Virtual Wholesaling Real Estate: A Step-By-Step Guide (2024)Jan 22, 2024
What if we told you about an emerging group of real estate investors doing deals remotely all over the country in places they’ve never been before, buying properties they've never laid eyes on, yet are making incredible sums of money to the tune of $10,000, $20,000, $50,0000, and even $200,000 per deal?
Virtual wholesaling is a lucrative niche in the real estate investment industry that has been getting loads of attention lately.
In this step-by-step guide, we’ll cover our virtual wholesaling process in detail. Use this menu to jump to your favorite section:
In the past decade, technology has completely transformed the real estate industry.
In 2024, 51% of home buyers found the home that they purchased through the Internet. It's also no surprise that more and more people are working from home now than ever before.
We’re going to pull back the curtain and reveal the techniques these long-distance real estate investors would rather keep a secret – we’re talking about a real estate strategy called virtual wholesaling
We at Real Estate Skills personally use this virtual wholesaling process to complete dozens of real estate deals in over ten states across the country – all from the comfort of my bayside condo in San Diego, CA.
[ Thinking about investing in real estate? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling. ]
What Is Wholesaling Real Estate?
Wholesaling real estate is a type of real property transaction where one party (the “wholesaler”) sells an equitable interest in a property to another investor for a profit – this is called a “wholesale fee.”
This equitable interest usually comes in the form of a purchase and sale agreement between the wholesaler and a motivated seller. It's then assigned to the end buyer before the wholesaler ever purchases the property! This is referred to as wholesaling by assignment of contract.
Alternatively, the wholesaler might choose to purchase the property using short-term, transactional funding or private money. After closing, they turn around and sell it to another investor immediately for a profit. This is called wholesaling by double closing or simultaneous closing.
Why would someone pay a wholesaler to find them properties without making any improvements to the home whatsoever?
You must realize that active real estate investors are constantly sourcing potential fixes and flips, rental properties, and development opportunities to make them money. Real estate wholesalers can be an abundant source of such opportunities.
Wholesalers serve an important role in the real estate investment value chain as "deal providers" of the industry. Real estate wholesaling rewards the finder of a deal with a fee for providing a lucrative opportunity to a willing and able real estate investor end buyer.
What Is Virtual Wholesaling?
Virtual wholesaling real estate is essentially the same concept as completing traditional wholesale real estate deals, except the wholesaler’s involvement is completely independent of their physical presence.
This is made possible using digital technologies such as the web, email, digital signatures, smartphones, and facsimile (fax).
The freedom of location that virtual wholesaling creates allows real estate wholesalers to operate in multiple markets regardless of their proximity to those areas.
Essentially, what we’re saying is that virtual wholesalers can flip houses in any real estate market, from any location in the world, without actually seeing the properties for themselves.
Can You Wholesale Virtually From Home?
Yes, you can wholesale real estate virtually from the comfort of your home!
When you calculate the time it takes to drive to an office or looking at properties, it certainly adds up quickly.
That's without mentioning the pollution from the vehicles on the freeway and all the money spent on transportation.
In a time where many people have been laid off, asked to stay at home, and cannot return to work due to social distancing measures and government intervention, many are looking for ways to make money from home.
Virtual wholesaling is one of the more unique and entrepreneurial ways that people have been taking their careers into their own hands and creating lucrative wholesaling businesses from home.
Using electronic signature applications such as Docusign and DotLoop, you never even have to leave your house to sign the documents. However, you may be required to notarize documents if you're signing a promissory note or are the seller of the property.
*In this Real Estate Skills student interview, Ryan Zomorodi (Co-Founder & COO of Real Estate Skills) speaks with Pro Wholesaler VIP Student Kevin on his inspirational success since being in the Pro Wholesaler VIP Program.
Learn how Kevin used the skills in this article to virtually wholesale a real estate deal from over 1,700 miles away.
How Does Virtual Wholesaling Work?
In many ways, virtual wholesaling works the same as traditional real estate wholesaling. Some of the most efficient and successful wholesale businesses that we work with all over the country are nearly one hundred percent virtual!
