How To Wholesale Real Estate In New Mexico: Step By Step (2023)May 18, 2023
With a total area of 121,591 square miles, New Mexico is the fifth largest state in the nation by area but is ranked 36th in terms of population of approximately 2.1 million residents.
Although there are 100-plus New Mexico municipalities, the communities of Albuquerque, Las Cruces, Santa Fe, Rio Rancho, and Roswell appear to hold the most promise for investors as the state’s five most populous cities.
New Mexico’s population is growing—increasing about 3.6% since 2020. Its housing inventory is approximately 940,000 units with home values appreciating just slightly under 16% in the past year, about a point higher than the U.S. average. Just over 56% of residents own their homes.
With this ultimate guide, we’ll help you learn how to wholesale real estate in New Mexico, using our proven step-by-step process. Read on to learn more.
- What Is Wholesaling Real Estate?
- How To Wholesale Real Estate In New Mexico (9 Steps)
- Is Wholesaling Real Estate In New Mexico Legal?
- How Much Do Real Estate Wholesalers Make In New Mexico?
- Do You Need A License To Wholesale Real Estate In New Mexico?
- Is Wholesaling In New Mexico Easy?
- Final Thoughts On Wholesaling In New Mexico
What Is Wholesaling Real Estate?
As a real estate strategy, wholesaling real estate uniquely enables the investor—known as the wholesaler—to go under contract on a property while retaining the ability to assign the rights and obligations under that contract over to another investor, often referred to as the end buyer.
In wholesaling, only the contract rights are transferred. The wholesaler does not market the property itself. That’s an important distinction we’ll discuss in greater detail as we delve deeper.
The goal is to sell the contract for a higher purchase price than your original offer, netting a profit. The process starts with locating a motivated seller, often because their property is distressed financially or physically.
When extending the offer to purchase, the wholesaler includes contract language allowing them to assign the contract to another party, the end buyer. Once the contract is executed, the wholesaler reaches out to their circle of investors to find one willing to pay more than the original contract. The wholesaler then transfers the contract, including all obligations and rights, and collects their fee from the end buyer.
How To Wholesale Real Estate In New Mexico (9 Steps)
Here are nine steps that form a starting point for wholesaling in New Mexico, allowing you to customize as you go. Also, 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 New Mexico:
- Partner With A Wholesale Mentor
- Learn New Mexico Real Estate Wholesaling Laws & Contracts
- Understand The New Mexico 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
Engaging an experienced wholesaler, willing to provide a bit of advice or coaching, can help you avoid costly mistakes.
Whether you partner on a few real estate deals or work out some other arrangement, having a wholesale real estate mentor can give a big boost to your business if you’re a beginner.
2. Learn New Mexico Real Estate Wholesaling Laws & Contracts
Key to success in real estate wholesaling is understanding federal, state, or local laws that could impact wholesaling houses in New Mexico. It also pays to understand some of the federal laws affecting real estate, such as national fair housing laws, as well as the New Mexico Administrative Code and New Mexico Statutes that apply to real estate.
Your guiding principle when wholesaling in New Mexico should be to avoid any activity requiring a real estate license under New Mexico law unless you’re licensed. Make a misstep and you could face a fourth-degree felony charge, punishable by a $5,000 fine and up to 18 months imprisonment—the consequence for practicing real estate without a license in New Mexico.
There are three ways to legally wholesale properties in New Mexico:
- Assign rights to the contract to an end buyer
- Hold a double closing so both the original offer to purchase and your contract with the new buyer close simultaneously
- Traditional buying and selling, where you close on the contract before reselling it to another investor. In this case, you may want to make use of a private or hard money loan for the purchase.
We’ll further explain these strategies later in this guide.
Read Also: Private Money Lenders: The (ULTIMATE) Guide
3. Understand The New Mexico Real Estate Market & Lingo
Taking advantage of opportunities to network with local agents in the New Mexico community you’re targeting is a great way to pick up on local market jargon as well as housing trends. It’s also helpful to research the local MLS to get a better understanding of local markets.
