| Mon: | Showings 1-4 Office Hours- 9-5: |
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| Tues: | Showings 1-6 Office Hours - 1-8: |
| Wed: | Showings 1-6 Office Hours - 1-8: |
| Thurs: | Showings 9 - 6 Office Hours 9 - 6: |
| Fri: | Showings 1-6 Office Hours - 1-8: |
| Sat: | Office 11-4 Showings by appointment only: |
| Sun: | Sunday Closed: |
| Real Estate Wholesaling |
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The great thing about wholesaling real estate is that you don’t take ownership of the property, but you control it. Once you have the property under contract, you assign the contract to another buyer who will close on the property in your place. There is little or no risk, and you can do it with little or no money down! Investors call this process "wholesaling real estate" or "flipping properties." No matter what term you use, it’s the same thing. There is the opportunity to make money from property you have never owned but have control. So, how easy is this whole process?
Find a property Your main objective is to find properties that you can purchase 25 to 30% or more, under “as is” value. Example: Property is an “estate” worth $100,000. The heirs just want to get rid of it. You offer $55,000 and they accept. If you are advertising correctly, your phone will ring off the hook. What you are looking for is a property with enough equity so that both you and the one you sell the property to can make some money. Next you need to tie up the property with a written agreement. If it’s not in writing it doesn’t mean a thing. You fill out a sales contract with the homeowner as the seller and you as the buyer. You can get the contracts from your Real Estate person, from the Board of Realtors, the web or an office supply store. They are easy to use. About the first lines on the sales contract is a place for the buyers’ name. Put your name and the words “and/or assigns” after it. This will allow you to assign the contract to the rehabber. To make the contract binding, you have to leave a deposit with the homeowner at the time of signing. This is where negotiating comes in. When going through a Realtor you will typically have to put up a deposit of $500.00 to $1000.00 as a deposit, (good faith money) but actually any amount that both the buyer and the seller agree on is ok. Speak with confidence.
Start building your buyers list. This is a list of rehabbers who will buy your wholesale properties. First, run an ad in the paper that says something like: Handyman Special
When investors begin calling, get their information. Take their name, number, fax, and email, and put that information in a database. Then the next time you find another deal, you'll have a list of buyers. Run your ads for sixty to ninety days. Even if you sell your property the next day, keep the ads running. Tell the investors that the property sold; however you are working on another, and ask if you can you call them once the deal is finalized. They will always say, “yes.”. Remember the money is in the list. The more buyers you have on your list the easier it will be to sell the property. You will get to a point where every time you get a deal under contract, fax and email your list and boom--the deal is gone. It’s awesome! Remember, the faster you find a buyer, the faster you get paid.
Negotiate a deal with your rehabber This is how a wholesale transaction might look. Say the house is worth $100,000 in good condition. The homeowners are either behind in their payments or facing foreclosure. They must move quickly. They owe $50,000 on the property, and they say they need $5,000 to move and pay deposits for their new place. You offer them $55,000, they shock you and accept. The first time they accept may indeed be a shock to you but it will not be the next. The house is worth $100,000 in good condition. You figure it will take approximately $15,000 in repairs to get it to market condition. You have a rehabber from you buyers list that will pay 65% of the retail value. You decide to sell it to the rehabber for $65,000 making $10,000 as your assignment fee. The price is $55,000 to the homeowners and $10,000 to you for assigning your contract to another party (the rehabber). The rehabber will fix-up the property and make the difference between the $65,000 and the $100,000 fair market value. If the rehabber does a good job and keeps costs low, there is a potential profit of $15,000 to $20,000.
Prepare for closing Using your investor friendly title company, move towards a closing. The beauty about title companies is that they do all the work for you. All you have to do is find the deal, wholesale it to your rehabber, and go to closing. The title company will do the rest. It’s that simple! Wholesaling real estate is fun, and the money is quick.
Note: Under Illinois law to be paid a fee as a part of a Real Estate Transaction you must be a licensed Broker or Agent or be a party to the deal. In the case above you have a contract that you can legally assign to another party for a fee.
Disclaimer: The foregoing is not intended to be given as legal, financial or tax advice, but intended for instructional use only. If you require legal, financial or tax advice you should seek the assistance of a qualified professional. |