How To Wholesale Real Estate In Idaho: Step By Step (2023)Jan 31, 2023
In today’s market, you might think it’s impossible to make money in real estate. Interest rates are rising, inflation is roaring, and the stock market is volatile.
However, what if we told you that there is a unique strategy that can provide positive cash flow to aspiring Idaho investors even in today’s challenging investment landscape?
According to the 2020 census, Idaho has a population of just over 1.8 million people. And, although that might not seem like a lot relative to other larger states in America such as Texas, California, and New York, Idaho has ranked amongst the fastest-growing populations in America for five consecutive years. That means the real estate market - an already growing industry - is likely to continue to grow throughout the great state of Idaho for the foreseeable future.
A great real estate investment strategy you can use to take advantage of this trend despite the overarching recessionary and inflationary pressures is wholesaling real estate. In this article, we will not only explain how to wholesale real estate in Idaho, but we’ll show you the necessary steps to do it extremely successfully.
- What Is Wholesaling Real Estate?
- How To Wholesale Real Estate In Idaho (9 Steps)
- Is Wholesaling Real Estate Legal In Idaho?
- How Much Do Real Estate Wholesalers Make In Idaho?
- Do You Need A License To Wholesale Real Estate In Idaho?
- Is Wholesaling In Idaho Easy?
- Final Thoughts On Wholesaling In Idaho
What Is Wholesaling Real Estate?
Wholesaling real estate is a type of real estate strategy whereby an individual connects homeowners with cash buyers in exchange for a fee. A truly successful wholesaler will sift the Multiple Listing Service (MLS), foreclosure auctions, and traditional real estate websites such as Loopnet, Zillow, and Redfin in order to find distressed properties to buy.
Then, once you’ve found a distressed property selling below market value, you contact a cash buyer and sell them the right to your purchase agreement. You do this by way of a contract called an assignment contract. Once you sell the contract to another investor, you collect your fee and rinse and repeat.
How To Wholesale Real Estate In Idaho (9 Steps)
In the following nine steps, we’ll show you how to wholesale properties in the Gem State. Be sure to check out our in-depth video showing you how to wholesale real estate step by step here:
Here's our simple step by step process for wholesaling real estate in Idaho:
- Partner With A Wholesale Mentor
- Learn Idaho Real Estate Wholesaling Laws & Contracts
- Understand The Idaho Real Estate Market & Lingo
- Build A Cash Buyers List
- Find Motivated Sellers & Distressed Properties
- Put Distressed Properties Under Contract
- Assign The Contract To A Cash Buyer
- Close Deal And Collect Assignment Fee
- Double Close Or Wholetail When Necessary
Step 1: Partner With A Wholesale Mentor
The first thing you’ll want to do as you embark on your wholesale real estate journey is connecting with local real estate and wholesale mentors. These mentors are individual investors who have found great success in wholesaling in Idaho. They all know the right markets to invest in, the right realtors, cash buyers, and real estate attorneys to deal with, and they’ll be able to assist you throughout the closing process.
By reaching out to these mentors and relying on them for the guidance you’ll not only avoid mistakes, but you’ll succeed far quicker than your competition.
Step 2: Learn Idaho Real Estate Wholesaling Laws & Contracts
Next, after getting in touch with a wholesale mentor, you’ll want to understand Idaho real estate wholesaling laws and contracts. For that, you’ll want to head over to the Idaho Real Estate Commission (IREC) - a governing body established by the Idaho legislature in 1947.
The Idaho Real Estate Commission is established pursuant to Idaho Code 54-2005 to administer and enforce all provisions of the Idaho Real Estate License Law (Title 54, Chapter 20) and the Idaho Subdivided Lands Disposition Act (Title 55, Chapter 18).
The Real Estate Commission is a self-governing agency that operates solely with dedicated funding from licensing revenue. Monies obtained from civil penalty fines may be used only for the development and delivery of real estate education to benefit Idaho real estate licensees.
Although the IREC governs licensing laws and brokerage requirements in Idaho, there are no specific laws discussing the practice of wholesaling real estate itself. However, although not entirely relevant to wholesaling, take a look through Title 54 of the Idaho Statutes. It covers professions, vocations, and businesses, including the formation and rules that govern the Idaho Real Estate Commission.
Even though you don’t have to become a broker to wholesale deals (more on that later), it might be a good idea to familiarize yourself with certain laws like the advertising law and fee disclosure law. For instance, the Idaho Consumer Protection Act and Idaho Statutes Section 54 - 2053 discuss that only a licensed salesperson or agent can publicly advertise a property for sale. Therefore you, an unlicensed wholesale, would not be able to post your property in the local newspaper or on social media.
Additionally, in Idaho Statutes Section 54 - 2054, the legislation states that a broker must disclose that they are making a fee on the transaction. Although as a wholesaler you won’t be taking a commission, but rather a profit, it is still good to know some of the laws governing real estate transactions that realtors need to abide by.
Once you’ve familiarized yourself with the laws governing real estate transactions throughout the state, you should then try to understand the ins and outs of a typical Idaho real estate purchase and sale agreement.