The New Mexico Association of REALTORS publishes housing statistics regularly. Another useful source of housing data is the local Multiple Listing Services (MLS), a system created by REALTOR associations across the country, customized for local real estate markets. Association members add their local listings to the MLS. If you don’t have your real estate license, you can partner with an agent for access.
4. Build A Cash Buyers List
Since real estate wholesaling involves marketing the rights to the purchase contract to another investor—the end buyer—you’ll want to establish a list of cash buyers you can reach out to when you have a property going under contract. Investors flipping houses or looking for rental properties are good candidates for assigning contracts.
Here are some ways to grow your cash buyers list:
- Ask other agents. Reach out to local agents involved in real estate investing. They will have a number of investor contacts. Establishing a working relationship will gain you access to the MLS and their knowledge about distressed properties. Be sure to compensate agents appropriately.
- Check public records. Examine public property sales records occurring over the past several months or even the past year. When you find buyers who have purchased and then sold multiple properties in the same year, you’ve likely identified a flipper. If the sales records are missing critical contact details, consider using a skip tracer.
- Build a landing page to capture potential cash buyer contacts. You don’t need an entire website. Building an SEO-optimized landing page helps investors find you. Make it easy for them.
- Join real estate investor networking groups. In addition to traditional networking groups, put your social media platforms to work by joining real estate investing groups online. LinkedIn is known for its B2B focus, but Facebook offers a plethora of groups, some local and some national in scope.
- Network at local real estate auctions. Despite the popularity of online auctions, you’ll still find plenty of local in-person real estate auctions. These offer great opportunities to network with cash buyers who are there bidding on properties. You can ask for contact information as you hand out your business flyers or cards.
You can also check out this video on how to find cash buyers!
5. Find Motivated Sellers & Distressed Properties
Your ability to purchase properties below market value is at the heart of your success as a real estate wholesaler. You’ll find distressed properties hold the most potential for wholesaling because the homeowner is motivated to sell.
While you can use direct mail to build awareness, there are additional ways you can find motivated home sellers, including off-market properties:
- Death notices - Often, heirs want to sell as soon as possible without investing in repairs. In addition to your local paper’s obit section, probate attorneys may be able to tell you about heirs wanting to sell the property.
- Public records - When a homeowner falls behind on their property taxes, any tax lien on their home is public record. The same holds true for homes subject to public auction when the owner defaults on their mortgage. These properties can usually be purchased below market value.
- City and county officials - Homes with code violations are another class of distressed properties. Local government inspectors identify everything from health to safety violations. Like probate attorneys, they can be a source of leads.
- Bankruptcies - Just as with code violations, homeowners faced with the threat of bankruptcy will be motivated to sell. Public records are your best bet for finding these distressed properties. Bankruptcy attorneys are excellent sources of future business as well.
- Expired listings - Expired real estate listings can be found on the MLS. When homes are on the market for an extended period of time, maintenance can fall by the wayside. Some homes languish because they have partially completed renovations, resulting in an eyesore.
- For Sale By Owner (FSBO) - When for-sale-by-owner homes are sold “as is,” you’ll often find these homeowners are motivated to sell because they either can’t or won’t spend money on repairs or renovations. You can find FSBOs on sites like FSBO.com, Houzeo, Forsalebyowner.com, and Fizber.
6. Put Distressed Properties Under Contract
Once you’ve identified a potential investment property, you’ll want to make the numbers work before going under contract. Here are some of the calculations to use:
After-Repair Value (ARV)
The After-Repair Value, or ARV, is calculated by adding the property’s current value to the value of renovating it. The result is an estimate of the property’s value once it has been purchased and renovated. Completing this calculation puts you a step closer to figuring out an appropriate offer.
