of several ways. One way is to use a short one or two page agreement that is “assignable”. No matter the deal, it must be assignable. The end result is that the wholesaler will assign you its contract with the seller. You will fulfill the role of buyer and pay an allocation fee to the wholesaler. Now there are many variations on what I just described, but suffice it to say that these are the basics of any wholesale deal.
Your first step is to find one or more wholesalers and provide them with the details of the properties you want to buy. Details like specific target neighborhoods, overall property condition, BR, BA, etc. Of course, a price range would be helpful; you can’t just say “as low as possible”. How do you find a wholesaler? It is easier than you think. There are probably more wholesalers in your backyard than you think. Have you ever seen those yellow “We Buy Houses” signs on poles or in someone’s yard? The sign setter is most likely a wholesaler. Have you ever seen Google ads for “We sell cheap houses.” The advertiser is most likely a wholesaler. Craigslist home search ads are probably wholesalers. Craigslist home for sale by owner can be a wholesaler with ready-to-buy deals. Use your imagination and find someone you can work with.
When you find a wholesaler, you need to be sure that you can work together to achieve your mutual long-term goals. Find out what the wholesaler’s goals are for your business and what plans it has to stop wholesaling, if any. A good wholesaler is involved in the long run and wants to build a successful business from wholesaling.
You should look for a wholesaler with whom to build a long-term relationship. Like you, a wholesaler seeks to establish long-term relationships with their buyers. Unique buyers are not the ideal buyers of wholesalers. The first couple of deals you work together with a wholesaler, use the Ronald Regan method to determine the depth of the ongoing relationship; that’s “trust and verify”. You must trust that your wholesaler will honestly tell you everything you want to know that he knows. You should also check any information you receive from a wholesaler for accuracy, oversights, and errors in judgment. You don’t want a wholesaler telling you that they know this neighborhood and that the house is worth $ 200k using Zillow’s inflated or old estimates when in reality the area only supports $ 150k properties. Use your own trusted internet resources and, if necessary, boot from the ground to verify what you are buying. If you buy a fake product, don’t blame your wholesaler; He is most likely a new “investor” himself looking to get started. It is your responsibility to know what you are getting into. Trust builds on itself and is a two-way street. You also need to be trustworthy and buy the property when you say you will and pay what you agreed to pay for it.
After a few offers, you will know the strengths and weaknesses of your wholesaler and can fix them or, if there are too many weaknesses, find another one. If you think you would like to work with an established bird dog, go to my website below and check out the ninety-seven dollar report you can get for free.