This is the contract you are going to enter into and inevitably sell to your cash buyer - be sure you know all your liabilities and requirements when you transfer it over to someone else via an assignment contract. Your wholesale fee will depend on it.
Step 3: Understand The Idaho Real Estate Market & Lingo
Once you have a good grasp of the laws and regulations, it’s time to dive into some market due diligence. Some questions you should get answered include:
- Which streets are popular amongst locals to hang out and spend time with their families?
- Which school districts are strong and in high demand?
- Which restaurants and parks do families like to hang out in and around?
- Which college towns could make way for a successful investment?
Answering these questions - and many more - could give you a good idea of which Idaho submarkets you should invest in.
Another great resource could also be glossing through the city-specific realtor sites. Typically, these sites include resources, contact numbers, and important real estate trends you might want to consider. Here are a list of the largest realtor association sites in Idaho:
- Boise Regional Realtors (BRR)
- Couer D’Alene Association of Realtors (CAR)
- Greater Pocatello Association of Realtors (GPAR)
- Sun Valley Board of Realtors (SVBR)
- Greater Idaho Falls Association of Realtors (GIFAR)
Step 4: Build A Cash Buyers List
A cash buyer list is a list of ready-to-go investors that can close on a transaction very fast. Cash buyers are typically fixing and flip-oriented investors, usually understand a market very well, have access to a lot of liquidity, and can close on a deal in a matter of days.
As a wholesaler, you are going to need to act quickly after you’ve gone under contract with your seller. Having a cash buyer list of interested parties can make the ultimate closing go down smoothly and without a hitch.
You can also check out this video on how to find cash buyers!
Step 5: Find Motivated Sellers & Distressed Properties
A distressed property is a property that is in need of repair. These properties are typically found in bank foreclosure auctions and are being sold by an owner that simply does not want the headache of renovating and re-listing the property to sell to someone else. These types of properties are perfect for fix and flip investors.
As a wholesaler, you’ll want to locate these properties and quickly go under contract with their sellers. Then, you’ll be able to flip the contract over to a different investor for a higher price because generally, these properties have a lot of potential if they are renovated correctly.
Another great source of opportunity is contacting motivated seller leads. Motivated sellers are individuals who own a home but need to sell it badly. These individuals usually would rather sell their property for below market value to a wholesaler rather than go on the market and wait for the right price. Market transactions could sometimes take months to close. A wholesaler offers a quick closing and can provide immediate liquidity to semi-desperate sellers.
Read Also: 25 Questions To Ask Motivated Sellers
Step 6: Put Distressed Properties Under Contract
Once you’ve identified the right property it’s time to put it under contract. For this part of the process, you’ll want to calculate the After Repair Value (ARV), estimate repair costs, and use the Maximum Allowable Offer (MAO) or MAO formula.
The ARV is the value of a property after you repair it and bring it up to the standard market price of similar properties in the neighborhood. Calculating this figure is essential to the wholesaling process because when you sell your contract to a fix and flip investor, they’ll want to ensure they can repair the home and increase its ARV above the repair costs they anticipate putting into the project. Calculate this value by searching the MLS and other brokerage sites to determine what other properties of similar configuration have recently sold for.
Next, you’ll want to estimate rehab costs.
For this part of the process, you’ll want to speak to general contractors and handymen to estimate how much work your distressed property will need. A two-bedroom, one-bathroom home that needs an entirely new kitchen and paint job to maximize its ARV will have an entirely different renovation budget than a six-bedroom mansion that needs a few extra bathrooms installed.
Then, after you’ve calculated the ARV and the necessary budget needed to achieve that ARV, you’ll need to bake in your desired wholesale fee and your buyer’s desired profit. There is no perfect number to use, but generally fix and flip investors utilize a formula called the 70% rule in determining attractive investments. That means they’d like to see at least a 30% gross profit margin. And, for your wholesale fee, you can bake in the standard $10,000 - $20,000 deal fee.
Now it’s time to plug the inputs into your MAO formula - the formula that determines the maximum bid you should make on the asset. Here is what the formula looks like:
MAO = ARV - Rehab Costs - Holding Costs - Wholesale Fee - Investor Profit
Let’s put the formula into an example.
You see a three-bedroom house in Boise that could use an extra bathroom and kitchen remodeling. You conduct your market research and determine a house of similar size could sell for $300,000. You determine, after speaking with some local contractors, that you could achieve that value with a $40,000 budget. You estimate the holding costs, including property taxes, insurance, utilities, and transaction costs to be $8,000.
You speak to a handful of investors and determine that you’d like to make $20,000 and they’d like to make $50,000. So, what is the MAO?
MAO = $300,000 - $40,000 - $8,000 - $20,000 - $50,000.
Therefore the maximum price you should offer for this house is $182,000.
Step 7: Assign The Contract To Cash Buyer
You’ve offered the seller a great price, the seller accepts your offer, and you go under contract. Now, it’s time to assign the contract over to a cash buyer. The way in which you do this is by drafting an assignment of contract. This contract is going to give your buyer the right to assume your purchase agreement and purchase the property instead of you. As a wholesaler, be sure to bake at a sufficient fee to compensate you for all your hard work.
