How To Wholesale Real Estate In Oregon: Step By Step (2023)Apr 25, 2023
Sandwiched between California, Washington, Idaho, Nevada, and the Pacific Ocean, Oregon offers exceptional real estate investment opportunities in the highly desirable Pacific Northwest.
As of 2020, More than 4.2 million people call Oregon home. The state boasts a fast-growing, dynamic economy that includes burgeoning high technology and bioscience sectors.
Between 2010 and 2020, Oregon attracted more than 500,000 new residents, increasing the state’s population by more than 10 percent. Portland, the state’s economic and cultural capital, has one of the most in-demand real estate markets in the country.
The city has spent most of the past few years in a seller’s market, and property values have grown year over year. However, according to the latest statistics from the Portland Metropolitan Association of Realtors (PMAR), Portland’s available housing inventory has increased over the last 12 months, easing the pressure on buyers.
The combination of consistent demand and stable home values makes Oregon an ideal market for wholesaling real estate.
Read on for an in-depth guide on how to wholesale real estate in Oregon.
- What Is Wholesaling Real Estate?
- How To Wholesale Real Estate In Oregon (9 Steps)
- Is Wholesaling Real Estate Legal In Oregon?
- How Much Do Real Estate Wholesalers Make In Oregon?
- Do I Need A License To Wholesale Real Estate In Oregon?
- Is Wholesaling In Oregon Easy?
- Final Thoughts On Wholesaling In Oregon
What Is Wholesaling Real Estate?
Here is how wholesale real estate works In a nutshell, real estate wholesalers act as an intermediary between buyers and sellers. Wholesale deals are typically between highly motivated sellers and real estate investors or house flippers. These parties typically do not have the time or energy to pursue a real estate deal or perform all of the necessary due diligence themselves.
The transaction begins with a contract between the seller and the wholesaler. However, the wholesaler doesn’t actually purchase the property. Instead, the wholesaler assigns that contract to the eventual end buyer. In exchange for connecting buyers and sellers, the wholesaler earns an assignment fee from the end buyer.
A wholesaler's profit is typically negotiated on a deal-by-deal basis, often as a percentage of the total property price or a flat fee agreed upon between the wholesaler and the cash buyer.
How To Wholesale Real Estate In Oregon (9 Steps)
Here’s our proven process for wholesaling your first deals and beyond in the state of Oregon. 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 Oregon:
- Connect With A Wholesale Mentor
- Learn Oregon Real Estate Wholesaling Laws & Contracts
- Understand The Oregon 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. Connect With A Wholesale Mentor
As in any other industry, working alongside an established wholesaler can help you learn the ropes. By tapping into a mentor’s years of experience, you can save time and money by avoiding costly mistakes. Mentors can also walk you through your first deal and ensure that you are making a sound decision for your clients.
Not only can a wholesale mentor give you insight into the wholesale real estate business, but they can also help you grow your network- a must to succeed in wholesaling.
Wholesaling houses requires a sizable contact list of end buyers, real estate agents, and real estate investors. Finding a mentor will give you a head start in building your buyers list and making your first few wholesale deals.
You can find experienced wholesalers offering mentoring through formal mentorship programs.
2. Learn Oregon Real Estate Wholesaling Laws And Contracts
After connecting with a mentor, the next step is familiarizing yourself with the laws relevant to selling wholesale properties in Oregon.
Wholesaling real estate is a lucrative opportunity, but it also carries risk. Having a thorough understanding of state contract law will prevent any misunderstandings between you, the seller, or the buyer.
You can begin by searching the Association of Real Estate License Law Officials website, which covers the real estate license laws in every state. You can also check in with local REALTOR associations for more information.
Wholesalers operating in Oregon may do so under the exemptions outlined in ORS 696.030 – Real Estate and Escrow Activities.
Under this statute, wholesalers are legally permitted to sell their contractual rights to a property. In Oregon, wholesalers can carry this out through an assignment of contract. This means that the end-buyer purchases the stipulations of the property contract from the wholesaler, rather than the property itself.
To avoid any problems with state law, wholesalers must not perform any sales activities that require a real estate license.
You should also be mindful of state or municipal laws around property ownership, sale and transfer, insurance requirements, and any other regulations.
3. Understand The Oregon Real Estate Market And Lingo
Successful wholesaling requires a deep understanding of the local property market. You should devote considerable time to learning about the factors affecting Oregon’s real estate market.
Oregon has three dozen counties, which include urban, suburban, and rural communities. The three most populous counties, Multnomah, Washington, and Clackamas, are home to more than 1.8 million residents. Learning about the housing market in these areas is a good place to begin.
