Do you wonder if there is a way to increase your wealth in an efficient manner despite some of the challenges in today’s marketplace? Do you dream of ways to make passive income and help you escape your traditional 9 to 5 job?
What if I told you there was a unique strategy within the real estate industry that could give you exactly what you’re looking for? Wholesaling real estate - especially in West Virginia - is exactly that strategy.
West Virginia is a phenomenal state to begin your wholesaling real estate journey. Over the past 10 years, the population has actually decreased from 1,852,994 people to 1,793,716 people.
However, though the population has decreased, the amount of owner-occupied homes relative to the rest of the country has increased. 74% of the homes in West Virginia are owned by the occupier - much higher than the 65% national average.
This means, when looking to flip or wholesale a house, you are catering to a buyer who generally wants to make the property a long-term home. When dealing with these types of buyers, the wholesaler will generally be able to fetch a higher price and a more motivated buyer.
People are drawn to West Virginia’s beautiful landscape, outdoor touring, and thriving communities. Even though the population hasn’t grown over the years, the large amount of owner-occupied homes makes the state a tremendously compelling place to wholesale.
In this article, we’ll discuss how to wholesale real estate in West Virginia and why it could be a great strategy for you to attain wealth and financial freedom.
Wholesaling real estate is the act of connecting homeowners, distressed property owners, and motivated sellers with cash buyers. Though there are a handful of variations to the strategy, being the ultimate matchmaker between a seller and an end-buyer is the most common form of wholesaling.
The process begins with sourcing the property and determining if it has the potential to appreciate. Then, the wholesaler will go under contract with the seller, find a cash buyer, and assign the contract over to the buyer. The wholesaler then charges an assignment fee and repeats the process with another property.
In the following nine steps, we’ll show you how to wholesale properties in the Mountain State. 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 West Virginia:
As a beginner, the first thing you’ll want to do before you dive into the West Virginia sub-markets is contacting a wholesale real estate mentor.
Mentors are professional real estate investors and wholesalers that have been around the block numerous times, know the best markets to spend time on and have navigated the closing process enough to guide you in the right direction so you don’t make careless errors.
Should you dive into Charleston, Morgantown, or Huntington? Mentors can help you choose and give you a leg up against your competition.
Then, once you’ve secured a mentor, it’s time to do some digging into West Virginia wholesale laws and contracts.
Learning the West Virginia real estate wholesaling laws and contracts is essential to becoming a successful real estate wholesaler. The number one risk in any transaction - before considering the price, Return on Investment (ROI), or any other financial metric - is the legality of the business. Learning the West Virginia laws will ensure you are always operating your business within the confines of local and state laws.
The first place you’ll want to look is the West Virginia Real Estate Commission (REC). The West Virginia Real Estate Commission is tasked with the responsibility of protecting property owners and the real estate market in the state. The commission’s power and duties are set forth in the provisions of this article - WV Code §30-40-7.
The Real Estate Commission offers two types of real estate agent licenses for West Virginia residents who work in a registered real estate brokerage: a real estate salesperson license and a real estate broker license.
Though there aren’t any specific laws pertaining to real estate wholesaling, you’ll want to familiarize yourself with licensing laws due to the inherent similarities between the two lines of business. Remember, wholesaling is the act of selling the equitable right to a contract to a new buyer. Brokering, on the other hand, is the act of marketing and selling the actual property itself.
Keep in mind, West Virginia also offers non-resident salesperson and non-resident broker’s license opportunities for those who hold a license in another jurisdiction. This could be a good option if you hold a license in another state but want to still operate in West Virginia.
Once you’ve fully grasped what you can and cannot do as an unlicensed wholesaler, you’ll want to also familiarize yourself with the typical West Virginia real estate contract. Here is a copy of a standard Purchase and Sale Agreement.
A great place to start understanding your market is city-specific realtor websites and networks. These sites not only list properties to help you get an idea of closing costs, open houses, and available inventory, but they also provide resources regarding financing, networking, laws, licensing, and regulations.
