For those who want to get into real estate investing but struggle to start because of a lack of funds, there's no better solution than wholesaling. Wholesale real estate has been the key to building critical networks and raising important capital for countless investors. And one of the best parts is that it's relatively quick to start! Here are the four most vital steps to getting started wholesaling real estate within the next month.
1. Learn Your Market
It's impossible to succeed in wholesale real estate without an intimate knowledge of the market you hope to wholesale in. That means you'll need to know more than just city- or region-wide trends. You should know individual neighborhoods, down to their housing styles, amenities, and target buyers and sellers. One of the best ways to do this is to simply walk or drive through the area, allowing you to scope out nuances you might miss when looking at strictly data. In addition, you'll want to closely follow all of the homes listed and sold in your target market. Note the overall prices, but also the number of beds and baths, square footage, and other factors.
All of this should help you develop a mental model of what different types of homes are worth, which you can quickly tweak when scoping out potential sellers' properties. Having examples of actual comparable properties sold in the area can also help sellers understand that your offer is based on actual market factors.
2. Develop Your Business Plan
Now that you know your market, it's time to figure out how you'll make money from it. Write down specifics about what kind of properties you're targeting (detached single-family, condo, townhouse, etc.), must-have or must-avoid features, and the price range you'll need to buy them to make money. On this last point, make sure you leave room not only for your fee as a wholesaler but also for the end buyer to make money.
One of the most critical parts of wholesaling is tracking down data on potential sellers. Sure, you could knock on every door and try to make your pitch or blanket entire neighborhoods with direct mail. Instead, successful wholesalers narrow down potential target properties.
Wholesalers can find potential property deals typically one of two ways: through finding them on-market or off-market. MLS listings, real estate agents and brokers can all offer great support in helping wholesalers find and monetize properties on-market. This frees you up to not spend as much time and money on your own trying to reach potential sellers. However, if you do choose to go the route of pursuing off-market deals, you will need to determine how you plan to market. Will you go door-to-door? Send direct-mail letters or postcards? There are even services that will leave pre-recorded voicemails on targeted homeowners' phones without them ever hearing a ring! Each of these methods has various advantages and drawbacks, including cost. You may need to be a bit flexible here to start, as you figure out what works best for your market.
3. Craft Your Marketing Strategy and Client Pitch
This is where successful wholesalers separate themselves from unsuccessful ones. It's a marketing business, after all. Some people find success with handwritten letters to homeowners, who may be more open to the personal touch of a small investor. Others may do better with sophisticated stationery and envelopes that convey a feeling of authority, making sellers feel comfortable working with you. Generally speaking, you'll want to explain why you're contacting them, why they might want to sell their home, and provide them with your contact information. You may wish to test several different methods, formats, and messages to see which works best.
Now comes arguably the most important part - your actual meeting and negotiations with the seller. Wholesaling requires a deft touch with people, one you'll need to develop over time. People often have complex feelings wrapped up in their homes, especially those who may not have been taking care of it or who have a long history there. Lay out for them why selling their home is in their best interest, and more specifically, the benefits of selling it to you as a wholesaler as opposed to going the traditional route with a real estate agent.
Remember, successful wholesalers solve problems for owners who want to get out of their properties, so always keep their needs and feelings at the forefront. You may not be able to agree on a deal right now, but developing a good relationship with potential sellers will pay dividends over time if they reconsider.
4. Start Networking
We've spent a lot of time talking about how you'll find and convince sellers, but having a buyer waiting is equally as important. If you can't find someone to wholesale the property to, you'll miss out on the opportunity. That's why you should start building a list of potential buyers as soon as possible. Try to find any local real estate investor clubs, connect with agents, and reach out to any investors you may know to see what kind of properties they may be in the market for. Knowing exactly what your potential buyers are looking for can help you focus your search and quickly turn over properties when you find them. The better your relationship with your buyers, the more likely they'll want to keep coming back to work with you, making you both more money.
30 Days Is All You Need To Get Started In Wholesaling
The days of spending years saving up to get started in real estate investing are over. By following these five simple steps, you'll go from zero to soon-to-be wholesale hero in a single month. While there will certainly be hiccups and lessons learned along the road, wholesalers will find following these simple principles - along with a hefty amount of dedication - will put them on the path to success.
