How To Wholesale Real Estate In Mississippi: Step By Step (2023)May 02, 2023
Do you live, work, or wish to invest in the Magnolia State?
Do you walk the streets, view the beautiful real estate, and wonder what it’ll take to get involved in real estate investing within the Mississippi real estate market?
Mississippi has a population of just shy of 3,000,000 people and although the population hasn’t grown materially over the past year, there continues to be tremendous opportunity in the real estate market.
The United States national average of owner-occupied housing units per available home is roughly 65%. Mississippi, on the other hand, has a housing unit rate of 69%. Though that 4% difference might not seem like a lot, it truly is. If nearly 70% of the houses are owner-occupied, that means that the residential housing market is generally driven by homeowners, families, and individuals looking to reside in houses as long-term owners rather than as renters.
A real estate market driven by motivated buyers that are looking to find a home that their families can grow into is a real estate market that is typically very strong and willing to pay a premium for housing. And, that is exactly what the trend is telling viewers in Mississippi. The year-over-year growth in home value in Mississippi has gone up 7% since last year.
So, what’s the best way to get a piece of the action? Real estate wholesaling.
In this article, we’ll discuss what wholesaling real estate is and how to wholesale real estate in Mississippi.
- What Is Wholesaling Real Estate?
- How To Wholesale Real Estate In Mississippi (9 Steps)
- Is Wholesaling Real Estate Legal In Mississippi?
- How Much Do Real Estate Wholesalers Make In Mississippi?
- Do You Need A License To Wholesale Real Estate In Mississippi?
- Is Wholesaling In Mississippi Easy?
- Final Thoughts On Wholesaling In Mississippi
What Is Wholesaling Real Estate?
Wholesaling real estate is a type of investment strategy whereby wholesalers connect motivated sellers with cash buyers looking to flip houses, multifamily properties, and commercial real estate. Wholesalers act as the middleman in real estate transactions.
As compensation for making the connection, wholesalers charge an assignment fee which is usually a fixed price or percentage of the sale of the property. Usually, wholesalers find distressed properties or properties sold by motivated sellers, then they go under contract to purchase them, and finally assign the purchase contract over to a different end-buyer for a fee.
Once completed, they’ll get back out into the market and find more deals.
How To Wholesale Real Estate In Mississippi (9 Steps)
In the following nine steps, we’ll show you how to wholesale properties in Mississippi. Be sure to check out our in depth video showing you how to wholesale real estate step by step here:
With that in mind, here's our simple step by step process for wholesaling real estate in Mississippi:
- Partner With A Wholesale Mentor
- Learn Mississippi Real Estate Wholesaling Laws & Contracts
- Understand The Mississippi Real Estate Market & Lingo
- Build A Cash Buyers List
- Find Motivated Sellers & Distressed Properties
- Put Distressed Properties Under Contract
- Assign The Contract To Cash Buyer
- Close Deal And Collect Assignment Fee
- Double Close Or Wholetail When Necessary
1. Partner With A Wholesale Mentor
Before you begin due diligence on a particular Mississippi market, you’ll want to connect to a real estate wholesale mentor. Mentors are individuals who have already successfully navigated the market and are willing to pay it forward and teach the next generation of investors how to make money in the business.
These are people who understand the Mississippi laws, know which sub-markets are profitable, and which types of houses to find.
Connecting with a mentor can make your life a whole lot easier. Whether you’re a beginner or a seasoned investor, you’ll be able to more efficiently wholesale deals if you have a mentor guiding you throughout and pointing you in the right direction.
2. Learn Mississippi Real Estate Wholesaling Laws & Contracts
Next, you’ll want to learn the Mississippi real estate wholesaling laws and contracts. The first place you’ll want to look is the Mississippi Real Estate Commission.
The Mississippi Real Estate Commission (MREC) is the state agency tasked with administering and enforcing real estate license provisions in the state. The MREC’s mission is to ensure real estate transactions and activities in the state are completed both ethically and professionally.
Mississippi’s license law is found on the MREC website. You’ll notice that there are no specific laws pertaining to wholesaling real estate. However, there are plenty of laws pertaining to licensing, brokering, and real estate transactions as a whole.
Real estate wholesaling is the act of selling the equitable right to a purchase agreement to another party. As long as you don’t do anything that is specifically geared towards licensed professionals, you won’t have to worry about any fines or negative repercussions for your actions.
In the MREC License Law section, you’ll find the necessary coursework, statutes, and regulations pertaining to licensing requirements. It is important to familiarize yourself with these laws even if you don’t intend on getting your real estate license. Since you’ll be involved in the real estate business, it can’t be a bad idea to understand your rights and limitations.
To further brush up on the various licensing requirements, you might want to gloss through Part 1601: Rules and Regulations. As a wholesaler, you might think this information is unnecessary, however later on in this article we’ll talk more about the benefits of getting licensing in Mississippi. So, you might want to take some time to go over these resources with your mentor before launching your wholesaling business.
