Wholesaling is a common practice among those who are just getting started in real estate investing. It involves finding a real estate deal on behalf of local investors and flipping the purchase contract for a profit.
Wholesaling is a great way for beginners to learn the basics of real estate investing without having to risk their own money or credit. But in order to be successful, you must locate a pool of real estate investors that may be willing to buy the property - also known as wholesale buyers.
Here is a look at how to build a list of potential buyers if you’re considering getting into wholesaling real estate.
A wholesale buyer is someone who is willing to buy a property that has been scouted by a wholesaler. The job of a wholesaler is to go out and find properties being offered at a significant discount, typically because the homeowner is either in foreclosure or because they are going through a serious life event and need to sell quickly.
The wholesaler will then get the property under contract, then turn it around and sell it to the wholesale buyer at a mark-up. If the wholesaler priced the deal properly, then the buyer will be able to purchase the property and still make a profit by rehabbing and selling it at market value. That allows the wholesaler to pocket the difference as a fee for helping the buyer find investment opportunities without having to do all the legwork themselves.
A wholesale buyer can be anyone willing to purchase the house from the wholesaler - but typically it’s a real estate investor who has the means to purchase the property and rehab it to meet market standards. So, if you want to try your luck at wholesaling, you’ll want to target local real estate investors who buy houses with the intention of flipping them.
There are many different ways that you can find buyers for your wholesale deal. You’ll have to find a strategy and process that works for you. Here are some of the most common methods wholesalers often use.
A bandit sign is a small, poster-sized sign that you’ll often see on lawns and intersections advertising different services. Many cash buyers and wholesalers post bandit signs that say “We Buy Houses” or “In Foreclosure? We Can Help” or something along those lines.
These signs are not only effective for attracting motivated sellers, but they can also be useful for finding buyers as well. If you post them all over town, you’ll likely get calls from a few buyers wanting to know what kind of deals you have available. So make sure you include your contact information such as your phone number and website on the sign, so they know how to get in touch.
Networking is always a good way to find leads, no matter what your business. Start by leveraging your personal network and see if anyone you know or work with is interested in buying an investment property. You could also join your local REIA or real estate investors association and pass out your business card.
This is a great way to connect with potential buyers because you already know that they’re involved in real estate. Also, be sure to join any other real estate groups in your local area. If you want to find qualified buyers near you, you'll have to meet them in areas they frequent. You should also check the local newspaper for listings. Many wholesale buyers advertise their services in the paper, which will make your job much easier.
Another way to find potential buyers is to connect with local landlords. Not all flippers sell the homes they renovate - some keep them to rent out to tenants. Plus, many real estate investors are involved in multiple aspects of the business and may own a rental property in addition to doing fixes and flips. Or, at least they may be able to point you to someone in your network who may be interested.
You can find landlords by contacting local real estate agents, calling for rent signs, or checking county records of the owners of investment properties in the area. A good way to find landlords is to check with the county auditor. You can use Zillow to pull a list of all the homes recently sold in the area. Then visit the country auditor and check their records.
There, you'll be able to determine the name and contact info of the new buyer. Look for any buyers that don't list their new purchase as their primary residence - chances are that means it's an investment property.
Read Also: Real Estate Marketing (The Ultimate Guide)
But not all real estate investors will make good wholesale buyers. Wholesaling is typically a quick process and requires the buyer to be prepared to close quickly. Wholesale contracts often expire after a certain amount of time. Plus, the homeowner may get restless and try to get out of the contract if you wait too long. So, if you have to wait for the buyer to obtain financing, it may threaten the deal. The best way to avoid this is to build a cash buyers list. Cash buyers will have the funds readily available, so there are no delays or obstacles that could kill the deal.
There are a few different ways you can find cash buyers. You can attend local property auctions and chat with other people in the crowd. Cash is often needed to buy a property at auction because the process moves very quickly, so chances are the crowd will be full of cash buyers.
You can also look for bandit signs that say "We Buy Houses Cash" or something similar and call the number listed - just make sure they aren’t other wholesalers looking for leads. You can also use any of the methods listed in the previous section but make sure the candidates are aware that you’re looking to work with cash buyers only.
You can also post about your properties on social media or craigslist. Posting an ad on craigslist is similar to creating a bandit sign in cyberspace. It has a section dedicated to real estate where you can post about your deal and field leads from interested buyers.
You could also try to find users who advertise themselves as real estate investors in their profile and try sending them a direct message. You may or may not get a response, but if you are persistent, you’ll eventually find a solid lead.
Real estate forums are another good place to look. Reach out to anyone who posts regularly on a popular real estate board and see if they have any interest in your deal or advice on building a buyers' list. Even if you don’t find any direct leads this way, you can often find a wealth of information that may point you in the right direction.
Many wholesalers who are just starting out choose to focus specifically on their own local area before branching out into other markets. But, that means you’ll need to find wholesale buyers who work specifically in your area. This may or may not be easy to do depending on the size of your city/town.
One method is to use the local MLS to look up cash sales in your area. You may need to enlist the help of a real estate agent if you don’t have access to the database. But this will help you find potential buyers who work in your specific area or neighborhood.