ARV = Property’s Current Value + Value of Renovation
Estimating Repair Costs
If you have experience, you may be able to estimate rehab costs yourself. Otherwise, you can hire a contractor to inspect the distressed property and provide a list of needed repairs and cost estimates.
Consider also getting the help of a software platform like Rehab Valuator. This program will help you analyze potential deals, regardless of whether your goal is wholesaling, flipping, or rehab and hold. It includes features useful in marketing properties to end buyers.
After you’ve calculated the ARV and estimated rehab costs, you’ll need to calculate the Maximum Allowable Offer (MAO). Calculating this formula helps guard against offering too much, which could put any profit at risk and may even make it difficult to find an end buyer at all. Without an investor to take over the contract, you could be forced to close on the property yourself.
Calculate the MAO as follows:
After Repair Value (ARV) – Fixed Costs – Rehab Costs – Desired Profit or Equity = MAO
Once you’ve determined the ARV, subtract the fixed costs required for purchasing and holding the property. Next, subtract the cost of renovation. You’ll then need to subtract whatever profit you hope to net. The result is the MAO—the maximum amount you should offer.
Once you have made the decision to move forward, your next step is to prepare the purchase agreement. As with other legal agreements, the wholesale real estate contract is a legally binding contract. If you don’t find an end buyer before the closing date, you will be obligated to purchase the property yourself.
Because it’s a legally binding contract, it’s best not to use a “one size fits all” approach using some online template. Most will be too basic for wholesaling. If you’re looking for a template to use as a starting point, engage the help of a REALTOR and access those available through the local MLS.
No matter what steps you take in creating your contract, you’ll likely find it helpful to review our article explaining wholesale real estate contracts.
7. Assign The Contract To Cash Buyer
Once you have an accepted contract, you’re ready to find a cash buyer. This is where the assignment agreement comes in. Use this contract to transfer your rights and obligations over to the end buyer.
As with your offer to purchase, you’ll want to ensure your assignment contract includes all the terms and conditions of the assignment.
8. Close Deal And Collect Assignment Fee
After you’ve executed the assignment contract with the end buyer, your last step will be to close the deal and collect your assignment fee. There are three ways to close a real estate wholesale deal in New Mexico: assignment of contract, double closing, and buying and selling.
If the assignment contract has been executed, you’ll collect your assignment fee. The other way to close the deal will mean collecting your fee at closing instead of beforehand. A double close means there will be simultaneous closings between the seller and the end buyer.
If instead you choose the buy and sell option, you’ll close on the property and then sell it to another investor. In this situation, you may need to look into hard money lenders to provide a bridge loan.
9. Double Close Or Wholetail When Necessary
Some homeowners won’t be comfortable with you assigning rights to the purchase contract to a third party and won’t enter into a contract with you. When this occurs, you may be able to opt for a double closing. This option enables the seller to sign the closing documents and get paid.
Immediately afterward, the end buyer then signs a second set of closing documents to purchase the property you’ve just closed on. You’ll net the difference between the first contract’s price and the contract you make with the end buyer.
Keep in mind a double closing will require you to close and take the title on the home before you then sell it to the end buyer. Depending on how the title company handles the two closings, you may need a hard money loan to cover the purchase short-term.
Wholetaling is also another great exit strategy you might want to consider.
In wholetailing, you’ll take ownership of the home, do some high return on investment (ROI) renovations like painting, landscaping, and other smaller projects, and then re-list the property shortly thereafter on the MLS. So wholetailing in a sense is a mix between a full fix and flip and a standard wholesale.
It is a great exit strategy because you are able to increase the value of the house and potentially access a larger pool of buyers when you re-list the property on the MLS.
Is Wholesaling Real Estate In New Mexico Legal?
If you are new to real estate wholesaling, you’re probably wondering if it’s legal in the state of New Mexico. The answer is yes, but you will need to ensure you don’t conduct your business in a way that requires a real estate license.
