Wholesaling… it is such a bizarre concept! You should have heard me trying to explain it to my kids after my first successful one “…well, I sold a house that I had not purchased….but I controlled it…had no money in it, never saw the house….” When it works, it’s beautiful, but in my opinion is one of the shadiest, greyest, most difficult to navigate businesses out there; yet, there are a few things you can do to make it easier and more successful for you.
The concept sounds easy:
1). You secure a property
2). For whatever reason you decide you prefer not to rehab it
3). You offer it to others at a premium
4). They see the value in it, make you an offer, you collect a fee and they still get a good deal
The problem is that there are a lot of “buyers” out there that are not true buyers or true buyers that shoot from the hip and are not really ready to finalize the transaction.
Fortune Builders has an amazing wholesaling training and the wholesale boot-camp taught by Than is priceless, yet these are a few things I have done myself to try to get smooth transactions.
How to build your list of buyers – getting names
In my opinion bandit signs and craigslist ads are the best ways to build a buyers’ list. Follow the Mastery training on bandit signs, its very well laid out, do use Google maps to map the routes for your drivers, do buy the long stapler, etc. Just follow the system. For craigslist, I suggest you create “ghost ads”, meaning you advertise a generic, attractive flip in your area “3 bedroom, 2 bathroom, was a rental…needs cosmetic work…fixer special, etc.” Use a picture of one of your projects in the ad.
Now, here is the most important thing to turn wholesaling from a very frustrating experience to a beautiful thing: spend time interviewing the people that call you and prioritize them based on the data you gather and your gut feeling. Point in case, this year on three occasions wholesalers that I do not know have called me to offer me properties I have under contract, on one occasion $100,000 over my accepted offer! How did this happen? I call these people “aggregators” they pretend to be rehabbers, they compile contact info from rehabbers and mass email everybody in their contact list creating a cross contamination of not truly rehabbers offering properties to each other, its a mess and its very frustrating.
I strongly suggest you spend time interviewing the people that reply to your add:
Are they wholesalers themselves, or are they rehabbers?
What properties do they buy, where, at what price brackets?
What is their “thumbs up” formula (the typical 70%, 10% of ARV, a minimum dollar amount?)
Do they use cash or hard money?
Can they provide you references from their lenders?
Can they provide you POF?
Can they share with you addresses of past or current projects?
What information do they need to make a decision, how quickly can they make a decision?
Spend your time interviewing them and create lists accordingly, after you do a few train your VA and have her/him do the interviewing and database selecting: I currently have three buyers’ list:
1). People I have sold before, I know they are legit rehabbers, have the funds, make quick decisions, can close quickly and we trust each other so much that we wholesale over a handshake, don’t even need a document. Right now, this list has 5 names in my database.
2). People I have interviewed, gather enough information to make me believe are truthful, honest buyers with the means to do it, I have about 20 of these.
3). Everybody else, just names I have gathered from my advertising but have not provided me the information I need to believe 100% in them. This list has like 300 names but I rather don’t use it.
When I have a property I want to wholesale I contact my VIP or list 1, if I get no interest in 36hrs, I send to list 2 and give them 48hrs to reply, if nothing happens then I try list 3, almost never happens. When I share properties with wholesalers I provide address, my accepted offer price, my assignment fee, proposed rehab ideas (without costs as everybody have different costs and I seldom share comps as most buyers will not trust them and will run their own)
In summary, wholesaling is awesome (when it works and goes smoothly), so, do advertise on craigslist and do use bandit signs, spend time interviewing your callers, separate the BS from the people like us and prioritize your lists. Another tip of the week will go into how to advertise on craigslist and how to transfer or sale the property as there are several ways to do it.