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Wholesaling Real Estate in 21 Days or Less

Jun 29, 2024

Lecture Notes: Wholesaling Real Estate in 21 Days or Less

Speaker: Alex Martinez, CEO and Founder of realestateskills.com

Introduction

  • Focus: Start Wholesaling Real Estate in 21 Days or Less, no marketing cost, no extensive experience
  • Achieved $12 million in revenue in the first year

Wholesaling Real Estate

What is Wholesaling?

  • Concept: Acquire a property under contract at a lower price and sell the contract to a cash buyer at a higher price.
  • Example: Contract at $100,000, sell to a cash buyer at $110,000, profit = $10,000

Main Strategies to Close a Wholesale Deal:

  1. Assigning the Contract: Transfer contract rights to another party.
  2. Double Closing: Close on the property temporarily using funds (often from a transactional lender), then resell to the cash buyer.

Understanding the Wholesaling Process

  1. Find Distressed Properties

    • Look for houses that are outdated, have damages, or aren't eligible for conventional mortgages.
    • Focus on properties with motivated sellers, e.g., facing foreclosure, divorcing, or inherited homes.

  2. Get Property Under Contract

    • Aim for below market value to make a profit when selling the contract.

  3. Sell Contract to Cash Buyers

    • Target fix-and-flippers as cash buyers.
    • Average wholesale fee: $10,000

12-Step Process to Start Wholesaling in 21 Days or Less

Step 1: Pick Your Market

  • Local vs. Virtual: Start locally for ease; choose virtual if you have prior knowledge or connections in that market.
  • Benefits of Local: Easier networking and market knowledge

Step 2: Find 3-5 Cash Buyers

  • Criteria: Prefer cash buyers who are active, buying multiple properties a month.
  • Resources: Online tools to locate cash buyers.

Step 3: Find and Filter Deals

  • Platforms: MLS, Redfin, Zillow, Realtor.com
  • Strategies:
    1. Day Zero Strategy: Target properties newly listed on the market.
    2. Old Listing Strategy: Target properties that have been on the market for 60-90+ days.

Step 4: Make Discovery Calls Daily

  • Target: Contact real estate agents representing distressed properties.
  • Goals: Build rapport, gather property details, understand competition.

Step 5: Analyze the Property

  • Key Metrics: After Repair Value (ARV), Repair Costs, Wholesale Fee, Offer Price
  • Formulas:
    • ARV: Identify comps (comparable properties) within the same area, sold in the last 6 months.
    • Repair Costs: Estimate repairs (cosmetic work ~$30/sq ft).
    • Offer Price Formula: ARV x 0.70 or 0.80 - Repair Costs - Wholesale Fee

Step 6: Call Back the Real Estate Agent

  • Objective: Discuss and agree upon the offer price and terms.
  • Strategy: Potentially have the listing agent represent you to leverage dual commission incentive.

Steps 7-12: Detailed Steps for Closing the Deal

  • Contract Terms:
    • Closing timeframe (e.g., 14 days).
    • Inspection contingency (e.g., 7 days).
    • Earnest Money Deposit (EMD): Usually due within 72 hours, ranging from $500 to $10,000.
  • Finalizing:
    • Agreements and terms to be communicated clearly via email.

Key Points to Remember

  • Always use inspection contingency clauses to protect your interests.
  • Building rapport with agents is crucial for obtaining and closing deals swiftly.
  • Thoroughly analyze each deal but prioritize speed to stay competitive.
  • Ensure that contracts are professionally managed by the listing agent.

Conclusion

  • By following these steps, you can effectively wholesale real estate in 21 days or less, leverage local knowledge, build strong networks, and make substantial profits.

Full transcript