Benefits of Wholesaling Fast Cash – 30 days or less Little or no money required Minimal risk Sell to a pool of regular buyers over and over No tenant issues No contractor issues No holding costs No credit needed No or low barriers to entry Profits range from $2k to $20k per deal Can wholesale FSBOs or REOs

The Disadvantages of Wholesaling

No real tax shields available Profits are typically less than other forms of real estate investing No long term wealth building or appreciation Remember Risk versus Reward

Wholesale Formula a.k.a. “Fixer Formula”

• After Repaired Value • Multiply times 65%• Minus Repairs • Equals Rehabber “Strike Price”• Anything below the strike price is profit

Wholesale Example

• After Repaired Value $100k • x’s 65% $65k• Repairs $-12k • Strike Price $53k • Anything below $53k is profit

Wholesaling Basics

• Find buyers first • If you have buyers you have a business• No buyers = no exit strategy • FSBOs = marketing and assignments• REOs = listing agents and back-to-backs • Remember the formula• Market on the cheap at the beginning

Six Steps to $6k in 16 days Wholesale Profits

• Marketing and Evaluation • Offer • Secure contract between “A” seller and “B” buyer• Market property to buyer’s list & Sell to “C” buyer • Sign contract with “C” buyer = assign contract with

addendum • Close

Elements of Wholesaling Success

1. You – what’s your mindset and motivation? 2. Your Market – neighborhoods, prices, 3. Your Marketing – for sellers and buyers4. Your Buyers – your exit strategy 5. Your Systems – automated for repitition

The Four Rules for Wholesaling Beginners

• Rule #1 – Keep your marketing strategies cheap • Rule #2 – Always be marketing for sellers &

buyers• Rule #3 - Don’t worry about your brand. You’ll build

your brand as you do deals. • Rule #4 – Understand your wholesaling sweet spot,

prices and what buyer’s are willing to pay

Rule #1 – Cheap Marketing Strategies

• In the beginning spend as little as possible• Keep it inexpensive until you have a better feel for the market

and what marketing is effective• Once you start to see some results and have a few successful

deals under your belt, then expand your budget

Rule #2 – Always be Marketing for Buyers and Sellers

Rule #2 – Always Advertise for Buyers and Sellers

• Marketing for Buyers – $$ – Classified ads in newspaper – Signs – Bandit and Yard – T.V. Commercials, Radio– Billboards– White and Yellow Pages – Covers and C.C. sized

ads– Direct Mail to Apartments– Promotional Material

Buyers• Rehabbers• Landlords • Fixer – uppers• Builders who do rehabs on the side• Get Buyers into properties by telling sellers

and agents that you have a partner (funding partner) who needs to see the house.

Rule #2 - Advertising for Buyers and Sellers

• Marketing for Sellers – Free– Driving for Dollars – Vacant Houses – Classified ads online

» Craigslist.com, oodle.com, trulia.com, many others

– Referrals » Mortgage Brokers, Attorneys,

– Attend REIAs– Building code violations – tall grass – Internet Marketing

» Video, Articles, Email, Social, Banners,

Rule #2 - Always Advertise for Buyers and Sellers

• Marketing for Sellers – $$– Classified ads in newspaper – Signs – Bandit and Yard – Commercials, Radio– Billboards– White and Yellow Pages – Covers and C.C. sized ads– Promotional Materials – Direct Mail to Lists

» Probate, Free and Clear, Expired Listings, Delinquent Tax Sales, Out of Town Owners

Sellers • Motivated sellers with equity • Banks with REO inventory

Wholesaling: Branding

• Forget it• Pay for things that result in sellers and buyers and closed

deals• Build your brand as you close deals• Build your reputation as you close deals

Know Your Sweet Spot

• Where do Wholesale buyers want to buy? • Inner ring neighborhoods • First ring suburbs • First time home buyers - they buy from rehabbers• If you get something in a prime suburb the rules stay the

same • If you get something in the country the rules stay the same

Wholesaling: Seller Lead System

• Buy Calls – if there’s equity “GO” • Pre-Call Planning – drive the comps• Presentation – Hot buttons for selling • Negotiation – what’s the least you’ll take? Is that the

best you can do?• Contract

Phone Scripts

• Where is it located? Sweet spot?• What’s it worth fixed up?• How much work does it need?• “If I could pay you all cash and closed in a week what’s

the least you would take?”• “Whoah… is that’s the best you can do?”

Wholesaling REOs

• Network with listing agents and asset managers• Let listing agent manage both sides for two

commissions • Target houses on market for 3 months or more (6

months) – Less competition than new listings

• Make offer with normal Realtor contract • Add inspection contingencies • Sell using normal contract for B to C

Wholesale Closing: assignments

• FSBOs • “A” to “C” closing • Assignment fee paid outside closing • Addendum explaining fee and assignment • Memorandum of Purchase Agreement

Assignments: Contracts #1 • Standard Purchase and Sales Agreement • Assignment of Contract Addendum • Give both to title company

Assignments: Contracts #2

• Option Contract• Notice of Option• Affidavit of Contract

Assignments: Contracts #3

• Option Contract• Notice of Option• Affidavit of Contract • Back-to-Back Closing

Wholesale Closing: Back to back

• REOs • “A” to “B” then “B” to “C” closing • Back-to-Back • Profit is spread between the two deals

Back-to-Back: Contracts #1 • Standard Purchase and Sales Agreement – “A” to “B”

– Banks required P&S agreement • Contract Addendum – “A” to “B”

– Banks required addendum • Title company – “A” to “B”• Standard Purchase and Sale Agreement – “B” to “C”

– Vanilla P&S agreement• As - is where-is • Owner of record prior to closing

• Title Company – Your preferred title company – Closing instructions, title commitment, HUD-1 from “A”- “B”