Not all real estate wholesaling businesses are designed to operate virtually. How virtual wholesaling works boils down to the systems, processes, and methods that are being implemented in one’s real estate business.
If you want to understand how virtual wholesaling works, think about a regular real estate transaction.
When you purchase a property, when is any of the party’s physical presence required? Usually at the following points:
Meeting Real Estate Agents
Negotiating With Motivated Sellers
Initial Property Walkthroughs
Physical Property Inspections
Getting The Keys
Contrary to popular belief, all of the above can be completed without the buyer’s physical presence.
That being said, most traditional buyers and sellers would not be willing to complete a real estate transaction without first seeing the property in person.
It’s largely a mindset shift, as the virtual wholesaling process is reserved for investors who take the emotion out of buying properties.
How Can You Start Virtual Wholesaling Houses?
You can start virtually wholesaling houses by following the step-by-step process we'll cover below. Make sure you have the following essential tools to wholesale real estate online:
Laptop or Personal Computer
High-Speed Internet Connection
Scanner or Document Scanner App
These are the most basic items you'll invest in to get your business off the ground. Once you have the right equipment to get plugged into the internet, you may need some additional software to make the process even easier.
Since many variables and scenarios cannot be explained during the time we have in this article, it’s a wise idea to find a mentor or partner who can teach you their business model, walk through the real estate contract and other paperwork you'll need, and hold your hand on your first few deals.
How To Virtually Wholesale Real Estate (Step-By-Step)
Find Cash Buyers & Build A Cash Buyers List
Make Offers On Properties Your Cash Buyers List Wants
Get Property Under Contract
Close The Wholesale Deal
Collect Your Wholesale Fee
1. Find Cash Buyers & Build A List
Cash buyers are the people or companies that will purchase your wholesale properties. They are real estate investors who are looking to make a return on investment (ROI).
Here are a few strategies you can find cash buyers for wholesale deals:
Purchase A Cash Buyer Directory
Set Up Bandit Signs
Build Your Real Estate Network
Leverage Relationships With Real Estate Agents
Find Local Landlords
Search Public Records & Classifieds Online
Utilize Social Media & Online Resources
The goal of virtual networking is to exchange your phone number, email address, and contact information to then schedule a live phone call with your potential cash buyer.
Since there are many real estate investment strategies as well as property types, you need to understand exactly what properties your cash buyers are looking to invest in.
Essential Questions To Ask Cash Buyers
Here’s a list of questions you can ask each cash buyer to establish their purchasing criteria:
What areas (zip codes, neighborhoods, etc.) do you like to buy in?
What types of properties are your favorite to buy?
How many deals per month can you handle?
What type of return on investment are you typically looking for on your properties once you renovate & resell them?
Do you purchase properties with your own capital, or do you borrow capital?
What types of properties will you absolutely not do? (new builds, cracked slabs, additions, cracked pools, septic tanks, death in property, etc.)
How quickly can you close on a great wholesale deal?
Do you also buy rental properties for your investment portfolio?
2. Make Offers On Properties Your Cash Buyers List Wants
Now that you’ve virtually networked with several serious cash buyers in your target market, it’s time to find deals and make offers on the properties they want to buy.
Here are some of the best ways to find virtual wholesale real estate deals:
Direct Mail Campaigns
Notice a theme? All of these digital lead sources are workable through just your laptop and cell phone!
While it’s good to test what strategies work best in your market, it’s important to stick with one or two of these methods until you find success. You can systemize your processes to master and scale them to grow your business without spending more time on it.
3. Get Property Under Contract
Make sure that when you put a property under contract, the language contains the following:
An inspection contingency that allows you to cancel the contract or renegotiate if you find any surprises during your due diligence.
The right to assign the contract to another party.
The most important things to understand when negotiating your offer contract are the market value of the property, the cost of repairing the property, and your cash buyer’s purchasing criteria.
With that information, you can analyze the deal to a point where you know your maximum allowable offer (MAO) – the highest price you can pay for the property.
Again, all of this can be completed with effective communication and the right deal analysis tools – all of which can be done virtually.
