Wholesale real estate is the best way for hopeful entrepreneurs and investors to get into real estate. However, while it’s a simple concept, it can take a while to understand the ins and outs of the market.
As a result, we hear a lot of questions from new real estate wholesalers looking to get started and land their first deals. Here are our answers to the most frequently asked questions about how to get into wholesale real estate
Getting started in wholesale real estate
While many influencers make wholesaling seem very simple, it can be hard to figure out where to begin. Therefore many of the frequently asked questions we get from new wholesalers are about what they need to do to get started.
What resources do I need to get into wholesale real estate?
Wholesaling real estate is a unique business model because it doesn’t require many resources at all. As long as you can afford the earnest money to secure a real estate contract, you can land deals.
Of course, to maximize your efficiency you’ll need money for real estate lead generation software, skip tracing, and marketing, but these aren’t required. You can find and land deals by simply knocking on doors in local neighborhoods.
What should I learn first about wholesaling real estate?
Different people have different answers to this question, but BatchService CEO Jesse Burrell recommends learning how to comp so you can consistently get properties under contract at the right purchase price.
There are a few ways to learn how to comp, but two of the most effective methods are watching top wholesalers like RJ Bates III and Jamil Damji on YouTube and finding a real estate coach or mentor. If you combine these two tactics, you’ll fast-track your real estate education and quickly learn how to get the most out of your deals.
What is the best way to get started wholesaling real estate?
The best way to start wholesaling real estate is to find a niche you want to focus on and look for deals in it. Don’t be like most wholesalers and make the mistake of never starting because you want to understand everything perfectly first. Instead, pick an area of the market and work it until you’ve become a master.
The process should look like this:
- Set aside some time dedicated to finding motivated sellers.
- Schedule some time for real estate education. Watch videos, read forums, and/or find a mentor.
- Put your new knowledge to work every day. You can learn a lot from YouTube, but you’ll learn even more by rolling up your sleeves and talking to buyers and sellers.
As you follow these steps, you’ll transform from a “new wholesaler who’s just getting started” to a “legitimate wholesaler” before you know it.
Is wholesaling real estate illegal?
Wholesaling real estate is 100% legal, as long as you do it the right way. The basic rules of thumb to follow are:
- Don’t bring cash buyers to deals before you sign contracts with sellers. If you do, you’ll be acting as an unlicensed real estate agent, which is illegal.
- Verify how many deals you can do per year in the state. Some states require you to have a real estate license if you exceed a certain number of deals.
- Include a clause in your real estate contract that clearly states your intent to double close or assign the contract.
- Disclose if you are a real estate agent. If you are an agent, be careful not to mix the two roles, especially when acting as a seller’s agent. As a seller’s agent, you are responsible for getting your client the best possible purchase price on their home
As long as you keep these rules of thumb in mind, you won’t run into legal trouble for wholesaling real estate.
How to wholesale real estate
Once new wholesalers figure out how to get started, their frequently asked questions start focusing on how to wholesale real estate. There are several steps involved in securing your first deal, so here are our answers to the most popular questions we hear about signing real estate contracts with motivated sellers.
How do I find wholesale real estate leads?
Real estate lead generation has changed significantly over the past few years. Traditionally, wholesalers relied on bandit signs, driving for dollars, and networking to find distressed properties and motivated sellers. Now they combine those tactics with real estate lead generation software like BatchLeads to instantly find full lead lists,
One of the benefits of real estate lead generation software is the ability to quickly pull thousands of records with the click of a button. All you have to do is:
- Select your search area
- Select the quick filter or advanced search filters you want to search with
- Select the leads you want to add to your list.
Wholesale real estate lead generation has become so simple you can do it in three steps.
What should I say to homeowners?
You should choose your words carefully when you approach motivated sellers. Building rapport with them is important if you want to make successful offers. If you start the relationship by pressuring them to sell to you, you’ll rarely close the deal.
Instead, you should ask questions and try to understand what’s caused the property to fall into disrepair or what’s motivating the owner to sell. Once you do that, you can position your offer as a solution to the problem and work together to come up with a plan that solves the problem.
Remember, wholesaling may look like it’s about getting properties at low purchase prices, but it’s actually about solving the problems motivated sellers are facing.
How do I convince someone to sell their home below market value?
The truth is that you’ll almost never convince homeowners to sell for cheap. That’s why wholesalers look for motivated sellers and distressed properties. Motivated sellers don’t usually have a choice: they have to sell for below-market prices because they can’t afford to fix their property or they need to close quickly to escape some financial situation, like pre-foreclosure.
Instead of trying to convince homeowners to sell for cheap, look for ways to help motivated sellers out of their financial situations. Not only will you start putting your energy in the right places, you’ll also become more effective when you make offers.
How do I find cash buyers for wholesale real estate deals?
Once you sign a real estate contract, you’ve made it through the hardest part of wholesaling, but you aren’t finished just yet. You still need to find a cash buyer and get them to buy your deal.
There are a few ways to find cash buyers. You can network with local real estate agents and other real estate investors. They will likely know someone who is looking to buy a house. You can also use BatchLeads’ cash buyers search to find local investors. This will allow you to cast a wider net and quickly build a cash buyers list that has multiple investors who may be interested in purchasing your deals.
Should I get a real estate license?
Whether or not you get a real estate license is up to you. It has many benefits, including access to the MLS, but it’s not necessary to be a successful wholesaler.
If you enjoy learning and you’re interested in expanding your real estate business then pursuing a real estate license is a great idea. Not only will it give you a deeper understanding of real estate and expand your network, but you’ll also gain the ability to list houses for people who aren’t interested in selling for below-market value. This will make your business much more versatile. But if you’re only interested in wholesaling houses, a real estate license isn’t a requirement.
Becoming a real estate wholesaler is exciting, because it’s a great path to financial freedom. If you follow the right steps, stay consistent, and work hard, you’ll find real estate deals that are worth a lot of money.
However, that doesn’t mean wholesaling is easy. There’s a lot to learn and you’ll make a lot of mistakes as you learn how to find leads, talk to motivated sellers, and sell contracts to cash buyers.
That’s why we recommend checking out our BatchTV YouTube channel. You’ll find a full content library on a variety of topics, including real estate entrepreneurship advice, industry tips and tricks, webinars with top investors and wholesalers, and much more.
Of course, the best way to learn how to wholesale real estate is to get started. Don’t put off taking action because you’re learning, or you’ll miss the biggest lessons and the biggest deals without realizing it.