The Crash Course For Wholesaling Real Estate in 2024

What real estate wholesaling is and isn’t

Wholesale real estate is a type of real estate investing strategy where an individual (the "wholesaler") acts as a middleman between a property seller and a buyer. The wholesaler finds a potential property owner who is motivated to sell their property quickly, often because they are facing financial difficulties, behind on payments, or simply want to sell the property as-is without making any repairs or improvements.

The wholesaler then negotiates a contract with the property owner to purchase the property at a lower price than its market value. Once the wholesaler has a signed contract, they begin marketing the property to potential buyers, usually other real estate investors or flippers who are looking for discounted properties to renovate and sell for a profit. The wholesaler's goal is to find a buyer who is willing to pay a higher price than what they agreed to pay the property owner, but still less than the market value of the property.

If the wholesaler is successful in finding a buyer, they assign the contract to the buyer for a fee, which is typically a percentage of the purchase price. The buyer then takes over the contract and completes the transaction with the property owner, while the wholesaler earns a profit without ever actually owning the property.

Wholesaling real estate is not a surefire way to “get rich quick”; it is in fact quite the opposite. Finding below-market properties with owners who are willing to sell, and investors who are willing to buy takes a ton of time and effort. It also requires a lot of coordination between the various parties involved and can lead to massive losses if executed incorrectly. If you ever hear a so-called “guru” tell you that it’s easy if you follow their process, turn around and walk the other way, because as they say, if it sounds too good to be true, it usually is.

Why wholesaling properties in 2024 has become so popular

Wholesale real estate has become increasingly popular in recent years for several reasons:

1. Low Barrier to Entry: As mentioned earlier, wholesale real estate requires little upfront capital or credit, making it accessible to beginners who may not have the resources to invest in traditional real estate.
2. Fast Cash Flow: Wholesale real estate transactions can be completed quickly, providing fast cash flow and allowing investors to move on to the next deal.
3. Highly Flexible: Wholesale real estate can be done part-time or full-time, allowing investors to work on their own schedule and from anywhere with an internet connection.
4. Scalable: Wholesale real estate can be scaled up or down depending on an investor's goals and resources. Experienced wholesalers can manage multiple deals at once, increasing their profit potential and expanding their network of contacts.
5. Growing Demand: There is growing demand for discounted properties among real estate investors and flippers, particularly in hot markets where competition is fierce.

The major risks associated with wholesaling real estate

Wholesaling properties is not for the faint of heart; here are some specific scenarios where this strategy can be particularly risky:

1. Misrepresentation: Wholesalers who misrepresent the condition or value of a property, or fail to disclose important information to buyers or sellers, can face legal and financial consequences.
2. Illegal Assignments: In some states, it is illegal to assign a contract without the consent of all parties involved. Wholesalers who engage in illegal assignments can face fines, lawsuits, and damage to their reputations.
3. Non-Disclosure of Fees: Wholesalers who fail to disclose their fees or commissions to buyers or sellers can be accused of fraud or deceptive practices.
4. Overleveraging: Wholesalers who take on too much debt or rely on short-term financing to fund their deals can face significant financial risks if the deals fall through or if market conditions change.
5. Risk of Escrow Forfeiture: The moment a wholesaler enters into a purchase agreement with a seller, the clock starts. If they are unable to assign the contract within the designated closing time (typically 30 days) they will either be forced to purchase the property for the agreed-upon amount, or they will forfeit their escrow deposit.

Insider tips for finding success when wholesaling real estate

We’re not going to bulls**t you, wholesaling real estate is tough, really tough. You’re effectively looking for owners of properties that are willing to sell their assets for a discount, which is a tough pill to swallow. That said, here are some tips to jumpstart your journey to finding success:

1. Build Strong Relationships: Wholesale real estate is all about building relationships with motivated sellers, buyers, and other industry professionals. Take the time to network, attend events, and build trust with those in your community.
2. Focus on Your Niche: Rather than trying to be everything to everyone, focus on a specific niche within wholesale real estate. Whether it's distressed properties, probate sales, or commercial real estate, specializing in a particular area will help you become an expert and attract more opportunities.
3. Analyze Properties Thoroughly: Before presenting a property to potential buyers, make sure you've thoroughly analyzed its value, condition, and potential profitability. Use tools like comps, repair estimates, and market trends to make informed decisions.
4. Be Patient: Wholesale real estate can be a slow process, especially when you're first starting out. Don't get discouraged if deals fall through or take longer than expected. Persistence and patience are key.
5. Stay Organized: Keep track of your leads, contracts, and deadlines using a system that works for you. Staying organized will help you stay on top of multiple deals and avoid missing important details.
6. Leverage Technology: Use technology to streamline your processes, such as automated email campaigns, letter of intent generators, digital signing software, and virtual tours. These tools can save you time and help you reach a wider audience.
7. Put in the Time: At the end of the day, wholesaling is a numbers game. The more chances you have, the more likely you are to find a deal. Nothing else matters if you aren’t picking up the phone and dialing at least 250 numbers a day.

How to find your first property to wholesale

We’ve written an entire guide on finding your first wholesaling deal. There are a few ways you can go about it, which we’ve outlined below:

1. On-market MLS Listed Properties - 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".
2. FSBO and Craigslist Listings - These are properties that the owner has decided to sell themselves, typically to avoid the 6% listing fee. They are motivated and willing to sell, the only question is at what price.
3. Sheriff sales - Be very careful with these, they are typically not the place for wholesalers as you are not usually allowed to assign the contract.
4. Driving for Dollars - Physically drive around and look for distressed or vacant properties, or those in need of repair. Once you’ve got a big enough list, determine the owners and their contact information and start dialing.
5. Static Lists - 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 helpful.
6. Dynamic Lists - This is what we build. We provide real-time information about properties with the highest propensity to sell based on unique combinations of intent signals. If you’re interested in learning more, get in touch.

What to say when you get an owner on the phone, wholesale cold calling scripts

In wholesaling it's much more important how you say something, than what you say. You want to exude confidence and demonstrate that you a resource for the owner to help them out of a tough situation. As mentioned above, wholesaling is a numbers game and practice makes perfect. You want to learn the lingo, identify what is motivating a particular owner to sell, overcome objections, and get good at your pitch. As you develop your buying (and selling) style, your odds of success will improve. To help, we put together a guide on the ultimate wholesaling cold-calling script so you speed up the time to find and close your first deal!