4. Close the Virtual Wholesale Deal
The most common ways to close a virtual wholesale deal are:
Assigning the Contract
Assigning the Contract
An extremely popular way to close virtual wholesale deals is through an assignment of contract. Assigning a contract simply means that the wholesaler who has the property under contract transfers their rights and obligations under that contract to another party. The wholesaler is the assignor and the end buyer is the assignee.
When a contract is assigned, the wholesaler charges a fee for bringing the end buyer a great deal. The seller gets the property sold at their agreed-upon price.
The end buyer gets a great deal to fix and flip, develop, or hold as a rental property.
Wholesaling through double closing simply means that the wholesaler actually buys the property, and then immediately sells the property to another buyer at a higher price.
This is also called a simultaneous closing or a back-to-back closing.
Since there are two separate transactions, the title company must produce two separate settlement statements and conduct two separate closings – usually on the same day. In some cases, the end buyer’s money is used to fund both transactions, so the wholesaler doesn’t put up a dime!
A third way to virtually wholesale a deal is by entity assignment. This applies when a wholesaler forms a legal entity, such as an LLC or Corporation, which then purchases and takes ownership of a property. Subsequently, the ownership of that entity is transferred to an end buyer for a profit to the wholesaler.
Entity assignment is best for deals where an assignment of contract is not allowed.
All three of these virtual wholesaling strategies can be completed over the internet, using electronic signatures, sending documents by mail, and communicating with people over the phone.
5. Collect Your Wholesale Fee
Finally, it's time to get paid for your virtual real estate wholesaling deal.
Cashing a sizable check when you’re doing real estate virtually is an exhilarating feeling! Depending on how you structure the real estate deal, you can get paid inside or outside of escrow.
Your wholesale fee can either be a line item on the settlement statement paid through escrow, or your end buyer can cut you a check when the deal closes. The way your wholesale check gets disbursed should be outlined in the wholesale contract you have in place with your cash buyer.
Enjoy the rewards of your hard work!
Benefits Of Virtual Wholesaling Real Estate
When you're thinking about getting started in virtual wholesale real estate, you should know the benefits versus other real estate investment strategies. They include:
Efficient Use of Time: How much time does it take to visit a property? How about five? Wholesaling virtually requires investors to make blind offers, that is, without seeing the property first.
Work from Home: If you prefer to work from home, you can set up a home office with all the tools you need to be a virtual wholesaler. You can chat with potential sellers, operate in different markets, and close deals in a variety of investment areas all from the comfort of your home.
No Geographic Limitation: Is your local market saturated? You can complete real estate deals in any market. When you learn the best virtual wholesaling system, you can scale your real estate wholesaling business and investment portfolio to multiple cities and states.
Wholesale Real Estate Online: You can operate your virtual real estate business 100% on the internet, using the right tools.
Build A Virtual Team: To scale, you'll want to leverage other people by building a team of real estate agents, virtual assistants, contractors, and other vendors to help you analyze and close deals.
Low-Risk High Reward: Since you won't be holding these properties, virtual wholesalers don't get affected by the market going up or down. No skin in the game means no risk.
How Much Money Can You Make Virtual Wholesaling?
According to ZipRecruiter, as of Q4, 2023, the average annual pay for real estate wholesalers is $53,805 nationwide.
With an average wholesale assignment fee of $10,000/transaction, it won’t take several deals to quickly earn a respectable income as a wholesaler.
Just closing one deal every two months, an amateur wholesale investor could make around $50,000 in their first year.
While not expected for beginners, it’s easy to find examples of wholesalers making $240,000-$600,000 by selling 5-10 wholesale houses monthly.
How To Make The Most Money Virtual Wholesaling
The amount of money you make through virtual wholesaling is largely dependent on two factors – the number of deals you close and the size of your wholesale fees.
Virtual wholesalers, as with real estate agents, are compensated according to the results they produce in the form of deals closing. While there is no “industry standard” when it comes to how much money you should charge for wholesaling a real estate deal, a typical virtual wholesale fee is around $10,000.
That said, wholesalers often charge fees in the amounts of $20,000, $40,000, or even $100,000 per deal. The wonderful thing as a wholesaler is that you set your wholesale fee.
