In the past decade, technology has completely transformed the real estate industry. According to the National Association of REALTORS®, 52% of home buyers in 2019 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.
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?
In this Real Estate Skills exclusive article, 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.
I have personally used 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.
Virtual wholesaling is a lucrative niche in the real estate investment industry that has been getting loads of attention lately. We’ll cover our virtual wholesaling process in detail in this special article.
So, if you’re sheltering in place due to the latest global pandemic or if you fancy cashing big checks in your pajamas from home – virtual wholesaling might just be that ideal business model you’ve been waiting for.
We wrote this manual to help you get started on the path of making serious money in real estate on your own terms from anywhere in the world.
We hope you enjoy this Virtual Wholesaling Ultimate Guide! Use this menu to jump to your favorite section:
Virtual wholesaling 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, smart phones, 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.
To understand what virtual wholesaling is, we must first cover what traditional real estate wholesaling is.
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 fix 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.
In many ways, virtual wholesaling works exactly 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. At what steps during the home buying process are any of the parties physical presence required? Usually at the following points:
While contrary to popular belief, the truth is that 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.
When we break down step by step how virtual real estate wholesaling works later in the article, we’ll cover how to completely eliminate the need for you or your business to be tied to any particular local real estate market.
Yes, you can absolutely wholesale real estate virtually from the comfort of your home! Here's a picture of me closing a deal while at home during quarantine. Signing closing documents is a breeze when using digital signature apps!
When you calculate the amount of time wasted in traffic driving to an office for work or driving around 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. Although, you may be required to notarize documents if you're signing a promissory note or are the seller of the property.
As a virtual wholesaler, you can make anywhere from zero dollars to six and seven figures per year wholesaling houses. The amount of money you make through virtual wholesaling is largely dependent on two factors – the number of deals you close and 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, it is likely they will 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.
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:
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 in to the internet, you may need some additional software to make the process even easier.
Since there are many variables and scenarios that cannot be explained during the time we have in this article, it’s a wise idea to find a mentor or partner that 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.
The steps to virtual wholesaling are:
Finding cash buyers and building a list is the first step because you want to begin with the end in mind. Cash buyers are the people or companies that will purchase your wholesale properties.
These people are real estate investors that are looking to make a return on investment (ROI). How you virtually find, connect with, and build relationships with cash buyers can be achieved by using these strategies:
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.
Here’s a list of questions you can ask each cash buyer to establish their purchasing criteria:
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 properties that they want to buy.
Here are some of the best ways to find virtual wholesale real estate deals:
Notice a theme? All of these digital lead sources are and 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. That way, you can systemize your processes in order to master and scale them in order to grow your business without spending more time in it.
This is a crucial step in building a virtual wholesaling business machine that can make you very wealthy.
Make sure that when you put a property under contract, the language contains the following:
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.
The most common ways to close a virtual wholesale deal are:
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, 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 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.
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!
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 to where they are geographically.
No, you do not need any money to start virtual wholesaling real estate. 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.
In fact, 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 $XX,XXX in marketing on direct mail, generate leads, hire a team of virtual assistants, 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 in marketing.
No, you don’t need experience to start virtual wholesaling real estate. 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!
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:
Remote real estate investing and virtual wholesaling 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.
This article was written by Ryan Zomorodi, Chief Operating Officer at RealEstateSkills.com and President of RZ Holdings, Inc. Ryan specializes in the acquisition of distressed single and multifamily residential properties nationwide for wholesale, flipping, and rental. Connect with Ryan on LinkedIn and Instagram.
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