If you cross the line, the consequences can be severe. In New Mexico, it is a fourth-degree felony to practice real estate without a license, punishable by a $5,000 fine and up to 18 months in prison. Title 16, Chapter 61, Article 29 of the New Mexico statutes spells out state real estate license law, beginning with section 1, which prohibits acting as a real estate broker without a license.
Real estate wholesalers will also want to familiarize themselves with Article 32 within the same title and chapter, which pertains to real estate advertising.
For more on the legalities of wholesaling real estate in New Mexico, see our article, “Is Wholesaling Real Estate Legal in New Mexico?”
How Much Do Real Estate Wholesalers Make In New Mexico?
Since wholesaling is a type of self-employment, your earning potential won’t be constrained by a set salary. Instead, it will depend on the number of deals you’re able to do a year and the fees you negotiate with investors who become end buyers. As a real estate wholesaler, you can earn anywhere from $0 to over $1 million per year—and more.
Although it’s true you won’t be able to pinpoint what you will earn through wholesaling in New Mexico, you can use a benchmark of $10,000 earnings per deal. Under this scenario, you can expect to need:
- 5 deals to make $50,000/year
- 10 deals to make $100,000/year
- 20 deals to make $200,000/year
- 50 deals to make $500,000/year
- 100 deals to make $1M/year
Wholesaling offers you the opportunity for unlimited earning potential, reliant entirely on your ability to develop a proven route for growing your business. Once you’ve created your own formula for success, the sky’s the limit.
Do You Need A License To Wholesale Real Estate In New Mexico?
While there are certain activities legally restricted to licensed real estate professionals, there’s no need to hold a real estate license in New Mexico to wholesale real estate. With wholesaling, you’ll assign the rights and responsibilities of a real estate purchase contract to another investor, the end buyer.
This is legal but if you cross the line and market the property itself, you’ll run afoul of the law. Marketing and selling property is restricted to property owners or licensed real estate agents.
That’s not to say becoming licensed for real estate in New Mexico doesn’t have its advantages. For one, you’ll have full access to the MLS. You’ll also earn commissions rather than negotiating fees.
If you do become licensed for real estate in New Mexico, you’ll need to disclose your status as a licensed agent whenever making an offer to purchase. If you don’t, you could run into legal issues so it’s best to disclose this upfront.
If you don’t want to go to the time and expense of becoming licensed, you can always partner with a real estate agent experienced in real estate investing.
Is Wholesaling In New Mexico Easy?
Wholesaling in New Mexico isn’t easy, but it can be lucrative. Familiarize yourself with contracts and assignment agreements and be sure you understand the legalities involved.
Once you’ve gotten down the basics, you’ll be ready to build on that knowledge by reviewing articles and courses designed to build growth and success for your New Mexico wholesaling business. Check out our free online training to see how we help our students all across the country crush it in real estate wholesaling.
Seek out a coach or mentor. The investment is bound to be worth it.
If you’re serious about wholesaling, sign up for our Pro Wholesaler VIP Program. You’ll take your business to the next level with this program by learning how to:
- Earn 6 —and even 7—figure profits and dominate your market
- Consistently identify real estate wholesale deals
- Successfully wholesale homes with zero cash investment
- Network with a national community of successful wholesalers and investors
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 New Mexico
Wholesaling real estate in New Mexico offers you the opportunity for a comfortable lifestyle as long as you take steps to build success with your real estate business. Educate yourself about the market, engage the help of a mentor, and outline a step-by-step process. It’s within reach to earn a six-figure income, depending on the number of deals you close each year.
You’ll want to ensure you understand New Mexico’s state and local laws that impact real estate, as well as federal fair housing laws. It’s important not to engage in activities that legally require a real estate license.
If you build on a strong knowledge base of local housing trends and follow a process from start to finish, you’ll likely find success at wholesaling in New Mexico. Look for opportunities like our brand new free training to fine-tune your process.