The important question to ask here is: How large of a wholesale fee can you factor in the potential deal, while still providing an end buyer with an opportunity to make an acceptable return on investment?
This crucial question is what so many virtual wholesalers can get wrong – especially when they don’t know how to determine the after repair value (ARV), estimate rehab costs, or analyze a wholesale real estate deal.
When a wholesaler has no experience, mentorship, or guidance, they will likely spend a ton of time but not close any deals or make any money.
If you’re thinking about starting in virtual wholesaling, invest in yourself by hiring a real estate coach or completing a virtual real estate wholesaling course.
Do I Need A Real Estate License For Virtual Wholesaling?
Getting your real estate license is not needed for virtual wholesaling. Having a real estate license comes with benefits like credibility, access to the Multiple Listing Service (MLS), and the ability to represent buyers and sellers on transactions. That said, it’s certainly not required to build a remote wholesaling business.
The virtual wholesaling process we use leverages real estate agents all over the country to provide us with local market information to help make quick decisions. This is essential when purchasing properties at a distance.
Additionally, websites such as Zillow, Redfin, Trulia, and Realtor.com aggregate real estate listings from different areas all over the country. We use these sites to access newly listed homes, gauge the intensity of the market, connect with active Realtors, and interpret comparative sales data.
Remember, at the end of the day, we are operating as virtual real estate investors – not real estate agents. Real estate agents are licensed by a particular state, limiting them to conduct business within a specific geographical area. Virtual wholesale real estate allows us to participate in many deals across nearly all markets with little regard for where they are geographically.
Virtual Wholesaling With No Money
You do not need any money to start virtual real estate wholesaling. While you would be ill-advised to venture into wholesaling if you don’t have any money, we can speak from experience in saying you can find and flip real estate deals without investing a dime into the deal.
One of the most attractive aspects of virtual wholesaling real estate is that you can make money without spending anything on marketing!
While it’s not always the case, it’s the goal of most wholesalers to spend little money (if any) to close a deal and collect an assignment fee.
Most online gurus and real estate education courses that we've completed generally preach the same process: spend X amount of money in marketing then wholesale those leads.
If you follow those traditional wholesaling processes, then yes you will need money -- a lot of money.
Fortunately, the virtual wholesaling process that my team follows doesn’t require spending a dime on marketing.
Do I Need Experience To Start Virtual Wholesaling Real Estate?
No, you don’t need experience to start virtual real estate wholesaling. The single most important thing is to just get started. It is important to note that even the most successful real estate wholesalers started out with no experience.
Real estate is one of those industries where you gain experience by taking action. Taking action means getting started no matter your background or what your previous experience is.
That said, many end up spinning their wheels watching endless YouTube videos and house-flipping shows expecting to make things happen. In reality, they never make the right moves because they need a plan.
To start virtual wholesaling with no experience, we strongly recommend that you enroll in the best virtual wholesale real estate course you can find or work closely with an experienced mentor who has succeeded in what you’re trying to accomplish.
That way, you’re not making the same mistakes that most rookies inevitably make. Learn from others who have walked the path and you’re sure to find many shortcuts to reach your goals.
If you want to get started and learn more about the virtual wholesaling process that got me started in the business, register for our free training on how to find and flip houses in 45 days or less!
Final Thoughts On Virtual Wholesaling
Virtual wholesaling real estate shattered my perspective about what’s possible in terms of personal business achievement. From a young age, I’d always wanted to build businesses and make a lot of money, but couldn’t manage to get any of my startups off of the ground.
Virtual wholesaling allowed me to take my ambition and channel my energy into a tried and true process, while also giving me the lifestyle and flexibility I craved in a career.
At Real Estate Skills, we've tried all the strategies under the sun and feel like we’ve finally cracked the code when it comes to how to succeed in this business.
In the digital age we live in, there’s never been a better time to become a virtual wholesaler. Trends in technology and big data will continue to make it easier to wholesale deals online in locations afar.
With relatively low risk and plenty of upside, what do you have to lose? If you think you have what it takes to be successful in this business, go all in on virtual real estate investing. You might see how quickly your life can change for the better.