How Does Wholesaling Real Estate Wholesaling Step By Step

How Does Wholesaling Real Estate Work Step by Step?

If you want to understand how wholesaling real estate actually works, this episode breaks it down step by step in a simple way that makes sense.

You will learn how wholesalers find motivated sellers, get properties under contract, connect with cash buyers, and make money by putting deals together. This episode is great for real estate investors, wholesalers, realtors, and beginners who want to understand the process from start to finish.

If you are tired of hearing people talk around wholesaling and want a clear explanation of how the business really works, this episode is for you.

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Transcript

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Welcome to the Real Estate Wholesale Deer Room. I am your host, Ebony Beacole, and in this particular episode, I am going to be talking about how wholesaling real estate actually works, step by step. And I'm going to get straight to the point. Number one, you need to find a motivated seller, right? You're looking for a property owner who wants to sell fast, often because of stress, repairs, tenants, probate, divorce, foreclosure, tax problems, or a vacant property. These sellers usually care about speed and convenience more than getting every last dollar. Number two, talk to the seller and understand their situation. See, this is what you need to find out. Why they want to sell. And to be honest with you, you also want to ask them do they have any existing liens on a property that they are aware of? Of course, you're going to do your due diligence, but this just gives you an idea of how you're going to potentially negotiate. All of this is important because, see, wholesaling is really about solving a seller's problem. Number three, you want to run the numbers. Before you put anything on a contract, you need to know exactly whether it's actually really a good deal. So you're going to be looking at the property's current value, if the after repair value, what that looks like, what the repair costs are, the comparable sales, and make sure when it comes to your comparable sales, they're within a one-mile radius of one another. And they have to be of similar type. Meaning, if this is a two-unit um brick building with a basement that's above ground, and you're trying to compare it to a four-unit brick building, that's not going to fly, right? But in reverse, the four-unit brick building can't compare to the two-unit brick building if that two-unit brick building is giving you the value that you need. So just remember that. Now, you also need to look for outside of the comparable sales what an investor would likely pay for this property, right? And that's why you need the comparables. Whether there's room for your wholesale fee, that's important. Because if you're selling a property for $150 and the numbers are tight based upon you getting the scope of warps and everything, and what the comparables are, you may not have enough room for the wholesale fee. So I just take that into consideration. You're not getting into wholesaling because um it's just fun. You're not getting into wholesaling because you know it's cool. No, you honestly are getting into wholesaling because you want to make money. So of course, those numbers need to make sense, but it also should be a reason because you enjoy working with people, you enjoy numbers, you enjoy negotiation, you enjoy marketing, you just enjoy just life as a whole. And I promise you, wholesaling, you know, just working with real estate investors, it really is a lucrative and rewarding business opportunity, but it's really up to you. So just make sure your numbers work for you and work for your real estate investors. Number four, you're gonna put the property on a contract. You and your sellers sign a purchase contract at a price and terms that leaves room for an investor to step in. But you want to make sure that when you're um signing this purchase offer, this purchase contract, it is saying ebony b co and catch word is and or assignees. So you are the assignor assigning the property over to your assignees. As long as your name is on that contract, that property for that quick second, that contract belongs to you, which means you have the right to assign it to one of your partners. That is why it's called and or assignees. Okay, so remember that. At this point, you are not necessarily buying the property yourself, but you are securing the right to buy it under that contract. Number five, find a cash buyer or investor. Now you take that deal to an investor who wants to buy properties for rental income, fix and flip, the bird method, or just simply resell it. This buyer could be a rehabber, a landlord, a cash investor, a small local investor, an investment group. See, here's the thing: when it comes to assigning the contract, building relationships with your investors is extremely important, or at least getting your name out there, whereas your name becomes reputable, right? Number six, you want to assign the contract. So instead of closing on the house yourself, you assign the contract rights to that investor for a fee. So, for example, you get the property under contract for $100,000. The investor agrees to buy that contract for $111,000. Your assignment fee is $10,000. That fee is now yours. That is how you're going to get paid that $10,000 assignment fee. Now, $10,000 is not a guaranteed fee, it's not a must fee, it's not the fee that you have to charge. Your assignment fee is your assignment fee. So, for an example, if the numbers make sense, if your assignment fee was um $50,000, that can happen. So you decide to put a property under contract for $100,000. That seller decides that they want to go ahead and buy it, or that investor decide they want to buy it for $150,000. Guess what? That's $50,000 that you just made on that property. And it's the quickest $50,000 ever. So the more you do this, the more you will get paid. And this will really become a true hobby and a passion for you. People have fun and make money off of things that they love doing. So make sure that this is your hobby. This is your passion that you've turned into a lucrative business. Number seven is you go through title and closing. Title Company or Closing Attorney handles the paperwork. Make sure title is clear and closes the transaction. And when I say make sure the title is clear, is because one of the questions you are going to ask that seller is do you have any liens on this property? It could be um mechanic liens, it could be water bills, it could be taxes, it could be anything like that. Sometimes they'll tell you, sometimes they want. So, but it's up to you to do your due due diligence, right? Now, when it comes to a seller, a lot of times seller have an attorney and they have a title company. Not all the time, they're gonna have an attorney. So another person you want to build a relationship with, honestly, is title company. That's really important because that is where that deal is going to go ahead and close. Once the deal closes, your assignment fee is paid out. So the title company or closing attorney handles the paperwork. Make sure the title is clear and the closes and it closes your transactions properly because, like I said, you do want to get paid. Number eight, you want to go ahead and collect the profit. Your profit. If everything was structured correctly and the buyer closes, you receive your wholesale fee, your assignment fee, that $10,000 or that $50,000 or more. This is the basic wholesale model. Simple example. A distressed seller wants out of a property fast. You agree to buy it for $120,000 because it needs work. You know an investor will still see value in it at $135,000. You put it under contract at $120,000. Assign the contract to the investor for $135,000. And you are able to make $15,000. So what wholesaling really is, is the wholesaling is not magic. It is lead generation and seller communication, deal analysis, negotiation, contract control, investors networking, problem solving. You are the solution solver. You are not just finding houses, you are finding opportunities and matching them with the buyer. Now, when it comes to what wholesalers, a lot of new wholesalers get wrong, a lot of people think wholesaling is easy money, but it's not, right? You still have to know how to talk to the sellers, how to estimate the repairs, how to analyze a deal, how to build a buyer's list, how to understand your contracts, how to follow your state laws. This is why some people get excited about wholesaling, but never close a deal. They chase the idea without learning the business. This is what I need you to remember. Wholesaling real estate works like this: you find the seller, you analyze the deal, get it under contract, you find an investor buyer, assign the contract, close, and you get paid. That is the process. So, with that being said, if you are a real estate investor, this is where you're gonna continue to learn how to find more deals and move faster. If you're a wholesaler, this is where you're gonna level up so you can close bigger deals and build big buyers lists. If you're a realtor working with real estate investors or wanting to tap into the investment side of real estate, this right here, this podcast, is where you're gonna go ahead and grow. So, with that being said, make sure you subscribe, stay tapped in, and don't just listen. But I need you to apply everything that I am doing and going to teach you. If you're ready to take the next step in trying to wholesale or structure your deals, get funding line up, or build real real estate relationships in this space, go ahead and connect with me directly by sending me an inbox message or scheduling a one on one session with me. Let's turn your deals into money. Let's turn the knowledge that you've made into more deals. This is Ebony Biko with the Real Estate Wholesale Deal Room, and we are just getting started.