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How to be a REAL ESTATE ENTREPRENEUR before buying your first property

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Wholesaling is an excellent strategy to get started in real estate. If you’re reading this article, you already know why:

  • Ramp up your learning curve
  • Start earning in two months or less
  • No credit or (substantial) cash necessary

If you’ve stumbled upon this article without any knowledge of what real estate wholesaling is, here’s the basic process:

  1. Find a motivated seller (they need help and will accept a low offer if it’s easy and fast).
  2. Negotiate a price (under market value) and have the seller sign an Assignable Contract (typically in exchange for a nominal deposit).
  3. Market the property to cash buyers (investors looking for off-market deals that can close quickly).
  4. Negotiate a price and assign the contract to the buyer (for big deals, double-close instead of assign the contract – more on this later)

I’ve included an Assignable Contract in the [optinlink text=”WHOLESALER’S BRIEFCASE” id=”435″].

Wholesalers are part marketer, part negotiator. No hard feelings fellow wholesalers, but basically a wholesaler is a “knock-off realtor”. In most markets, you don’t need a license and you can go into business solo. For more experienced investors, the same strategies I outline below will provide a stream of off-market deals that you can buy yourself or flip the contract.

When you build your system as I describe below, this strategy will basically run itself! Now, let’s get into the nuts & bolts:

1. Choose your market

If you’re already in the business, this will be self-explanatory. Choose a market where you and your competitors are fix & flipping properties. If you’re expanding to new markets, choose an area where you already have a network developed. You don’t want to start marketing for motivated sellers if you don’t know at least one cash buyer already operating in that area.

If you’re just getting started, it’s always best to start locally but you’ll need to be strategic depending on where you live. Some neighborhoods aren’t as conducive to a wholesaling strategy or are already become too competitive (look for lots of bandit signs – “we buy houses”). In cities and larger towns, the best areas to focus are up-and-coming neighborhoods. Pull up a map of the closest city, look at the neighborhoods that share borders with the more desirable parts of town. Clare Trapasso shares some tips on spotting up-and-coming neighborhoods.

I live in Graduate Hospital, Philadelphia a neighborhood where gentrification has already displaced most of the wholesalers. Just south of us is Point Breeze, where the median home price has increased from $67k to $225k within the last 5 years alone. There are still opportunities here but there are many more motivated sellers to the south (further from Center City). Trulia’s heat maps are a great tool to start defining your focus. Click on View More to the right of Housing Market Trends to explore different time periods and property types. Also use Trulia to review crime, schools, demographics and more.

Once you have an idea of where you would like to focus, research your access to public records and other information on the local real estate. Go to NetrOnline and pull up your county. This screen will give you the phone numbers and websites for the government offices. It’s a great sign if you see the hyperlink: Go To Data Online. The Recorder of Deeds will have record of all liens and real estate transactions. The Sheriff typically handles foreclosures. The Treasurer, Assessor or Tax Official will provide information on properties with unpaid taxes. Depending on your county, there may be access to a GIS system and plenty of other useful tools. Although not 100% necessary, a useful county website is a big plus.

2. Find your list

If you are fortunate enough to be targeting an area in a tech-savvy county you might be able to get your list directly from the source. In other areas, third party providers will be your best option. Listsource is a great option to start with. This CoreLogic service will build a list out of user-defined parameters. There are other companies that provide lists based on more sophisticated algorithms, Audantic for example.

At the end of the day, think about your goal: to find motivated sellers. Get creative and think about the type of people that would be most likely to need help selling quickly:

  • out of state owners
  • properties in foreclosure
  • delinquent taxes
  • out of state probate (call the register of wills)

The list you compile or purchase should be in a spreadsheet format (.xls, .csv, etc) and should minimally include the property owner and mailing address (they may or may not live in the subject property depending on how you defined your lists)

3. Prepare your list

In our next step we’re going to upload our list for mailing so its important to make sure you’re not wasting money sending to duplicate or incorrect addresses. Skim through your file for accuracy. Use Excel’s find duplicate function just in case. Lookup a few properties at the county website and see if the owner names match.

4. Mail your postcards is the most cost effective online mailing solution for low volumes. I would recommend sending at least 500 mailers in your first campaign (.48 each – $240). If you have the development chops (and you have more time than money) has an excellent API for automated mail campaigns at a volume of 5,000 per month ($.46 each – $2,320). For this volume, Click2Mail will cost you $.40 cents each – $2,000.

I’ve include a template for copy (sales text) that I’ve found to generate 5%+ response rate (with a quality list) in the [optinlink text=”WHOLESALER’S BRIEFCASE” id=”435″]. I’ve found the best response rate for the cost to be 4.25” x 6” yellow 65# postcards with black & white text. You’ll need to change some of the text to match your strategy. If you’re going to create a website and/or automated voice message (see step #5), you will need to include your URL and phone number. If you decide you want to accept all calls live, I would definitely recommend at the very least setting up a Google Voice number that routes to your cell so you aren’t giving all of your post card recipients your personal phone number. Fortunately Google Voice is free and you can even choose your own number (if it’s available).

Once you’re ready to go, set up your account and follow the easy Click2Mail order process to upload the postcard template along with your list. Match the list fields with the mailing label and press send!

5. Prepare for calls

Get ready! If you’ve done everything right so far, you’ll receive 20-30 calls over the next few weeks (per 500 postcards mailed). If you’ve got the time, you could field all of these calls yourself. You’ll have the most success this way but if you’re like me, you’re not going to appreciate taking calls at odd hours. A more efficient solution is a pre-recorded voicemail giving your potentially motivated sellers instructions to make your life as easy as possible.