You can also focus on Oregon’s top three cities, Portland, Salem, and Eugene. Average home prices range considerably. While home prices in the Portland metropolitan area are nearly double the national average at more than $525,000, smaller cities such as Salem and Eugene remain relatively more affordable.
Start your research by identifying the most attractive areas. Look for towns with excellent school districts, universities, and dynamic job markets, as these tend to have the most lucrative real estate investment opportunities.
You can find much more specific information about the Oregon housing market by contacting local associations and commissions. You can browse through the websites below and gather more data:
- Oregon REALTORS
- Portland Metropolitan Association of Realtors (PMAR)
- Oregon Real Estate Agency (OREA)
- East Metro Association of REALTORS (EMAR)
4. Build A Cash Buyers List
So, now that you have a solid understanding of the Oregon real estate market, you can start to build a list of your ideal cash buyers. Cash buyers are highly motivated investors who have the liquidity to close deals very quickly.
These buyers tend to buy houses in bulk and are generally experienced in wholesale deals. They do not need financing from hard money lenders or banks.
Since wholesale deals require timely executions, having a list of cash buyers on hand can facilitate the transaction process. Since buyers have the cash up front, sellers often waive requirements like an earnest money deposit to proceed with the deal.
The best way to build a cash buyers list is by going where the potential buyers are. Attend auctions, networking events, and conferences and let people know what you do. You can also advertise yourself on popular forums like Craigslist and industry blogs.
The success of your wholesale real estate venture relies on your cash buyers list. The more investors you can add to your Rolodex, the better.
You can also check out this video on how to find cash buyers!
5. Find Motivated Sellers & Distressed Properties
Once you have a strong buyers list, you can start the search for motivated sellers.
Homeowners can be motivated for many reasons. Perhaps they are facing foreclosure and need to secure a quick deal. Others may be on the verge of paying two mortgages if they do not sell their current property. You can find motivated sellers through off-market listings, on the Multiple Listing Service (MLS), or through referrals from a real estate agent.
Distressed properties are also ideal investment properties for wholesaling. These include REO properties, which are owned by the bank through foreclosure. Since the bank is more interested in off-loading these assets, the properties are often sold way below market value.
You can also search through public records and look for signs that indicate a property may be distressed. This might include missed mortgage payments, foreclosure notices, or probate announcements. This can lead to amazing deals for wholesalers, who can then pass on the property to a real estate investor.
6. Put Distressed Properties Under Contract
If your research leads you to an interesting real estate deal, you can start the first phase of the wholesale deal.
Before making an offer, you will need to know a few numbers. The most important is the Maximum Allowable Offer (MAO). The MAO formula determines the most you are able to pay and still make your profit target.
Without an MAO in mind, you may make the rookie mistake of offering too high a purchase price. While the deal itself may be below market value, your end-buyer may not be able to turn a profit after investing in renovations. This mistake can cut heavily into your profits, and even delay the property sale.
You can calculate the MAO using this formula:
MAO = After Repair Value – Rehab Costs – Holding Costs - Desired Profit - Wholesale Fee
Here is a step-by-step explanation of each of these figures and how they are used to determine your Maximum Allowable Offer formula.
Calculate your ARV - Since the property is distressed, the sales price won’t reflect its true market value. You can calculate this amount by searching comparables on Zillow or Redfin. You should also consider how any changes to the layout will affect the home’s value.
Estimate repair costs - Most end buyers will renovate the home in order to resell the property and make a profit. Ask a professional to provide you with an estimate for the cost of repairing the property.
Calculate desired profit - Real estate investors look for deals that will net a profit between 10% to 30%. Consider this when you make your offer so you don’t turn any potential buyers off.
Include wholesale fee - Now, you can calculate your wholesale or assignment fee. Most wholesalers factor around $10,000 or more for their assignment fees per deal. However, consider your market, closing costs, the profitability of the deal, and other factors before adding your assignment fee to the final numbers.
Plug the figures above into the MAO to calculate your max price. Use the MAO as a guideline and try to secure the property for under that amount.
Now you are ready to make an offer!
If your offer is accepted, it is important to draft any purchase and sales agreements with the help of an experienced legal professional or a licensed real estate agent.
7. Assign The Contract To Cash Buyer
At this step in the process, your business with the seller is over. Now, you can now proceed with the assignment of contract from your ownership of the property forward to the buyer. Essentially, you transfer the obligations of the contract to the buyer.
However, you must make sure that the contract is assignable. Always work with a real estate attorney during this stage in the process to ensure that your agreements are above-board and crystal clear to all parties.
