How To Wholesale Real Estate In Montana: Step by Step (2023)Apr 04, 2023
Are you looking for a way to give back to the community while being your own boss and making good money? If so, why not think about starting your own real estate business in Montana? Getting involved with real estate investing in Big Sky Country is a brilliant way to connect with your neighbors and serve the people in your community in positive ways - all while building a lucrative, independent business.
Sounds great, right? But what if you don’t know anything about real estate, or perhaps you don’t have the cash flow to start? Not to worry. The beauty of wholesaling real estate is that you can start with little to no money, the learning curve is relatively shallow, and you don’t even need a real estate license to get rolling.
Moreover, Montana poses tremendous opportunities for real estate entrepreneurs looking for serious returns. For instance, a recent overview conducted by Zillow indicates that the average market value for homes in Montana is $420,572, up over 6.7% from the prior year (as of April 2023). Furthermore, the recent Montana census indicates that the current population of 331.4 million is up by 7.4% from previous years.
With stable population growth, a strong market value of properties in the state, and a fast turnaround in property sales - real estate wholesalers stand to reap some satisfying returns while doing business in the state of Montana. And if you’re scratching your head about these figures or not sure where to start in the wholesale real estate realm - fear not.
Here is a step-by-step guide for beginners who are interested in contributing to the community while earning money wholesaling houses in Montana.
- What Is Wholesaling Real Estate?
- How To Wholesale Real Estate In Montana (9 Steps)
- Is Wholesaling Real Estate Legal In Montana?
- How Much Do Real Estate Wholesalers Make In Montana?
- Do You Need A License To Wholesale Real Estate In Montana?
- Is Wholesaling In Montana Easy?
- Final Thoughts On Wholesaling In Montana
What Is Wholesaling Real Estate?
So what is wholesaling real estate?
In a nutshell, real estate wholesalers are a type of investor who places great deals under contract, then sells their interest in that contract to other real estate investors at a higher price, earning a profit.
Wholesalers typically buy cheap, distressed properties or homes at a foreclosure auction, through real estate agents, and using various other methods.
There are many advantages to this real estate investing strategy and business model. For one thing, you don't need to spend money repairing the property before you monetize it. All you have to do is negotiate the purchase and resell the contract for a profit.
How To Wholesale Real Estate In Montana (9 Steps)
Now that we’ve established what wholesaling real estate is, let’s take an in-depth look at how to wholesale real estate in Montana. From finding wholesale properties to tips on how to interpret the Montana real estate market - the following steps will get you on the right track.
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 Montana:
- Partner With A Wholesale Mentor
- Learn Montana Real Estate Wholesaling Laws & Contracts
- Understand The Montana 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
As with any first-time endeavor, having a wholesale mentor to help you get your feet wet and guide you along the way can be extraordinarily helpful. Seek a mentor with knowledge in the industry, such as a house flipper, Realtor, or real estate agent. Ideally, your tutor should also have experience and proven success at tackling the wholesale real estate game.
The great thing about a mentor is that they can help you achieve your goals and ambitions. You can find one in a few different ways. For instance, you can search real estate forums online, attend meet-ups, or talk to experts on social media. Eventually, you’ll begin to make connections with “people in the know” and hopefully hit it off with one of these to the extent they are willing to take you under their wing as a mentee.
Additionally, a real estate coach, teacher, or mentor should be a treasure of contacts. That means he or she might be able to connect you with lenders, give you leads on wholesale properties, or tip you off on smashing real estate deals. They may also know a reputable real estate attorney who can help you with legal advice during crucial moments of drawing up your first real estate contract.
2. Learn Montana Real Estate Wholesaling Laws & Contracts
As you first venture into wholesaling properties, there are tremendous amounts of details to consider. The most important of these details is conducting business and drawing up contracts in a legally binding manner and not violating state laws in the process.
For instance, real estate wholesalers in Montana are not permitted to market or sell the actual physical contracted property - only the equitable rights may be sold without a real estate license. To explain, selling and marketing a property is different than selling the equitable title of the property. That is why a wholesale real estate contract must clearly lay out the terms of the transaction so that all parties are agreeable to the terms, and as the wholesaler, you are properly abiding by Montana state real estate laws.
It’s strongly advised that new wholesalers retain the assistance of an experienced Montana real estate lawyer. This is because real estate laws and drawing up contracts can be highly complex and overwhelming. A real estate lawyer can guide you through the process (especially through your first few transactions), and help you avoid costly (or illegal) missteps.
There are wholesale real estate contract templates available, but there are still a myriad of nuances to consider. For instance, the language of a contract might be changed to require a seller’s written consent, and any other revisions can result in errors - again, making a real estate attorney on your side an invaluable asset.
Additionally, you should proceed with business with utmost transparency. The more upfront you are with homeowners, cash buyers, and all parties involved - the more straightforward the process will be. Conduct business with integrity and be honest with all parties involved. Keep meticulous notes through every phase of your wholesale deal, and always be aware of financial requirements.