The options for virtual answering services are aplenty these days, Google Voice is a great (FREE) option but for more functionality (at a cost) look into Ring Central.

You can get by without one (using a pen & paper or a program like Excel), but I would definitely recommend also creating a website to streamline information capture from your leads.

Your options for website creation range from the turn-key (Lead Propellor, Investor Carrot) which are a bit more expensive ($50-100 per month), to the basic DIY (WIX, Weebly, SQUARESPACE) or for the most professional results, just keep it simple and use WordPress. Instructions and pricing comparisons on everything are a quick google search away, feel free to reach out to me with any questions!

Whichever option you choose, you’ll probably want to also purchase a custom domain. For my own site, I bought this domain along with a seperate domain for my seller leads through my hosting provider Siteground. Pick a domain that is easy to remember, pronounce, spell and understand over the phone.

Here are the data points I capture online:

Property Address

Seller Name



Best Time to Call

Who’s living in the Property?

Current Property Condition

Repair Cost Estimate

Listed with Realtor?

Asking Price

Mortgage Balance

How fast do you want to sell?

Why are you selling?

6. Speak with your Motivated Sellers

If you set up the automated voicemail and the lead capture web page then all you need to do is review the form submissions you receive on your website. You can quickly screen the time wasters from the potential deals by reviewing the asking prices and level of motivation with the comparable sold homes in the neighborhood (Zillow is an excellent resource).

Call back the motivated sellers and build rapport. There are tons of “We Buy Homes Fast” wholesalers and investors competing for these properties, you need to stand out! Don’t hesitate to call back your leads, if you wait too long, they may have already discussed their situation with a competitor. Be friendly and as you talk on the phone, put a smile on your face – the prospect will be able to tell!

You’ll want to posture your discussion around setting the seller’s pricing expectations but with a careful effort to show them the value of selling to you at a less than market value price (easy, hassle-free closing as soon as they need it). The goal of this first call is to set up a followup appointment to visit the property and make a final assessment before putting it under contract.

7. Inspect the Property/Negotiate

If you’ve done your homework, you know what comparable properties have sold for (ideally with & without rehab). If all of the recent sales in the area are being sold post-repair, then you’ll need to calculate the ARV (after repair value) then back into your offer by deducting the expected expenses (plus a profit margin for the investor) from the ARV. This number is the marked-up price. You’ll need to deduct your own wholesale spread from this figure prior to making your offer  If you are uncomfortable or inexperienced making these assessments yourself, bring along a contractor or mentor to show you the ropes. If you know your cash-buyers well, you might be able to bring out your best buyer to walk through the property with you. If they like what they see, you can save a few steps by negotiating your wholesale fee directly with your end buyer (unless you double-close, they’ll find out how much spread you’re making at closing anyway).

I’ve included my Inspection Checklist in the [optinlink text=”WHOLESALER’S BRIEFCASE” id=”435″].

8. Put it Under Contract

Hopefully you brought your Assignable Contract with you to the property inspection. Once you know your numbers and can estimate your bid on-demand, you’ll be able to write-in your final offer and have the contract signed at this meeting. Some deals might need a follow-up visit to hash out final details but your goal is to negotiate a price that works and put it under contract ASAP. If necessary, add a deposit to seal the deal (most sellers will be happy with $100 down payment to show you’re serious).

9. Market it

If you’ve successfully followed the steps so far, you now have an asset to sell! The contract you had the seller sign now gives you an exclusive opportunity to buy the property yourself (or assign the contract to an investor) within the next 30 days (or whatever time period you negotiate).

If you’ve calculated your metrics correctly, you should have a built in spread that earns you a profit while also leaving enough meat on the bone for your end buyer. The Marketing One-Sheet from the [optinlink text=”WHOLESALER’S BRIEFCASE” id=”435″] is your shortcut to getting bids from potential buyers. Fill in the blanks and calculate the expected profits. This rough Pro Forma will give your buyer’s list an opportunity to assess.

Here’s an important tip – don’t focus on increasing the size of your buyer’s list, think about the quality. Trying to flip a deal to 100 potential buyers that may or may not know, trust and like you is a waste of time. Work on building relationships with the best, most successful buyers in your market. A buyer’s list of just one quality investor is more effective than 100 tire-kickers.

Start by giving your best buyer(s) a call. They will appreciate the “first-look” and might save you the hassle of further marketing efforts. Walk them through the property if necessary. If your top prospects aren’t interested, put the deal out to the rest of your contacts. Email the Marketing One-Sheet to your list, put it up on your website/Craigslist and take it to local REIA meetings/Meetup Groups.

10. Close the deal

Negotiate a final price, arrange a closing date with all parties. Depending on the value of the deal, your buyer may or may not want to include a title company in the closing procedure. Title insurance is a worthwhile expense when the property is worth >$10k and an investor-friendly title company will be happy to include your wholesale fee on the HUD (replaced with the Closing Disclosure effective October 3rd, 2015)

If title insurance is not necessary, the quick way to get the deal done is to have the seller execute a Quit-Claim Deed to your cash-buyer and invoice your buyer for your wholesale fee at closing (don’t worry, you’ll find a Quit-Claim Deed in the [optinlink text=”WHOLESALER’S BRIEFCASE” id=”435″]).

[optinlink text=”GET THE WHOLESALER’S BRIEFCASE” id=”435″ style=”button”]

Leave a comment below with questions or if you’ve found a better method!

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