8. Close Deal And Collect Assignment Fee
Once the buyer signs on the dotted line and funds the deal, the transaction is complete. You can collect your assignment fee from the end buyer.
The buyer will fund the deal according to the terms you agreed on. The seller will receive the funds according to the terms of the original contract, and you’ll receive the assignment fee according to your assignment contract.
9. Double Close Or Wholetail When Necessary
There are a few other options for closing a wholesale deal.
Instead of making a contract with the seller and assigning it to the buyer, you can do a double closing. When this happens, you create concurrent purchase agreements with both the seller and the end buyer. In a double closing, a title company can hold the buyer’s funds in escrow and transfer the money to the seller. A private money lender can also fill this role.
You can also consider wholetailing. This combines some aspects of flipping houses and wholesaling. Rather than selling a distressed property to a cash buyer, you do some minor upgrades (not a full renovation) on it. Now you can market the property on the MLS to potential investors. This method provides flexibility and more time for the wholesaler to land a new buyer who may even get a mortgage on the property due to the minor repairs you’ve made.
Is Wholesaling Real Estate Legal In Oregon?
Yes, wholesaling is legal in Oregon. However, the state has strict laws regarding the practice. You must ensure that any transactions you execute as a wholesaler do not violate any state laws.
To ensure you are following best practices while wholesaling, make sure to familiarize yourself with Oregon real estate laws and statutes, such as can be found in the ORS 696 - Real Estate and Escrow Activities.
Technically, only real estate agents can represent sellers and buyers or sell properties. As a wholesaler, you are not selling the property itself- only your equitable interest in the real estate contract.
How Much Do Real Estate Wholesalers Make In Oregon?
Wholesaling properties is a very lucrative niche in the real estate market. The average wholesaler can earn around $10,000 from a single deal.
New wholesalers may close between 5 to 10 deals per year, resulting in a respectable $50,000 to $100,000 annual income.
As you gain more experience and grow your client base, it’s possible to make hundreds of thousands of dollars per month.
The really compelling aspect of wholesale income is that your potential to make big money is virtually unlimited. Even if you only close one deal a month at, let’s say, $10,000, you’re talking about a six-figure income for the year!
The most successful wholesalers hire team members to help them operate and scale their wholesale real estate businesses. Wholesalers at this level can earn millions in profit per year.
Do I Need A License To Wholesale Real Estate In Oregon?
Wholesaling in Oregon doesn’t require any licenses, certificates, or official qualifications.
However, earning a real estate license can be beneficial for wholesalers. For example, licensed wholesalers can access the MLS, a database of property listings only open to real estate brokers.
There are a couple of ways to earn a real estate license in Oregon:
- Follow the criteria set by the Oregon Real Estate Agency (OREA)
- Transfer a real estate license from one of the following states with an active reciprocal licensing agreement:
- South Dakota
Earning a real estate license will also enable you to expand your business and market properties to buyers directly. So while you do not need a real estate license to start wholesaling, it could be something to consider in the future.
Read Also: Can A Realtor Wholesale Property?
Is Wholesaling In Oregon Easy?
Wholesaling is not a form of passive income and not a source of easy money. If that were the case, everyone would do it. However, since there is no cap on what could earn through wholesaling, it is a very lucrative market for determined real estate entrepreneurs.
Becoming successful in the wholesaling business requires a little bit of capital, excellent communication skills, a strong network of real estate investors, and a deep understanding of relevant laws and regulations. This can be overwhelming for beginners.
Starting your career with our Pro Wholesaler VIP Program can put you on the right track. This program is completely online and you can complete it at your own pace.
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.
Taking advantage of our all-inclusive program puts you in a better position, as you will have access to step-by-step guidance on best practices in wholesaling. You will also have exclusive access to a national community of seasoned real estate professionals who can help you get your wholesaling endeavors off the ground.
Final Thoughts On Wholesaling In Oregon
Oregon’s hot real estate market is appealing to both seasoned real estate investors and beginners entering the wholesaling business. Learning how to wholesale real estate in Oregon can set you up for financial success.
When you’re ready to launch or grow your wholesaling business, go through these surefire steps. Do your market research, build your list of cash buyers, and find the properties that offer the right balance of value and investment potential. 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.
Join our training program and learn how you can get your start in the wholesale and house-flipping business with just an internet connection and a smart device.
Learn the laws, crunch your numbers, and do your due diligence. Closing your first few deals will take some legwork, but with the help of a mentor, you’ll become a wholesaling professional in no time.