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How To Wholesale Real Estate In South Dakota

How To Wholesale Real Estate In South Dakota: Step By Step (2023)

real estate investing strategies real estate markets (states) wholesale real estate Jun 15, 2023

The best real estate investors know that wholesaling is all about taking advantage of the short-term opportunities in a given market, and no other market may have a greater opportunity for wholesalers than South Dakota. With an unemployment rate of 1.9%, South Dakota has the lowest unemployment rate in the country, which means the local economy has proven relatively resilient in the wake of the Fed’s decision to increase interest rates and slow economic activity.

The state’s high employment rate, compounded by a steady economy and affordable home values, promotes an active housing market. Local demand has resulted in homes lasting an average of 38 days on the market, down a remarkable 29 days year-to-date, according to the Federal Reserve Bank of St. Louis.

Residents are looking to buy, and anyone who knows how to wholesale real estate in South Dakota stands to benefit from an influx of activity. If you are interested in starting a real estate business in The Mount Rushmore State, our comprehensive guide is tailored to provide you with a deep understanding of the wholesale process, including:

 

What Is Wholesaling Real Estate?

Wholesaling is a real estate investment strategy known for generating rapid wealth. It offers a quick turnaround time, requires minimal capital, and has a low barrier to entry, making it an ideal starting point for those breaking into the industry for the first time.

Simply put, wholesalers act as intermediaries between sellers and buyers; they facilitate transactions that might not have otherwise occurred. In doing so, they acquire the right to purchase a property at a discounted price and then sell that right to an end buyer for a profit. The term "wholesaling" accurately captures the wholesalers' role in the border housing sector: acquiring properties below market value and transferring them to retailers (other investors) at fair prices.

Done correctly, the original owner receives their proceeds from the sale, the end buyer secures their next deal, and the wholesaler gets a fee relative to their involvement. All things considered, it's a win-win situation for all parties involved.

 Pro Wholesaler Program Free Training

How To Wholesale Real Estate In South Dakota (9 Steps)

Developing a step-by-step process, then following it consistently, and fine-tuning along the way can lead you to success in real estate wholesaling. Check out our in-depth video on how to wholesale step by step in 21 days or less!

 With that in mind, here is how wholesaling real estate in South Dakota can be made easier for investors who follow the nine steps outlined below:

  1. Partner With A Wholesale Mentor
  2. Learn South Dakota Real Estate Wholesaling Laws & Contracts
  3. Understand The South Dakota Real Estate Market
  4. Build a Cash Buyers List
  5. Find Motivated Sellers & Distressed Properties
  6. Put Distressed Properties Under Contract
  7. Assign The Contract To The Cash Buyer
  8. Close Deal & Collect Assignment Fee
  9. Double Close Or Wholesale When Necessary

how to wholesale real estate in south dakota step by step

1. Partner With A Wholesale Mentor

Anyone learning how to wholesale real estate in South Dakota must understand that plenty of resources are available. Of the resources made available to new investors, however, none are more beneficial than partnering with a wholesale mentor. Partnering with an experienced wholesaler offers a competitive advantage, invaluable knowledge and reduces risk exposure. More importantly, it’s the fastest way to make success habitual.

Truly great mentors have developed a reputation for shaping the next generation of investors. However, It is worth noting that the most beneficial aspect of working with a mentor isn’t the tangible tools they provide but the intangible characteristics they instill in their students. In particular, working with a mentor gives new wholesalers the confidence they need to get started, which is more valuable than anything else in this industry.

2. Learn South Dakota Real Estate Wholesaling Laws & Contracts

To succeed in wholesaling, investors must learn the local laws governing wholesaling and contracts. For the latest and most accurate information on the regulations investors must abide by, here’s a list of trusted resources:

  • South Dakota Real Estate Commission: The South Dakota Real Estate Commission offers the most relevant information on state and licensing laws, which many wholesalers will find suitable.
  • South Dakota Legislature: The website of the South Dakota Legislature offers investors a look into official state statutes, including those wholesalers may need to know.
  • South Dakota Realtors Association: While not legal professionals, South Dakota Realtors, and real estate brokers are familiar with the laws that govern their industry and may serve as an excellent resource for what can and can’t be done.
  • Local Real Estate Attorneys: To obtain accurate and reliable information on wholesaling laws, wholesalers in South Dakota are advised to consult a knowledgeable and qualified real estate attorney.