The following represents West Virginia’s larger professional organizations dedicated to the real estate profession. Each of these West Virginia associations is a member of the National Association of REALTORS (NAR) –
Once you’ve exhausted all possible Association of Realtors websites, next you’ll want to familiarize yourself with the surrounding market. West Virginia is a huge hiking state which means you might find some investment opportunities near some of the main tourist attractions.
Check out this interactive map of the thousands of trails you’ll find throughout the state. You could use it as a guide to help find nearby houses and communities that hikers would want to move to.
Next, you’ll want to build a cash buyer list.
A cash buyer list is a list of real estate investors with enough cash and liquidity needed to close a wholesale deal very quickly. These people prefer distressed properties and are willing to close all cash without any bank financing or hard money loans. Generally, a cash buyer list should consist of investors that can close within a few days' notice.
Speak to your mentor, he or she will be able to help you source the right cash buyers for you.
You can also check out this video on how to find cash buyers!
As a wholesaler, your most fertile ground for sourcing opportunities is with motivated sellers and distressed properties.
A motivated seller is a homeowner that needs to sell their house quickly. Usually, these individuals will forgo listing their property on the MLS or Zillow and instead sell the property directly to you, the wholesaler. These people are typically in a cash crunch and need to pay off debt or simply don’t want to deal with the headache of owning a property.
A distressed property is a property that is severely damaged and in need of some immediate repair. Typically, these properties can be found in foreclosure auctions or after a condition-altering event like a flood or fire. Distressed properties are perfect for wholesaling. If you can source a good property at a low basis that needs some repair, you can flip it over to one of your investors in a flash.
You’ve found a distressed property and want to determine the right price to offer – now what? It’s time to calculate the Maximum Allowable Offer – or the MAO.
The Maximum Allowable Offer is the maximum amount you should offer on a property to ensure you and your end buyer make a profit.
Maximum Allowable Offer = After Repair Value – Rehab Costs – Desired Profit – Wholesale Fee
Let’s dig in.
After Repair Value – also known as the ARV – is the price your cash buyer is going to want to sell the property for after he or she conducts the necessary repairs. Typically, the After Repair Value is calculated by surveying nearby properties around the block and estimating the house’s fair market value after you take it out of its distressed state. You’ll want to also sift through recent sales from Crexi, Loopnet, or Zillow.
Next, you’ll want to estimate the rehab costs to achieve your stated After Repair Value.
A good place to start would be to contact Lowe’s, Home Depot, and other local shops to determine the price of major materials. Then, you’ll want to have a few conversations with local general contractors and buildings to get their estimates.
Next, you’ll want to calculate the desired profit and wholesale fee.
The desired profit is the profit you believe a house flipper would want to make for this particular investment and the wholesale fee is your form of compensation.
Given the risks and challenges associated with flipping houses, it is not inconceivable to assume an investor would want to make at least a 25% or 30% profit (see 70% rule) on any given transaction. Obviously, the profits will vary based on the cost of the house, but as a rule of thumb, you should probably assume fix and flip investors want to make at least $20,000 on any given transaction.
The same applies to you and your wholesale fee. You can either calculate an appropriate fee based on the price of the house, or you could just issue a flat fee. On average, $10,000 - $25,000 per transaction seems reasonable.
Now, plug in the numbers. Let’s assume a $300,000 ARV, $50,000 in rehab costs, a $50,000 desired profit, and a $15,000 wholesale fee. Here is the MAO:
MAO = After Repair Value (or $300,000) – Rehab Costs (or $50,000) – Desired Profit (or $50,000) – Wholesale Fee (or $15,000).
So, your MAO is going to be $185,000.
If you can go under contract for $185,000 or lower, you are going to make a nice profit!
Read Also: Real Estate Comps: The (ULTIMATE) Guide
Once you’ve gone under contract with your seller, you’ll want to draft an assignment contract and assign the contract over to the cash buyer. Make your assignment contract rock solid. The last thing you want is to mess up a wholesale deal with a botched assignment contract.
Seek legal advice from a real estate lawyer and discuss with your mentor – they will be able to ensure your interests are protected throughout the entirety of the process.
Once you’ve drafted up the assignment contract it's time to close the deal. Have the cash buyer sign the document, give them the purchase agreement, and collect your assignment fee.
