There are millions of people around the world who at one time or another have thought about getting started in real estate investing. This could range from receiving a type of hard money loan for a fix and flip project, or it could be real estate wholesaling. But the big question most people have is how to get started.
Luckily, our team of hard money lenders, have years of experience working with real estate investment projects so we wanted to create a straight to the point guide for beginners who are interested in getting started with real estate investment.
We believe real estate wholesaling is one of the best options for beginners because of it has lower barriers of entry and is overall easier to learn compared to more complicated real estate investment projects. If you are looking to get started in real estate wholesailing, or flipping real estate then this is the perfect guide for you.
What Is Real Estate Wholesaling?
Real estate wholesaling is a short term real estate business strategy in which the “wholesaler” will connect a seller of a property with the end-buyer of the property. In simplistic terms, the wholesaler acts as a middleman that helps connect the property owner with the property buyer. And in return for facilitating the deal, they will receive a a percentage of the sale value of the property. This commission rate can vary depending on the value of the property but it’s entirely possible for the wholesaler to make tens of thousands of each deal. Real estate wholesaling is considered one of the best options for beginners as it doesn’t require any licenses, large amount of capital, or history in the real estate industry to begin.
Below is our guide for beginners who are looking to get started in real estate wholesaling.
Step 1: Short Term Goals & Long Term Goals
It may sound corny or unnecessary but the first thing we recommend to anyone who is interested in real estate investment is to write out short term and long term goals. You want these goals to be ambitious but also realistic. These goals will guide you and inspire you when times are tough.
Short Term Goals:
Short term goals are anything you want to accomplish within the first 3 years of real estate investment. We recommend keeping these goals as direct as possible. Don’t use vague terms. We want these to be actionable goals that can be crossed off your list when you complete them.
Short Term Goal Examples:
- Acquire my first real estate property.
- Create my own website.
- Secure my first real estate lease deal for monthly cash flow.
- Hire my first full time team member.
Long Term Goals:
Long term goals are anything you wish to accomplish after year 3 of business. Again, we recommend you are ambitious but also realistic for these goals. Ideally, these goals will be more advanced as you have 3+ years of experience working in the industry.
Long Term Goal Examples:
- Acquire 10 total properties by year 5.
- Create a system where I work less than 10 hours per week.
- Create a monthly cash flow of $50,000 by year 7.
Step 2: Research Your Local Market
It is vital to begin the process of researching your local real estate market. In order to identify real estate wholesaling opportunities you must have a good understanding of the market in your area. It is important to do your homework and not skip over this step.
We recommend that you attend local meetup group that talk about real estate as well as local real estate conferences. These will give you the opportunity to learn from experts within your local market. It is important to dedicate the time to get a firm understanding of your market, what houses are buying for, what houses are selling for in order to know when you have a good deal on your hands.
Along with learning from other people in meetup groups, we recommend that you spend some time browsing websites in which locals are typically buying and selling real estate. This will let you see first hand how much houses are being purchased and sold for. We recommend that you take a look at websites such as Craig’s List, Facebook Marketplace, Zillow, and other options.
Step 3: Get Your Buyers List In Place Before Making Deals
This is a step that real estate wholesale beginners often mess up. Typically, beginners will begin reaching out to property sellers before they have any connections with a potential property buyer. We highly recommend that you work on your buyers lists as soon as possible. Similarly to making successful hard money loans or fix and flip loans, your network can make or break deals. By having a high quality network of buyers, you will be able to facilitate deals much quicker and with much less stress.
There are a multitude of ways to begin building your buyers list but the most popular methods are attending local real estate events, networking in person as well as utilizing Linkedin, and a newer method is by utilizing social media. Once you have an established list of potential buyers, you will be able to use this as a selling point when you begin reaching out to property owners. This will separate you from other individuals and will allow you to lineup a buyer for each property in record time. This will eliminate the stress of struggling to find a buyer for a property and will help you complete more deals each month.
Step 4: Finding Property Deals
Now that you have a firm understanding of real estate wholesaling, you understand your local market, and you have a network of property buyers, it is time to start finding property deals. This involves you searching your local market for homes that are for sale. You can look for homes that are selling for below market value, or look for distressed homes which allows you to maximize the profit margin on the deals.
When searching for property deals we highly recommend checking your local Craigslist as these are typically individuals who are trying to sell their home which are often easier to work with compared to working with large real estate agencies. You can also look on websites such as Zillow or Realtor. These sites may require you to perform more research but it will list thousands of homes in your area.
It is also a good idea to reach out to your network for real estate conferences as well as utilize Linkedin and other social media websites to find deals.
Final Thoughts On Real Estate Wholesaling
Real estate wholesaling is a great opportunity for individuals who would like to get started in the real estate industry as it has very low barriers to entry. But it is important to treat this like a real business, because it is a real business! This isn’t a get rich quick scheme and will require a dedication to learning and then a hustle to find and sign deals. But at the end of the day you will thank yourself for working so hard on your future.