Staying informed about the ever-changing laws governing real estate wholesaling in South Dakota is essential, as they can be updated anytime. To ensure compliance with the regulations in South Dakota, investors are advised to consult a qualified legal professional.

3. Understand The South Dakota Real Estate Market

In addition to the laws and regulations governing investing practices in the state of South Dakota, wholesalers also must acquaint themselves with the status of the market itself. For a better understanding of the health of the South Dakota real estate market, here’s a list of trusted sources with the most relevant data:

4. Build A Cash Buyers List

A cash buyers list is an invaluable asset for wholesalers, streamlining the deal process. However, building a reliable buyers list requires effort and networking; it’s not something that happens overnight. Therefore, investors of every level need to put some time and energy into the following strategies to build a cash buyers list:

  • Conduct an email marketing campaign to reach a broad, targeted audience.
  • Share business cards during networking events to express intentions.
  • Create an engaging website with a solid call to action to generate leads.
  • Place well-designed bandit signs strategically to attract buyer leads.
  • Utilize online platforms like Craigslist to identify potential buyers.
  • Attend networking events and trade shows to connect with active buyers.
  • Implement a targeted direct mail campaign to reach potential buyers.
  • Leverage popular social media platforms to increase exposure and attract leads.

You can also check out this video on how to find cash buyers!

5. Find Motivated Sellers & Distressed Properties

To successfully wholesale properties, investors must identify motivated sellers. While various strategies have proven useful, wholesalers keep coming back to these tried and true methods:

  • Nobody knows a local market better than the Realtors and real estate agents who work within it. Therefore, networking with a real estate professional should reveal home-buying opportunities—now and in the future.
  • Partner with an agent or brokerage to gain access to the Multiple Listing Service (MLS). The MLS is home to the largest listings database, and each one represents an opportunity.
  • Attend foreclosure auctions held by institutional banks. Repossessed homes may be auctioned for a discount because banks don’t want to hold onto nonperforming assets.
  • The title chain of each property can be found at the local Recorder’s Office. Investors who know what to look for should be able to identify distressed property owners or those who may be motivated to sell.
  • Target distressed homeowners with a direct mail campaign that reveals your intentions to buy quickly with cash. Lists of motivated sellers and their mailing addresses may be purchased online.
  • Drive through neighborhoods and attempt to identify neglected homes. Owners who lack the capacity to maintain their properties may be more inclined to sell.

Read Also: Finding Motivated Seller Leads: Free & Paid Tactics


6. Put Distressed Properties Under Contract

After identifying a homeowner willing to part ways with an investment property for a discount, it is time to draft a real estate contract that facilitates a real estate deal. The agreement must give the investor the sole right to buy the home, preventing the owner from selling to anyone else.

It is crucial to understand that investors are not signing a contract to buy the home but rather to secure the rights to purchase it. This arrangement ensures that any transaction regarding the subject property must go through the investor.

7. Assign The Contract To The Cash Buyer

With the sole right to purchase the home, the investor must locate a cash buyer to assign the contract. In other words, the wholesaler must sell their right to buy the house to another investor before the contract’s terms expire. If the wholesaler has a properly curated buyers list, finding a buyer may be as simple as contacting the appropriate connections on the list. If for nothing else, other investors should jump at the chance to work with a wholesaler who already has property lined up.

When an end buyer is found, the wholesaler must initiate another contract: an assignment of contract agreement. As its name suggests, an assignment of contract agreement allows wholesalers to transfer their right to buy the home to the new investor. When completed, the wholesaler will give up their right to buy the house to the new investor for a fee.


Download Free Wholesale Real Estate Contracts Here (PDF)


8. Close Deal & Collect Assignment Fee

Once all of the documents are in place and signed by the necessary parties, it’s time to close the deal and collect an assignment fee, which begs the question: How much does a wholesaler deserve for connecting a seller with a buyer?

Typically, wholesalers charge anywhere from 5% to 10% of the property’s asking price. However, it’s not uncommon for wholesalers to charge a flat fee, ranging from $10,000 to $15,000. To be clear, there’s no universally accepted fee structure. Instead, calculating the assignment fee is flexible and depends on how much value the wholesaler brings to the end buyer.

