The Ultimate Guide To Finding Your First Wholesaling Deal

Finding your first wholesaling deal is a bit like searching for a needle in a haystack. Most people decide to go wide with their search, which results in a ton of frustration and very few deals being done. The key to success is to start small in your local area (usually city or county) and be diligent in your follow-up. Making 100 calls per week is a start, but the truth is you’ll need to make many more calls than that if you want to find a deal. The people who see success the fastest often make more than 500 calls per day—the more calls you make, the more “shots at bat” and thus the more home runs you hit. In the end, wholesaling or fixing and flipping is a numbers game.

Before you even start working on your first wholesaling deal, it's important to understand how the process works. In wholesaling, you’re acting as a middleman between a property owner and an end buyer. Your goal is to find a property owner who is willing to sell their property at a discounted price, often due to motivations such as financial distress, life events, or general frustrations. After you find said owner, you enter into a contract with them to purchase the property at a set price.

Once the contract is in place, you’ll market the property to potential end buyers, such as real estate investors or home flippers. These buyers are typically looking for properties that they can purchase at a discount and then renovate or sell for a profit. The difference between the original contract price you secure and the final sale price to the end buyer is your profit. Important note: if you are unable to find a cash buyer, you’re either stuck purchasing the home or you can back out of the deal and forfeit your escrow deposit. That’s why it's so important to understand exactly what you are doing, or else you can lose a ton of money very quickly—we know from firsthand experience.

So how do you go about finding your first property?

The easiest way to get started - on market properties

Most gurus on the internet will tell you that you need to start your wholesaling journey by driving around your community and looking for properties that are run down / abandoned—that’s a mistake. Not only are you wasting your time, but you’re also very unlikely to find a property that an end buyer is willing to purchase. Instead, start with properties that are already listed on the MLS. They’ve already indicated that they’re willing to sell the property which is half the battle, the other half is convincing them to take less money than you’re offering.

When searching the MLS, you’ll want to find distressed properties that have the potential for a wholesale opportunity. Look for properties with keywords like "fixer-upper," "as-is," "motivated seller," or "cash only". Once you’ve identified properties with potential, request a tour with the listing agent. During the tour, you’ll want to make note of all the work needed to get the property in useable condition. If they decline to provide a tour, use the agent to gather as much information about the property’s condition as possible (including the seller’s motivation). Pro-tip: oftentimes agents will overshare if you butter them up.

The next step is getting the property under contract. It's CRUCIAL that you work with a lawyer to make sure you don’t get the “short end of the stick”. There are two clauses you need to ensure that the contract has: 1) an assignment clause that enables you to assign the contract to another party and 2) a marketing clause, that allows you to promote the property. When determining what price to get the property under contract for, aim for 70% of the ARV in the area, minus the estimated rehab costs. To estimate the rehab costs, check out the rehab calculator we built.

Assuming you’ve agreed on a price, and the terms of the contract, and the agreement is executed you’ll need to pay the escrow deposit. In an ideal world, you’d have included a provision that enables you to pay the escrow deposit at any point during the inspection window (typically 10 days). The escrow deposit (also known as earnest money deposit, or “EMD”) should be specified in the contract and is typically between 1% and 3% of the purchase price. If you do not have the money to fund the EMD, you’ll want to work with a lender who can provide it or ask the end buyer to cover it. Note: if you need an intro to EMD providers, we’d be happy to help—get in touch with us.

Once the property is under contract and you have paid the EMD deposit, you officially have a claim to said property. At this point, you ideally already have an end buyer lined up, but if not, don’t fret because you typically have 30 days to assign the contract. Once the end buyer is ready to go, send the assignment agreement with a copy of the executed purchase agreement to the end buyer for signature. When it is signed forward that to the title company - NOT THE REALTOR. As a reminder, you are acting as a principal in the transaction and assigning your right as a buyer to a new buyer.

Congrats! Assuming all goes well with the title company and closing process, you’ve officially closed your first on-market deal. The best part—it required very little effort on your part and essentially no cost. If you’re a first-time wholesaler, aim to clip 5% on the spread between what you get the property under contract for and the price that the end buyer pays. Also, even though the ideal scenario is 70% of the ARV minus rehab costs, it's very unrealistic to expect that to happen. The much more realistic scenario is 10-15% below their asking price, which is usually only 10% below the ARV.

The next easiest way to get started - FSBO and craigslist listings

A lot of the time owners will try to sell their property without going on the MLS because they want to avoid the realtor fees (6% in most cases), we don’t blame them. To find properties being sold by owners, take a look at FSBO and Craigslist (housing => real estate for sale => owner). These owners are motivated to sell, and because they don’t have to pay realtor fees they’re more likely to be flexible on the price. Please note: these individuals may not understand/want to work with you given that you’re going to immediately turn around and flip their house for more money. The process for purchasing properties found here is the same: look at the comps and walk it to determine the target price, agree on a price with the owner and get it under contract, then find an end buyer, and assign the contract.

The other avenue that is very productive, but not as well known, is reaching out to owners that have properties listed with vacancies (rentals). On Craigslist, go to housing then click on “apartments/housing for rent”. You’ll want to sort by recent and look for listings that are clearly by the owner (not sublets/listings by current tenants). In every scenario you can get in contact via email, in some cases they even put their phone number. Your pitch here should be simple: _“Hi! I saw that you had an apartment listed for rent on Craigslist. I work with cash buyers who purchase properties in the YYYYYY area. Would you be interested in selling the property if the numbers made sense?” _Assuming they say yes, follow the rest of the steps outlined above. If they say no, thank them for their time and ask them if they’d mind if you followed up again in a few months to see if anything changed. Most will say yes, that’s when you’ll ask for their email.

