Many people find selling wholesale properties an attractive business because you don’t need a lot of cash up front.
In most cases, putting up the earnest money of 1%-3% of the selling price gets the house under contract.
Take a house priced at $30,000. You invest $300-$9000 and you’re ready to wholesale the property.
Of course, the low cost of entry is only part of the equation. There are some other things you need to know when you start wholesaling properties.
How It Works
Selling wholesale properties usually follows a predictable pattern.
You find a property that could be sold for a substantially higher price with some work and put it under contract. Make sure to include a clause in the contract that lets you abandon the deal if you can’t find a buyer. Then you add a modest markup to the price and market it to cash buyers.
When you strike a deal with a buyer, you assign the contract to that person with the markup as a fee. The buyer purchases the property and you keep the fee as profit.
Some well-funded wholesalers prefer to buy the property outright and then resell it an investor.
Finding Off-Market Properties
For many new real estate wholesalers, finding properties is a serious challenge.
The ideal situation is finding off-market properties. These properties aren’t listed, but the owners want to sell.
You have several options for finding these properties. You can send out small batches of direct mail postcards to people in bankruptcy or foreclosure.
You can drive through neighborhoods and look for distressed homes. Distressed homes often indicate the owners are in financial trouble and might be ready to sell.
Network with people in related industries, such as contractors, lawyers, and property managers. They will often know about available but unlisted properties.
Wholesale Properties Buyers List
Securing the contract won’t do you much good if you can’t offload the property to an investor. You need to develop a list of people that you know are regularly interested in buying wholesale property.
One approach is to use bandit signs posted in the neighborhood. These signs say something like “Cheap Home,” the selling price and your phone number. People who respond are often good candidates for the list.
Networking events with a focus on real estate are usually packed with good candidates for your buyer’s list. Just be sure to make careful note of what kind of properties interest each person.
Another option brings us to our next topic, which is leveraging the Internet.
Leverage the Internet
Getting yourself set up with a professional website makes it easier for sellers and buyers to find you. That cuts down on your legwork and speeds up the deal-making process.
The trade-off is that you need to invest time in marketing the website. You can achieve some of that through inbound marketing, such as blogging, search engine optimization, and webinars.
You can also develop social media profiles that function as lead generation tools. The key to good inbound marketing is to keep the content customer-focused. For example, you could talk about architectural styles in your market or what makes for a good investment property.
Pay per click or PPC advertising offers an alternative way to get your name in front of potential buyers. Just be aware the costs can be high for competitive keywords.
You can make a good living selling wholesale properties, but it takes work.
You need to develop a system for finding properties. A professional website and consistent marketing are necessities. You also need to build a buyers list.
Real Estate Visionaries specializes in helping people develop online marketing for real estate. If you haven’t been seeing the online results you want, check out our coaching call.
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