9. Double Close Or Wholesale When Necessary

For one reason or another, some homeowners may not feel comfortable assigning a contract to an unfamiliar buyer, rendering the assignment of contract strategy moot. However, assigning the contract isn’t the only way to wholesale a property. Investors also have the option of conducting a double close.

As its name suggests, a double close requires the wholesaler to buy the home from the seller (usually with the help of a lender) and resell it immediately. The double close requires two independent real estate transactions, hence the name "double close."

Not surprisingly, most wholesalers would prefer to assign a contract. Double closings are inherently more involved, have closing costs, take longer, and require enough capital to purchase a house. That said, the double close is another way to facilitate a deal. The more ways wholesalers can complete a transaction, the more likely they will realize a profit.

 

how to wholesale real estate in south dakota legally

Wholesaling real estate in South Dakota is legal and lucrative, as long as local laws are followed. Investors simply need to prioritize transparency and integrity to comply with legality. The more transparent a wholesaler is about their intentions, the better.

Wholesalers must disclose that they mean to acquire an equitable interest in the property rather than the property itself when entering into a bilateral contract with the seller. That’s not all; investors must also provide a proof of funds letter and act as the principal buyer. Again, putting everything on the table is paramount, so don’t leave anything out.

Wholesaling off-market deals can be complex, and investors must consult a qualified real estate attorney to ensure compliance with specific market laws when engaging in wholesaling activities. Seeking professional guidance will help investors navigate the intricacies of the process and stay within legal boundaries.

 

How Much Do Real Estate Wholesalers Make In South Dakota?

The earnings of a wholesaler in South Dakota are influenced by several factors, including personal experience, market conditions, property sale price, and the willingness of the end buyer to assume the contract. Consequently, no definitive answer exists.

However, it is possible to estimate the potential earnings for an average wholesaler by assuming that wholesale fees range from 5% to 10% of the total property price. Considering the median home value in South Dakota is approximately $289,590 (as per Zillow), a 5% wholesale fee would amount to $14,479.50 for investors. That, of course, assumes the house being wholesaled was purchased for its actual market value. Investors must adjust their earnings potential for homes sold below market value.


Read Also: Wholesale Real Estate Salary | The (ULTIMATE) Guide


 

Do You Need A License To Wholesale Real Estate In South Dakota?

There is no need to obtain a real estate license to wholesale in South Dakota.

how to wholesale real estate in south dakota without a license

While getting a license is not a legal requirement for wholesaling, however, maintaining transparency is essential to ensure compliance with local regulations. Licensed investors must disclose their status and role as intermediaries in wholesale transactions.

 

Is Wholesaling In South Dakota Easy?

Wholesaling has proven it belongs in an investor’s toolkit. Few strategies can match the profit potential of wholesaling in the amount of time it takes to assign contracts, which begs the question: Is wholesaling in South Dakota easy? The short answer is no. The long answer, however, is entirely subjective.

Learning how to wholesale in South Dakota is inherently easier than learning how to rehab or scale a rental property portfolio. As this guide points out, wholesaling is generally less involved than most other real estate investing strategies. That said, wholesaling isn’t easy; it’s just easier relative to the jobs held by flippers or landlords.

Wholesaling requires a lot of hard work and attention to detail. Ironically enough, the process is made easier through hard work. Here at Real Estate Skills, we offer the Pro Wholesaler VIP Program, a world-class program that has seen thousands of beginners learn the business and make a lot of money along the way.

Best Wholesale Real Estate Course Virtual Wholesaling

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 South Dakota

Learning how to wholesale real estate in South Dakota can present substantial opportunities in the current market. However, it is crucial to acknowledge that success is not guaranteed. Aspiring wholesalers should approach the process with respect, emphasizing thorough due diligence at every stage. The nine steps above should give new investors a competitive advantage in a lucrative industry.

At Real Estate Skills, our team of experts is ready to provide you with the tools you need for wholesaling houses in South Dakota. We're committed to providing the knowledge, resources, and support you need to navigate a South Dakota wholesale successfully. So avoid common mistakes and maximize your returns by leveraging our expertise.


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