3. Understand The Montana Real Estate Market & Lingo
Do you know the difference between the housing trends in Billings and Missoula and which cities are more lucrative for wholesaling than others? What the acronym ARV stands for, or what is meant by a “double close” deal? Did you know that Montana is one of the non-disclosure states (meaning the sales price is not disclosed to the public when real estate is sold)?
If you’re not sure about these and other terms or market trends for real estate in Montana, it’s time to start studying. You can start your education by first visiting the real estate association for your area.
For instance, you might want to join the Great Falls Association of Realtors if this is your region of focus. From Gallatin to Helena, there are realtor associations around the entire state - simply join one and begin learning what you need to start “talking the talk” and learning more about the Montana market in your area. You can also start getting a better understanding of market trends by county by visiting the Montana.gov market value site.
You can also brush up on the lingo and various markets by talking to others in the Montana real estate scene. Utilize social media or discussion forums and start asking questions. Most people appreciate sharing their wisdom and will gladly fill you in on the highlights of what you need to know.
4. Build A Cash Buyers List
A huge aspect of a successful wholesale real estate investing strategy is having a solid cash buyers list. A big reason for this is the nature of wholesale real estate transactions are typically head-spinning in speed (even on the same day in some cases). That means you’ve got to get your hands on a buyer as quickly as possible so as not to lose the deal.
Furthermore, building a buyers list may also help you track down leads and communicate with people who are ready to invest in your contracts - and do so quickly by paying cash.
There are a few options when it comes to building your buying list. You might contact services that advertise with slogans such as “We Pay Cash for Your Houses.” Make sure these aren’t wholesalers first. If not, they might be a potential cash buyer for your wholesale real estate contract.
You can also try talking to people attending and purchasing at property auctions. Because these are typically high-paced in nature, bidders are very likely to have cash or quick access to money. Therefore, this might be an ideal place to build your list.
Another option is to contact lenders and find out who is buying up properties. You can also talk to investors, friends, or family. The point here is to network and ask questions. The more you talk to potential buyers, the more you’ll find the circle will widen, and eventually, your cash buyers list will grow.
You can also check out this video on how to find cash buyers!
5. Find Motivated Sellers & Distressed Properties
Because (usually) there is no fixing for flipping involved, a wholesaler's bread and butter are made on motivated sellers who just want to get out from underneath a house. Many scenarios motivate people to sell their homes. For example, a family member might inherit a rundown house after the death of a loved one. Unwilling to renovate it, they look for a fast sale.
This is where you, as a wholesaler, can save the day and make a bundle. Distressed properties are ideal because the owners just want to be rid of them, the transactions typically go fast, and you can buy the purchase contract cheaply and then sell the contract to a cash buyer at an elevated price or for the price of your assignment fee.
Your best bet in finding distressed properties and motivated sellers is to hit the internet. There, you can scour foreclosure lists in the state of Montana. You can also check out MLS listings and find low-priced homes that are selling “as is” or “cash sale” - these are typically homes that are in rough shape, and their sellers are highly anxious to get the property off their hands. Don’t forget to check out home auction sites too.
Lenders can also be a good resource for finding the right wholesale deals. To explain, lenders can be particularly helpful during a recession when they are overrun with homes that are backward on mortgage payments. Another good tip is to contact your local tax assessor for a list of properties that are in arrears on tax payments - this is often a sign that the homeowner might be willing to sell to get out from beneath what they owe on a home.
6. Put Distressed Properties Under Contract
Ideally, you’ve done your homework, built your cash buyer list, and you’ve found a motivated seller who is finally ready to sell that dilapidated rental property, foreclosure, or distressed home. Your next step is to create a contract.
Putting a property under contract entails calculating integral figures that you will present to the seller. The trick is to find the right price so that the seller simply can’t turn down your offer - while you still come out with a profit in the deal.
This is where the MAO formula comes into play. The MAO (or Maximum Allowable Offer) helps you determine the best offering price as well as helps you calculate your profit. To determine the MAO, take the ARV (After Repair Value), subtract it with repair and fixed costs associated with the property, and then subtract any equity or target profit. The sum will be your MAO, which will be your offer, plus any wholesale or assignment fee you connect for your services as a real estate wholesaler.
To determine these costs, you can start by researching the market values in the surrounding area. Also, figure out the average price of homes recently sold in the area. You can estimate the cost of repairs by getting quotes from general contractors or calculating the costs of materials at hardware stores.
To get that all-important MAO, you can also consult with a real estate agent, or talk to your mentor. Once you have the MAO, you can begin drawing up a contract. Be sure you have the help of a real estate attorney - especially for your first contract. This will help ensure your contract is legally binding, and not breaking any real estate laws in Montana.
7. Assign The Contract To Cash Buyer
Once under contract, and you’ve pinpointed a solid buyer, it’s time to begin the assignment of contract process to the buyer. This is essentially the phase in which you hold the paperwork, and are undergoing the process of transferring the purchase contract to your buyer.
