Wholesaling has become one of the most popular ways for new investors to get their feet wet. Wholesaling real estate is the act of buying a property, or getting it under contract, and then selling or assigning it as quickly as possible. What makes it so attractive is its relatively low capital requirements. Unlike with a rehab or buy and hold purchase, no down payment or closing cost money is needed. This isn’t to say that you won’t need upfront funds, but they are much less than with any other purchase you will make. Like everything else you do in real estate, the key is to find the right deal, and recognize it when it comes your way. Regardless of how well you are familiar with wholesaling, here are a few tips to help you find more deals:
1. Direct mail: Real estate wholesale deals need to be purchased well below market value. There has to be enough of a spread for the end buyer to make a profit. If the purchase price on your end is too high, you may be stuck with a property you can’t get rid of. One of the ways to get a reduced price is through direct mail. Yes, direct mail can be pricey if you purchase a large list and mail several times. However, it can be tailored to meet your specific needs. Mail 200 or so names multiple times. Ideally you will want a list of distressed homeowners, but this can get pricey. An alternative is looking for absentee owners or disgruntled landlords. If you are consistent with your mailing, you should get some response. From there, you need to find motivation and use it in your pitch. If the seller just wants to get out, they may be willing to accept a discount. The same is the case if the property needs work or if the transaction is time sensitive. Direct mail is an investment that should pay off if you know how to track your leads and you are willing to follow up.
2. Real estate meetings: You can find a local real estate investment club in almost every state. Regardless of your experience level, you should consider joining. They are a great place to find wholesale deals. Finding good wholesale deals is often a numbers game. The more outlets you have for deals, the greater your chances at success are. You never know who you are going to chat with at a meeting that has a deal or a seller they just don’t have time to work on. You may also run into a buyer that is just looking for the right person to sell to. In addition to contacts, you may also find techniques and methods of closing wholesale deals that you have not previously thought about. For the small annual fee, you can put yourself in front of dozens, or hundreds, of people in the business every month. All it takes is one of these to change your wholesaling business.
3. Local marketing: You don’t necessarily need to spend thousands of dollars to find new deals. Often times you can find plenty of deals in your local market. Start by purchasing a bulk order of bandit signs. These are the small signs that you see in yards and on telephone poles. A simple “we buy houses cash” or “sell your home today” bandit sign can get your phone to ring. The key with these signs is positioning. A busy intersection or high traffic area can be more effective than a direct mail campaign. Another quality local source is FSBO properties. These are properties that are for sale by owner and can offer great discounts. You can either purchase a list of fsbos or reach out to all properties you see in your area. Some of these owners do not use real estate agents because they want to save on commission. If you make the right offer, they may just want to sell and move on. These two low cost marketing efforts can quickly jumpstart your wholesale lead database.
4. Social media/website: Social media gives us the ability to reach hundreds of people in a single click. You should start by setting up a simple WordPress wholesale website. It is a good idea to keep buyers and sellers on different sites. Once your site is up, you should create pages on Facebook, Twitter, Instagram and possibly LinkedIn. Promote how you can close on properties in as little as five days. By making frequent posts, you are bound to find a handful of people who either want to sell or may know someone who does. It is not an exaggeration by any means to say that one post could reach hundreds of people, if not thousands.
It may take you ten leads or more to find one potential deal. Some months you may have to sift through as many as twenty leads to find that one jewel of a property. When investing in real estate for beginners, wholesaling can be used as not only a way to make money, but gain contacts and learn the business. This all starts with finding deals to work on. By using these four techniques, you can find deals in any market.