Usually, closings happen without many issues. Nevertheless, be available during the closing to answer any questions or provide any documentation that might be necessary to collect your fee and transfer ownership of the contract. Again, be sure to always get legal advice for every transaction.
If you’d like to move beyond a typical wholesale deal and increase your deal flexibility, you might want to consider double closing and wholetailing. Each of these strategies is connected to traditional wholesaling, but is still very unique in its execution.
A double closing is when you forgo an assignment contract entirely and instead go under contract with the cash buyer and the seller at the same time – with two separate purchase agreements.
For this type of transaction, you’ll have to get the title insurance company on board and potentially use transactional financing or hard money loans to get the deal done. Since you are facilitating two transactions at the same time, title insurance might have some pushback. So, be prepared to be more involved than usual.
The way it works is that you’ll first go under contract as both the buyer of the property from Seller A and seller of the same property to Buyer A, then you’ll then take both contracts over to the title company to facilitate the closing. The title company will then close on the purchase between you and the end-buyer and then use the funds to facilitate the closing between you and the initial seller.
It is a great strategy, but could end up being a bit more costly. You’ll have to pay closing fees and taxes twice because you are engaging in two separate transactions at once.
Separately, you could also consider wholetailing when necessary.
Wholetailing is a hybrid between a full fix and flip and a wholesale transaction. What you’ll do is actually take ownership of the property, do some high return on investment (ROI) renovations, such as cleaning, landscaping, and painting, and then re-list the property shortly thereafter on the market.
It is a great exit strategy because you are able to increase the value of the property by doing a handful of renovations and you can potentially access a larger pool of home buyers when you re-list the property back on the MLS. You might even find a buyer that wants to finance the transaction and is willing to pay a premium to live in the property.
Be sure to brush up on local rules, licensing requirements (if necessary), and the appropriate contracts to engage with. Though wholesaling is legal, there are a number of limitations if you aren’t licensed. As always, consult your attorney before engaging in any transaction.
In general, there is no limit to how much a wholesaler can make – whether in Charleston, WV, or any other city or state across the country. Usually, wholesalers will charge anywhere between $10,000 and $25,000 per transaction, but even those numbers are not exact and can be shifted up or down to your liking.
The deal flow will be heavily sporadic, but, on average, if you become a top wholesaler, it is not inconceivable to make well over $200,000.
No, you don’t need a license to operate a wholesale business in West Virginia. Though, it might be a good idea to get one.
Real estate brokers have access to a myriad of resources that could greatly benefit any aspiring wholesale investor. As a broker, you’ll get access to networking events, the MLS, and third-party report professionals (appraisers, engineers, attorneys, contractors, etc.) that could help you get more business.
For anyone interested in getting a license, see below for some of the requirements.
The real estate laws that govern the actions of real estate licensees in West Virginia are found in West Virginia’s Real Estate License Act (WV Code § 30 - 40).
The practice of real estate in West Virginia includes listing, advertising, procuring, or negotiating real estate transactions. If you do any of those things without a license you could get fined many thousands of dollars as stated in WV Code §30-40-22. So, as a wholesaler you won’t need a license, but here are the steps if you want to get one:
You can check out the requirements of a WV Salesperson license on the West Virginia Real Estate Commission website to learn about all the necessary items, requirements, and payment portals.
No, but it can be easier with the right coach, a mentor, and the proper training like we offer at the Real Estate Skills Pro Wholesaler VIP Program.
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.
The first few deals can be tricky, but once you have a few transactions under your belt you’ll be wholesaling smoothly in no time.
Wholesaling real estate is an extremely lucrative form of real estate investing. You won’t need much cash and the barriers to entering the industry are very thin. With the right steps, a mentor to guide you, and some grit and determination you’ll be able to wholesale properties successfully in no time.
Be sure to familiarize yourself with West Virginia law throughout and always make sure your interests are protected for all your real estate deals. Be scrupulous in the purchase price you offer and generally seek out off-market properties. Soon, if you’d like to take your wholesaling business to the next level, you could start working in the commercial real estate industry and start wholesaling multifamily properties and rental properties as well.
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.
Now, all you have to do is find potential buyers and get started with your real estate business. What are you waiting for?
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