Next, after you’ve reviewed the licensing laws, you should familiarize yourself with the standard Mississippi purchase agreement and assignment contract. Here is a Mississippi Realtors Contract for the Sale and Purchase of Real Estate. Be sure to review it with an attorney to ensure your interests are protected and disclaimers are addressed.
3. Understand The Mississippi Real Estate Market & Lingo
After you feel comfortable with the laws surrounding wholesaling, you’ll want to begin your research into specific Mississippi sub-markets. The best way to get a true understanding of any market is to walk the streets of the town, speak to locals, and actually experience the state events, landmarks, and tourist sites.
However, if you are just looking for a high-level understanding of a market’s strengths and weaknesses, you should gloss through the Mississippi realtor sites. Usually, these websites contain information such as necessary documents, local requirements and laws, and different trends and research on the local housing market.
These professional trade organizations are each a member of the National Association of REALTORS (NAR) -
- Mississippi Association of REALTORS (MAR)
- Central Mississippi REALTORS (CMR)
- Hattiesburg Area Association of REALTORS (HAAR)
- Northeast Mississippi Board of REALTORS (NEMBR)
- Gulf Coast Association of REALTORS (GCAR)
4. Build A Cash Buyers List
After you’ve conducted some research into specific markets, you’ll want to build a cash buyer list.
A cash buyer list is a list of potential buyers that are ready and able to purchase your property in just a few minutes or days’ notice. These are fix and flip specialists and rental property investors who can close deals extremely quickly. Compile a list of these individuals and vet them thoroughly so once you’ve found a deal, all you’ll need to do is shoot them a quick phone call to get the ball rolling.
You can also check out this video on how to find cash buyers!
5. Find Motivated Sellers & Distressed Properties
There are many ways to find great properties to wholesale. Surfing sites like Zillow, Loopnet, and Redfin or researching properties listed on the Multiple Listing Service (MLS) can be a great starting point. However, you’ll likely find the best opportunities by finding distressed properties and off-market properties from motivated sellers.
Motivated sellers are homeowners who wish to sell their homes badly and quickly. Usually, these people are in a cash crunch, going through a family challenge, or have recently inherited a property from someone else. They can also be homeowners that are simply willing to forgo larger profits in place of a quick, cash offer. After all, cash is king.
You’ll also want to find distressed properties. Distressed properties are properties that are in a less-than-ideal condition. Perhaps they were placed into foreclosure after being damaged by a bad tenant, fire, or mortgage issue. Or, perhaps they have simply been inhabited for a few years and have been infested with rodents or are in dire need of some new frontage.
These owners don’t want to renovate their properties and spend the time and money bringing them back into a livable situation. They’d rather sell their properties for below market value if it means getting a quick offer that could cover some of their expenses and taxes.
6. Put Distressed Properties Under Contract
After you’ve found the cash buyers and the distressed property, it’s time to put the property under contract. This is where the Maximum Allowable Offer or MAO formula comes in.
Maximum Allowable Offer (MAO) = After Repair Value - Rehab Costs - Desired Profit - Wholesale Fee.
The MAO is the maximum price a wholesaler should pay for a home in order to ensure all parties involved (i.e. the wholesaler and the fix and flip end-buyer) turn a profit. Sticking to this formula will ensure you are being aggressive enough to win the deal, but conservative enough to ensure you’ll earn positive cash flow and a good ROI (return on investment) on your property.
So, what are the inputs?
The first step is calculating the After Repair Value (ARV). The ARV is the value of a property after you rehab it and bring it up to market value. You can calculate this value by researching the neighboring markets, speaking to agents and bankers, and determining what similar properties have sold over the past year. You can also collect this data on Zillow by sifting for recently sold properties. Ask your mentor for some advice as well - he or she will be able to assist you in compiling accurate data.
Next, you’ll have to estimate the rehab costs necessary to fix up your distressed property. Is the property going to need a new driveway, an updated garage, or a new roof and gutter? Answering these questions will help give you an idea of the extent of the project at hand.
Then, you’ll need to determine your’s and the investor’s desired profits. For this part, you can plug and play with different values.
Let’s say you invest in a property with a $500,000 ARV, you might want to bake in a large desired profit for you and the fix and flipper due to the large size of the deal. A good rule of thumb is to assume a cash buyer would want to make about a 25% - 30% profit on any investment.
Anything below that may not be worth the risk and time needed to devote to an investment. This is calculated using a formula called the 70% Rule. It’s a great place to start, however, you’ll want to understand the specific ROI requirements of your cash buyers.
For you, the wholesaler, we’d recommend baking in at least a $10,000-20,000 assignment fee, but the number is ultimately up to you and your financial goals.
Once you calculate the MAO, put in an offer at or below your calculated number. This will ensure you’ll make money once you’ve assigned the contract over to a cash buyer on your list.
7. Assign The Contract To Cash Buyer
Once you are under contract with the homeowner, you’ll need to assign the contract over to one of your end-buyers.
