Are you interested in taking advantage of the opportunities in the real estate market? Wholesale real estate investing, also known as wholesaling, is an excellent way to kickstart your residential redevelopment career. This specialized strategy allows you to collect a finder's fee for locating wholesale properties, providing you with a valuable introduction to the world of real estate investing while potentially earning some money.
However, finding those elusive wholesale leads can be a challenge. While traditional methods like the multiple listing service (MLS) can be effective, savvy wholesale investors know that thinking outside the box is often necessary. In this article, we'll explore different sources and strategies to help you find the ideal wholesale property you're looking for.
What Are Wholesale Properties?
Wholesale properties are homes currently owned by distressed homeowners. They present an excellent opportunity for investors looking to wholesale homes. Wholesaling refers not to the house itself, but to the exit strategy investors use to make money on it.
There are two main ways to wholesale property deals: contract assignment and double close. Contract assignment involves making a deal with the owner to buy the house and then selling those rights to another buyer. On the other hand, a double close involves buying the home and quickly reselling it. While these strategies differ, they fall under the same umbrella of wholesale property investing.
Wholesale Properties: Listed Vs Unlisted Leads
It's essential to understand the difference between listed and unlisted wholesale properties. Listed properties are those listed on the MLS, including private seller properties, pre-foreclosure properties, and REO properties. While listed properties are easier to find, they are typically more competitive and offer less profit potential.
Unlisted properties, on the other hand, are wholesale properties not listed on the MLS. These properties have significant profit potential but require additional effort and expense to locate.
How To Find Wholesale Properties For Sale
Finding wholesale properties is not as straightforward as finding traditional real estate deals. Here are some methods you can explore:
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Private Sellers on the MLS: These properties are owned by sellers who have signed a listing agreement with a real estate agent. While they can be profitable, the wholesaling process can be challenging due to the involvement of real estate agents.
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Pre-Foreclosure: Pre-foreclosure properties require the bank's approval to complete the transaction. While these properties can offer great deals, you must navigate the hurdles involved, such as restrictions on resale or assignment.
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Direct Mail: Direct mail, including postcards, letters, and catalogs, can help you find unlisted wholesale properties. Target lists that include properties in probate, absentee owners, or owners in pre-foreclosure.
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Outdoor Signage: Outdoor signage methods like banners, billboards, and vehicle magnets can be a cost-effective way to find untapped wholesale deals. Check local regulations before putting up signs.
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Pay-Per-Click Advertising: Online advertising platforms like Google, Facebook, YouTube, and Pinterest can be effective in generating wholesale leads. Each platform has its pros and cons, so choose the one that aligns with your target audience.
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Driving For Dollars: Sometimes, the old-school method of driving around your local neighborhood can help you discover vacant or distressed properties. Make note of the addresses and track down the owners later.
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Cold Calling: Utilize public records and online searches to find ownership information and phone numbers. Establish connections with property owners or reach out to real estate agents and other investors for potential leads.
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Auctions: Real estate auctions allow sellers to place their properties for sale, offering opportunities for real estate wholesalers to find deals at a good price. Be prepared for cash payments if you win a bid.
Do You Need Money To Wholesale Real Estate?
You do not need money to start wholesaling real estate. Property wholesalers do not actually purchase real estate; instead, they obtain the contract for a home and assign it to an end buyer. Wholesalers earn capital through assignment fees, making it possible to wholesale real estate with no money. However, a double close strategy may require capital for the initial purchase and closing costs.
Is Wholesaling Legal?
Wholesaling is legal as long as you follow your state's real estate regulations regarding marketing and contracting properties. Wholesalers can sell the contract of a property but cannot market the actual property to potential buyers, as that infringes on the role of licensed real estate agents and brokers. Understanding and abiding by your state's laws is crucial to avoid legal issues.
Wholesaling Real Estate For Beginners: How To Get Started Wholesaling Houses
Before jumping into wholesaling, it's essential to do some groundwork. Here are a few steps to get you started:
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Get to know the local market: Learn about the demand and trends in your local market.
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Establish a marketing presence: Increase your exposure in the area and build a network of potential buyers.
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Find deals: Use various marketing funnels like direct mail, the MLS, online listing portals, social media, and other investors to find deals.
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Evaluate the deals: Assess the deals you come across to effectively market them to end buyers.
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Decide on a wholesale strategy: Determine whether to use contract assignment or a double close strategy.
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Market the asset: Start marketing the property to end buyers, ensuring a successful wholesale deal.
Summary
Wholesaling real estate is an exciting avenue for investors to enter the real estate market. While finding wholesale properties may require some extra effort, it can be highly rewarding. Remember that wholesaling is a marketing funnel, and by filling the top of the funnel with qualified leads, you increase your chances of successful transactions.
So, are you ready to explore the world of wholesale properties and expand your real estate portfolio? Take advantage of the current opportunities in the market by starting your journey into wholesaling houses.