Here is an example of a downloadable assignment contract.
Step 8: Close Deal And Collect Assignment Fee
Next, you’ll close on the deal and collect your assignment fee. Once the cash buyer pays you the money you are owed it’s time to rinse and repeat!
Step 9: Double Close Or Wholetail When Necessary
Every successful wholesaler should be flexible in the way they go about their transactions. Two such examples are a double close and wholetailing.
A double closing is a type of transaction where you actually don’t even use an assignment contract at all. In a double close, you go under contract with the seller and then simultaneously go under contract with your buyer at a slightly higher price.
For example, you see a home in Idaho Falls worth an ARV of $350,000. In a double closing, you’ll go under contract with the seller at $250,000, put down an escrow payment, and simultaneously go under contract with a different buyer at $275,000. In doing so, you collect a $25,000 profit without actually writing up an assignment contract.
However, double closings are not without their challenges. Since you are going under contract with a cash buyer before actually owning the property, you might encounter some pushback from your title insurance company. In order to avoid this, some investors opt to contact hard money lenders or go through transaction funding to ensure they can close on the two deals at once.
Keep in mind, however, double closings - although many times the right strategy to use - can be more expensive than standard wholesale traction. Generally, you’ll be paying legal fees twice, recording taxes twice, and other traditional closing costs both as a buyer and a seller.
Wholetailing is also another wholesaling method you might want to consider.
Wholetailing is a combination of a fix and flip and a standard wholesale deal. In wholetailing, you’ll take ownership of the property, do some high Return on Investment (ROI) renovations, and then re-list the property shortly thereafter on the market. It isn’t a full flip because you don’t do a complete renovation, however, it's not a wholesale deal either because you aren’t simply selling the equitable right of a contract via an assignment contract. It’s right there in the middle!
Wholetailing is often a desirable exit strategy because you can access a larger pool of buyers when you re-list the property on the MLS. These buyers typically use financing and are generally less sensitive to pricing as compared to cash buyers.
Is Wholesaling Real Estate Legal In Idaho?
Yes, wholesaling real estate is legal in Idaho. As mentioned earlier, there are no specific rules governing wholesale transactions in Idaho. However, it is never a bad idea to familiarize yourself with standard rules and regulations governing the Gem state.
All resources surrounding laws and statutes specific to real estate and all business and life in Idaho can be found on the official website of the Idaho state legislature.
How Much Do Real Estate Wholesalers Make In Idaho?
The average wholesale deal brings in about $5,000 - $25,000. However, the actual wholesale salary amount can change depending on the state, specific neighborhood, type of real estate being sold, and the overall discount to ARV you can get ahold of.
Assuming a $20,000 per deal wholesale fee, you can manage to make an extremely successful wholesaling business career out of wholesaling if you can close one deal a month. That’s over $200,000 a year!
Do You Need A License To Wholesale Real Estate In Idaho?
No, you do not need a license to wholesale real estate in Idaho. However, given the number of resources accessible to real estate brokers and realtors, it might be a good idea to get a license anyway.
In order to get an Idaho real estate license, you’ll need to oblige to the following requirements:
- Have a high school diploma or equivalent
- Be 18 years of age
- Take 90 hours of pre-license education classes
- Pass state and national portions of the salesperson licensing exam
- Go through fingerprinting and a background check
- Register with IREC
- Apply for a license through IREC
- Obtain Errors & Omissions Insurance
- Provide proof of legal residence in the United States
For detailed information on obtaining an Idaho real estate license visit the Idaho Real Estate Commission licensing page.
Is Wholesaling In Idaho Easy?
No, wholesaling in Idaho is not easy, but that doesn’t mean it can’t be. If you find the right mentor, and seek out the right houses in the right market, you can become a wholesaling professional in no time.
We recommend enrolling in the Real Estate Skills Pro Wholesaler VIP Program. It is a world-class program that will help you hit the ground running before diving into any United States market.
The Pro Wholesaler VIP Program is designed for the modern entrepreneur to learn the basics and how to avoid the pitfalls typically found by new real estate wholesalers. It is 100% online and is used for local and virtual real estate wholesaling.
Final Thoughts On Wholesaling In Idaho
If you are a real estate investor looking to buy a rental property or invest in Boise, ID, you should consider real estate wholesaling. Whether you are a multifamily investor, a new investor, or prefer flipping houses, there is still room to learn the intricacies of wholesaling houses.
As a wholesaler, you collect a fee for finding below-market properties and selling them to end buyers. It is a great real estate business for anyone looking to generate some cash with little downside risk. In order to find the best real estate deals, speak to lenders, flippers, and real estate agents.
Get their contact information from your mentor and take the plunge. It won’t be easy at first, but once you get the hang of it you can become a wholesaling powerhouse in no time.
Check out our brand new free training on how we help investors all across the country wholesale and flip houses from the MLS using only a laptop and a cell phone. See you there!