Again, you may want to obtain an attorney to help you with your first assignment of contract because you need to have full assurance that the paperwork protects your interests. You can also get wholesale real estate templates online for the state of Montana, which will make drawing up your assignment of contract easier. Additionally, check with your local government to make sure your contract is complying with all of the state, city, and county regulations.
8. Close The Deal And Collect Your Assignment Fee
Assuming you’ve put the property under contract with your seller, and drafted the assignment contract with your buyer - it’s time to close the deal and collect your assignment fee. To ensure a smooth transaction, keep in close contact with all the parties involved, and keep in touch with your mentor and your real estate agent. The more available you make yourself, the more prepared you are to give the title company, or involved parties any information required in order to have a quick closing.
After all the paperwork is signed and the purchase agreement is transferred to the buyer, you should be paid your assignment fee.
9. Double Close Or Wholetail When Necessary
A double closing is a specialized structured real estate deal where two real estate transactions take place around the same time. This is done when a wholesaler finds a motivated seller and agrees to buy their distressed house for a certain price. Then, as the wholesaler, you agree to sell the property to your end buyer for a profit. At closing, the property is transferred from the seller to the wholesaler, then from the wholesaler to the cash buyer at a higher price.
Wholetailing is when you purchase a distressed property and make enough repairs to make it viable, but you won’t do a full renovation. After minor upgrades are made, you market the property on MLS in order to entice an investor that will pay top dollar for the property.
This strategy gives you, the wholesaler, more time and flexibility to find a new buyer. This new buyer may even be able to get a mortgage on the property due to the repairs made. You can think of wholetailing as a hybrid between a wholesale and a flip, as you are investing to get the home in a more appealing condition for the end buyer. By doing this you'll get more access to buyers with financing, and potentially secure more profits by seasoning the property for a few weeks or months and selling it at a higher price.
Is Wholesaling Real Estate Legal In Montana?
Absolutely. It is wholly legal to wholesale real estate in the state of Montana. What you need to know, however, is that you cannot sell or market the actual property without a real estate license.
You can only market or sell the rights of the property as awarded by the Principle of Equitable Conversion. In other words, it is legal to sell equitable rights, but it is not legal to sell real property without a license in Montana.
This is made very clear according to Montana’s MCA 37-51-301 licensing code, which states (among other things) that It is unlawful for a person to supervise licensed salespersons or to act in the capacity of a supervising broker unless the person has a valid and active Montana broker's license and a supervising broker endorsement.
How Much Do Real Estate Wholesalers Make In Montana?
How much money you make wholesaling in Montana is largely contingent upon your ability to assess the market, your diligence, and the effort you put into your endeavors. While it’s true that real estate markets fluctuate, and some quarters will be more lucrative than others - wholesaling real estate offers a lot of opportunities for enviable income for go-getters and savvy entrepreneurs.
The exciting aspect is that the earning potential is limitless with wholesale real estate. It all depends on how many deals you close, multiplied by your average wholesale fee. If you close one deal per month at a $10,000 profit, you’ll be earning a six-figure annual net income!
Do You Need A License To Wholesale Real Estate In Montana?
As mentioned earlier, no, you do not need a real estate license to wholesale real estate in Montana. Because a wholesaler is essentially marketing and selling purchase rights, there is no physical property to consider. However, you do need a license to broker, market, or sell real property.
Montana Real Estate License Requirements
While not a requirement for wholesale transactions, you might want to consider getting a real estate license anyway. Getting a license entails training which can give you information that could put your wholesaling efforts on better footing. Moreover, a license can give you access to information that you might not have had without one.
Here are the requirements for getting a real estate license in the state of Montana:
- Be at least 18 years old or older
- Have a 10th-grade education (or more) from an accredited school
- Undergo 70 hours of pre-licensing training and instructions. Training should be provided by a board-approved instructor or educational institution. Instruction must be completed within two years.
- Pass the Montana Salesperson Real Estate Exam
- Get broker affiliation and submit an application for licensure to the state
Is Wholesaling In Montana Easy?
No, it isn’t a cakewalk, but nothing worthwhile is ever easy. There is a lot of work, effort, determination, and research involved to be a successful wholesaler in Montana. However, you can make the process easier by partnering with a professional real estate mentor or coach.
Having someone by your side who has “been there, done that” can greatly reduce challenges and frustration on your journey into wholesaling real estate. You can also take advantage of in-depth training programs such as the Pro Wholesaler VIP Program, where you’ll get instant access to top-notch step-by-step training, and world-class mentorship, and join a community of experienced real estate investing professionals.
The Pro Wholesaler VIP Program is designed for the modern entrepreneur to create a sustainable wholesaling and flipping business and to 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 Montana
In conclusion, wholesaling in Montana has the potential to be incredibly lucrative. Moreover, it can be an opportunity for you to familiarize yourself with your neighborhoods as well as help build your community.
With the steady influx and increase of people moving to Montana in an attempt to escape big city life, the opportunities for wholesalers will continue to grow. Even in spite of recent fluctuations in the housing market, Montana is rife with possibilities when it comes to building a wholesale real estate enterprise. 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.