The third easiest way to find deals - sheriff sales

Every year, counties across the nation sell properties that have defaulted on their taxes. These sales typically last for a few days and can be held either online or in person. If you decide to attend one of the sales, you’ll typically want to request the list ahead of time so you can visit the property. They won’t let you inside, but you can usually get a sense of the condition of the property from the driveway (note: just because the outside looks fine, doesn’t mean the inside isn’t a complete disaster - plan accordingly). If you plan to purchase property at the Sherrif sale, know that it is as-is, what you see is what you get. Also, in most cases, you need to pay at least 5% of the sale price within 10 days of the sale (in some counties you need to pay the wholesale price upon the close of the auction). Again, read the bidder information carefully and plan accordingly. One very important caveat is that you usually cannot assign these properties: if you bid on it, and you win the auction, you own it. Therefore, proceed with caution.

The fourth easiest way to find deals - driving for dollars

As mentioned above, this is where most of the gurus tell you to start. When you “drive for dollars” essentially you will physically drive through neighborhoods and look for distressed or vacant properties, or those in need of repair. As you identify potential properties, you write down the addresses, take photos, and add relevant notes. Once you’ve got a big enough list of potential properties (usually 50+) you’ll research each property to determine ownership and contact information for the property owner which can be done through public records, online databases, or skip tracing services. After you get in contact with the owner, you’ll follow the same process as scenario 1&2.

To make driving for dollars easier, there are a ton of tools that help automate the process of identifying distressed properties and gathering contact information. Some of the more popular ones include the Driving for Dollars app, REsimpli, and DealMachine.

Though it sounds easy, trust us it's not. You can spend hours, or even entire weekends driving the city to find a single property. Then you’ll spend hours searching for the owners, and their contact information. And in the end, you’ll only spend a few minutes taking “swings at bat” calling/getting in contact with the owners. Again, off-market real estate is purely a numbers game, with this method you get very few chances to hit a home run, so you better make them count.

The fifth easiest way to find deals - buying static lists

Again, this is where most so-called “gurus” will tell you to start. They’ll suggest you subscribe to Dealmachine, PropStream, or Propwire to find and analyze off-market deals. These tools provide access to property data, including transaction history, tax, foreclosures, and upcoming property auctions. They also integrate with or offer built-in skiptracers so you can find the contact information of the property owners which can be incredibly helpful. These lists are massive (tens of thousands of records), have a low monthly cost, and are great for practice.

However, they’re not great for landing deals because the same data is given to hundreds (if not thousands) of people, all of whom are reaching out. So when you call, you’ll often be the fifth, tenth, or even hundredth call an owner receives. Also, the data is typically 4-6 weeks behind, so it's sometimes inaccurate (e.g. the property has already been sold to an end buyer).

But again, off-market real estate is a numbers game, so assuming you make enough phone calls (1000+ per week) you’ll likely find a needle (or two) in the haystack.

The more effective way to find deals - public notices

The more effective way to find off-market deals is through legal/public notices in local newspapers and municipality websites. Generally speaking, these listings are the most up-to-date signals to indicate a high likelihood of sale. Probates, eviction notices, and notices of defaults are just a few of the items to look out for. While these notices are provided in real-time, they’re often incomplete or unusable: providing just the parcel IDs, the owner’s name, or the agent assigned to the estate.

These notices are also typically not exportable, thus there is a ton of manual work required to transform and enrich the data to make it usable. To accomplish this, most RE professionals hire an army of VAs to manually enter the data, enrich the data, and skip-trace the owners daily. Then once a week, they’ll call down the list of leads. From what we’ve seen, this strategy typically is more effective than the others, but it's also incredibly inefficient and time-consuming. If you’re just starting out, strategies one and two are a better fit, but as you learn more this can become a viable option.

The most efficient and effective strategy - real-time information

Admittedly, we’re a bit biased based on what we’re building. We believe that the best strategy is one that combines elements of each method, making it hyper-efficient and effective. Imagine a world where leads are qualified based on multiple intent signals: probates, preforeclosures, tax delinquencies, vacancies, notices of default, divorce filings, eviction notices, and so on. And those leads are automatically enriched so you have all the information you need, and that information is streamed directly to wherever you work out of (CRM, Google Sheets…etc.) so you can follow up the exact moment they become an opportunity.

That is the future we’re building, and our customers are already seeing the impact on their top and bottom lines: going from over 1000 calls to find a single deal to just one hundred. The result is more deals closed each month and happier employees. If you’d like to get your hands on what we’re building, so you can find and close more off-market properties, get in touch with us.

Other resources

Regardless of which method you pursue, there are a few other resources you’ll need to get started, we’ve outlined them below. Keep in mind that we’re not attorneys or realtors, and this isn't legal advice. These guides are provided for informational purposes, and all contracts should be reviewed by an attorney in your state before use.

• An outline of the steps required to close a wholesaling deal
• Cold-calling scripts to close more contracts (same as above)
• Ten phrases and questions to ask when buying property (same as above)
• The top investor-friendly title companies & closing agents
• A letter of intent generator
• The most frequently used wholesaling contracts
• Rehab calculator for determining estimated expenses and profits