For this part, we cannot stress enough how important legal advice is. If you miss something in your assignment contract, you could end up being subject to intense scrutiny and liabilities you just don’t want to deal with. Working with a real estate attorney or mentor, although not always cheap, could ensure you don’t fall victim to any major issues. Make sure your assignment contract is extremely clear and thorough.
8. Close Deal And Collect Assignment Fee
Once you have the purchase contract signed, it’s time to close the deal and collect your assignment fee.
Make sure, throughout the closing process, you are in touch with the title agency, your attorney, and the seller. Be sure to have all the documentation needed to close so everything goes down without any issues. Residential deals usually close pretty quickly, but you never know what kind of challenges might pop up at the last moment. Always be prepared and available to jump in if necessary.
Once you’ve collected your cash flow, it’s time to rinse, repeat, and find your next wholesale deal.
9. Double Close Or Wholetail When Necessary
Maybe not as a new investor, but once you become a seasoned wholesaler, at times you’ll want to implement a few different creative strategies as variations to the standard wholesaling process. Two such examples you might want to consider are double closings and wholetailing.
A double closing is a transaction where you use two simultaneous closings with two different purchase agreements instead of the traditional assignment contract method. What you’ll do is go under contract with the seller and the end buyer at the same time.
Then, you’ll present both purchase agreements to the title insurance company and they’ll close on the deals. In an ideal situation, they’ll facilitate the closing with your buyer and use the buyer’s earnest money to close on your sale with the initial seller.
Seems enticing, but there are a few drawbacks. Double closings are not without their challenges. Since you are going under contract with a cash buyer before owning the property, you might encounter some challenges from your title insurance company. Although there are some loopholes, you might have to be a bit creative by using hard money loans or transactional funding. Double closings are also a bit more expensive than standard wholesaling because you may be paying closing costs, legal fees, and recording taxes on two separate transactions one after the other.
Wholetailing is a hybrid between 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’s a great exit strategy because you are able to increase the value of the house and get access to a larger pool of buyers when you relist the property back on the MLS. It also allows you to hold off on selling the property until more favorable market conditions come around.
Is Wholesaling Real Estate Legal In Mississippi?
As mentioned earlier, wholesaling is the act of selling the equitable interest in a purchase agreement - not the actual property itself. The purchase agreement is a bilateral contract which means both parties have certain responsibilities they have to maintain. These bilateral contracts are generally allowed to be transferred between different parties.
Luckily, Mississippi laws don’t have any issues with wholesaling so long as the wholesaler stays within the confines of local licensing rules. But, since you are not selling an actual property, many of the laws surrounding licensing requirements do not apply.
How Much Do Real Estate Wholesalers Make In Mississippi?
There is no perfect answer to the wholesaler’s salary question. The answer will largely depend on how much time and effort you decide to devote to the business.
Generally, wholesalers can make $10,000 - $20,000 per wholesale transaction. If you are capable of locking in one deal per month, you could end up making over $120,000+ a year.
Do You Need A License To Wholesale Real Estate In Mississippi?
As mentioned earlier, you don’t need a license to wholesale real estate in Mississippi. However, it might be a good idea to get one.
Licensed professionals get access to important resources like networking events, the MLS, and other exclusive listings and contacts.
The work required to devote to getting a license and the fees associated with the program is not too bad. If you get a license, there is a good chance you’ll have a significant leg up against your competition.
Mississippi Real Estate License Requirements
If you’d like to get a license, here are the necessary steps you’ll need to take:
- Step 1 - Be 18 years old
- Step 2 - Be a Mississippi resident
- Step 3 - Complete a minimum of 60 hours of MREC-approved real estate courses
- Step 4 - Pass the state exam
- Step 5 - Work under the supervision of a Mississippi real estate broker
- Step 6 - Complete an approved 30-hour post-license course within one year after being issued a temporary license.
For more information, please visit this website.
Is Wholesaling In Mississippi Easy?
No, but it can be if you take the right steps. Getting a coach, a mentor, and the proper training can make the wholesaling process so much easier.
At Real Estate Skills, we offer the Pro Wholesaler VIP Program, an elite course that can help set you up for success. It is a great place to start your journey and it has already helped thousands of other students turn into tremendously successful wholesalers in their respective states.
The Pro Wholesaler VIP Program is designed for the modern entrepreneur to learn the basics and how to help new real estate wholesalers avoid the pitfalls typically found by beginners. It is 100% online and is used for local and virtual real estate wholesaling.
Final Thoughts On Wholesaling In Mississippi
It might seem challenging to become a real estate investor and learn how to sift through various real estate deals to find wealth-creating opportunities. You might ask yourself: should you become a real estate agent, how do you analyze an investment property, is wholesaling houses a good strategy? These answers can be tricky and sometimes intimidating to pursue.
However, with the right mentor and the right resources, you’ll begin to realize that becoming a wholesale investor in Mississippi is within reach.
If you speak to local lenders in your town, meet up with real estate professionals, educate yourself with the right partnerships and podcasts, and take the time to analyze real estate contracts and Mississippi wholesale laws you’ll become a savvy wholesale professional before you know it. 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.