Another tactic is to attend local community events and trade shows and pass out your business card. Depending on where you live, the local REIA may cover a large territory and not your specific town. But if you attend a local meetup in your community, it will make it easier to find buyers who work in your area.
Read Also: How To Get MLS Access: The (Ultimate) Guide
But locating the buyers is only half the battle. You’ll also need to vet the buyers and build a solid list to be prepared for when you land a deal. Part of the balancing act of running a wholesale real estate business is establishing a pool of buyers before you look for properties. You likely won’t have time to start from scratch after the property is under contract.
So you'll need to do some scouting beforehand and keep a solid record of all the potential buyers you meet. Not everyone you come across will be interested or available to purchase the property you ultimately get under contract. So you’ll want to carefully vet each buyer you meet and keep the information organized and easy to access when the time comes.
Here is a list of questions you should ask each potential candidate:
You can adjust these questions and add more to meet your specific process. But this is the basic type of data you want to collect. You should also consider how you plan on organizing the data. You could just use a basic spreadsheet or you may want to invest in professional CRM software for wholesaling.
A CRM is a program that will have features that make it easier to organize data and reach out to leads that can help ease the process if you're compiling a large amount of information. It’s up to you to decide what works best. But the smoother you make this process, the easier it will be to find a buyer when you have a deal.
If you want to save yourself the time and energy of building your own list from scratch, there are ways you can get a buyers' list for free. One way is to search for websites that cater to wholesalers and real estate investors. They often provide free resources for investors, including a list of cash buyers along with their contact information.
You may be required to provide your email address or sign up for a newsletter. But this can be a good way to get a few free leads. Be aware that some of these sites may only offer a free sample and expect you to pay for any additional information. But this can be a good place to start if you’re stuck and don’t quite know how to find buyers for your wholesale deals.
What the Google Ninja Trick is, and how you find cash buyers online for free, is that you will use search keywords on Google that motivated sellers typically type in. And you're going to type those keywords in and as well include your location information into google in order to find cash buyers in your area and online. So to find cash buyers online for free, all you need to do is pretend you're a motivated seller yourself.
This strategy is what our company, Real Estate Skills, has coined the "Google Ninja Trick."
We have a downloadable resource that you'll be able to download with all the words that you can type in to find these cash buyers, all you have to do is search in your area. And then you'll be able to find these cash buyers in your area in literally one minute or less. It's that simple.
Download the Google Ninja Trick Resource For Finding Cash Buyers here (this includes all of the BEST Motivated Seller Keywords & Phrases you want to use to Find Cash Buyers)!
Also, check out this quick video that talks about how you can find cash buyers for free!
Another strategy you can use is to go to social media community groups like Facebook, for example, you can find a variety of real estate investor groups there. What you would be looking for is posts from people who would be looking for buyers.
These interested buyers would mostly send their email or contact details in a direct message or they would comment on that particular post. You can then use that information and scrape their contact details to create a buyers list of your own and put it in your own CRM to keep this data organized. This may take a little bit of time and dedication but it is a simple process to build up your buyers list for free.
Keep in mind that there’s a big difference between a wholesale buyer and a regular wholesaler. A wholesaler is only responsible for locating the deal and getting the property under contract. After that, they will turn it over to the wholesale buyer, who will retain ownership. The wholesale buyer is typically an investor who will purchase the property and renovate it for sale to local home buyers.
A wholesaler will never actually own the property, they will simply secure the purchase price and then flip the contract to the other investor. The wholesale buyer will take possession of the property and be responsible for the heavy lifting required to renovate it to market standards. So, while they are both involved in the same general process, the roles and responsibilities of each party are completely different.
The benefit of working with a wholesale buyer is mainly that you can earn a sizeable assignment fee without taking on as much risk. Wholesalers never actually purchase the property, which means you don’t need good credit or money in the bank to get started. Plus, you’re not responsible for the renovations or paying any carrying costs associated with owning the property, which brings additional risks. As a result, the earning potential for a wholesale buyer is much higher. But it’s more time-consuming and requires more work and careful planning as well.
Wholesaling is a great technique for beginners who want to learn about the process of investing in real estate but aren’t quite ready to jump into buying property. Working with a wholesale buyer allows you to gain experience from a seasoned investor while potentially earning large fees. Plus, it doesn’t require a full-time commitment, which makes it great for those with a nine to five job who want to earn additional income on the side.
Finding wholesale buyers isn’t difficult, but it does require patience and dedication. You may have to face a fair amount of rejection and try multiple methods to build a solid buyer’s list. Use the techniques discussed in this article to get you started. You’ll have to develop a system that works for you if you want to be successful.
So, you should try as many different methods as possible and decide what works best for you and your wholesale business.
The Real Estate Skills Pro Wholesaler Program is world-class and designed for the modern investor with fast-paced, engaging content. Check it out for yourself with our free online training to see why thousands of new and experienced real estate entrepreneurs are learning to wholesale and flip houses successfully with Real Estate Skills!
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