Wholesaling real estate is a great way to get started investing, even if you have little to no experience.
If you are unfamiliar with the process, it’s relatively simple: a wholesale investor works to find the great deals he or she can “sell” to another investor for a finder’s fee. The wholesale investor can choose to assign the contract to another to buyer – therefore never having to put down a deposit on the property – or go through the process of a double close.
To put the idea into terms easier to understand, let’s picture and imagine a scenario: Nick is a wholesaler. He spends most of his time creating new marketing campaigns targeted at distressed homeowners and building his wholesale buyers list. One day, Nick gets a call from Emily, a single mom on the brink of foreclosure. Emily contacted Nick after receiving a piece of his direct mail designed specifically for those on a pre-foreclosure list.
Emily explains to Nick that her property is distressed and in poor physical condition, but that she wants to sell it as soon as possible so she can avoid going bankrupt. Nick thinks to himself, “Ding! Ding! Ding! Motivated seller!” (Motivated sellers are ideal for wholesalers because they are typically willing to sell their property for a lower price.)
Nick meets with Emily, examines her property, and offers her $100,000. Emily accepts the offer, and both Nick and Emily sign a purchase sale agreement, which states that Nick (or whoever he sells the contract to) will buy the home for $100,000 within “X” number of days.
Nick then calls Brandon, a local house flipper, and lays out the numbers (like ARV and estimated cost of repairs) for him. Brandon feels he can flip this property for a profit and offers Nick $110,000 for bringing him this awesome deal.
Nick and Brandon both sign an “assignment contract,” which gives Brandon the right to buy the property from Emily. When all is said and done, Emily gets her $100,000, Brandon gets a property he plans to flip, and Nick gets his share for making it all happen. It’s worth noting that Nick never truly owned the property.
Keep in mind, this is just one wholesale method.
Building Your Wholesale Buyers List: What Really Matters
Why is the above story relevant? Because Nick would not have been able to complete his wholesale deal successfully had he not had Brandon readily available on his buyers list. A wholesale buyers list is a wholesale investor’s Holy Grail — his “little black book,” if you will. It has the contact information for dozens of hungry investors seeking lucrative opportunities.
Compared to a rehab or buy and hold deal, the wholesale deal process moves rather quickly, which is why it is crucial to have your buyers list ready to go, as to not prolong the affair.
So how can one build a resourceful wholesale buyers list? Consider exercising one or more of these methods:
Bandit Signs: You’ve seen these signs everywhere. Driving down the street, through a neighborhood, or on the freeway. You can use bandit signs to find properties and you can use bandit signs to find potential buyers. If you are using your bandit sign marketing campaign to curate a buyers list, the sign should read something along the lines of “Cheap House! Must Sell Fast!” And your phone number. These signs can be handwritten or professionally printed.
If you have a property under contract (like Nick did with Emily) you should scatter 20 + signs throughout your local market. Make sure to place your signs in high traffic areas like busy cross streets or crowded shopping mall parking lots.
The more signs you put up, the more calls you’ll get. Be sure to save the contact information of each investor who calls so you can add them to your rolodex of buyers. After a few bandit sign campaigns, you’ll have a decent list of buyers who might be willing to work with you on future deals.
Call “For Rent” Signs: As you are driving through the streets of one of your target markets, keep a pen and notepad by your side to jot down the phone numbers on “for rent” signs. Calling these numbers will put you in contact with potential landlord buyers; perfect candidates for your buyers list.
Landlords are often looking to expand their property bank and therefore can be great people to add to your buyers list long term.
Craigslist: Craigslist marketing is like the online version of bandit signs. Building your wholesale buyers list using Craigslist is great for beginners because it is absolutely free (unless of course you’d like to pay a virtual assistant to do your dirty work, which could be helpful once you start expanding your other marketing efforts).
Start by placing your ad in the “For Sale By Owner” category of the appropriate neighborhood. Hide your email address so potential buyers are forced to call you. Also, consider including a link to your squeeze page to capture people’s email addresses. You have the option of posting a generic ad (similar to a bandit sign) or an ad that contains the details of each property. Typically, ads that give away more details are looked at as more reliable and therefore receive better acclaim. Consider switching up the style of your ads and note when you receive calls from the best buyers. Be willing to experiment on craigslist, track your results, and tweak your techniques.
If you’re ready to start a career in wholesale investing, start by building your wholesale buyers list. Once you’ve accumulated a solid list of contacts, you’ll be closing deals faster than you can find new properties!