Are you eager to become a real estate investor but don’t have a large sum of money saved? You’re not alone! Many aspiring investors face this hurdle, but there are effective strategies to get started, even with limited funds. One such strategy is wholesaling, and it can be highly profitable. In this post, we’ll show you how you can earn $12,000 from a wholesale real estate deal, following in the footsteps of pros like David Lecko and Ryan Haywood.
What is Real Estate Wholesaling?
Wholesaling in real estate involves finding a distressed property, locking it in under a purchase contract, and then selling that contract to another buyer at a higher price. Essentially, you’re acting as the middleman between the property seller and the end buyer.
David created DealMachine, a software designed for investors focused on house flipping and wholesaling. The app has helped users close over 10,000 deals across all 50 states. His partner, Ryan, has been wholesaling since 2019 and has built a successful rental portfolio.
"If you want to become a real estate investor, but you don’t have hundreds of thousands of dollars in the bank, we show you how to get started with the strategy of wholesaling." - David
The Wholesale Deal Breakdown
Last week, Ryan secured another wholesale deal. Here’s the breakdown:
Initial Property Evaluation
Ryan visited the property alongside the seller to assess its condition. Using the DealMachine app, he was able to determine an offering price, repair costs, and the After Repair Value (ARV). Ryan stuck to using only the numbers generated by DealMachine to ensure a consistent approach.
Negotiation Process
Ryan's initial offer was $43,000, which aligned with the DealMachine recommendations. However, the seller had already scheduled a meeting with another wholesaler. Ryan cleverly asked, “Is there a number that would get you to say yes right now?” The seller replied that she would accept $50,000.
Knowing he had some room to negotiate, Ryan offered $48,000. The seller agreed but still wanted the other wholesaler to inspect the property. The next day, the seller accepted Ryan’s offer of $48,000.
Turning the Deal into Profit
Ryan’s team quickly moved forward by marketing the deal to their buyers' list. One of the responses came from a private money lender interested in the property. Here’s where the deal took an interesting twist: the lender proposed a creative trade. Instead of a straightforward purchase, the lender offered another property valued at $50,000 in exchange for the wholesale deal.
Creative Deal Structuring
Ryan evaluated the lender’s property, which was already renovated, rented, and generating $900 a month in rent. Structuring the deal creatively, Ryan agreed to sell the wholesale property for $50,000 and receive the rental property valued at $50,000, along with a $2,000 assignment fee.
Factors Contributing to a Successful Wholesale Deal
- Direct Engagement: Ryan was proactive by scheduling and attending property viewings immediately after receiving calls from potential sellers. Such responsiveness sets the stage for quick decision-making and establishes credibility.
- Building Rapport with Sellers: Ryan emphasized the importance of building a relationship with sellers. By immersing himself in the community and understanding the seller's background, he gained a level of trust that set him apart from other wholesalers.
- Using Technology effectively: The DealMachine app played a crucial role in providing accurate estimates, making the negotiation process more straightforward.
- Creativity in Deal Structuring: The flexibility to consider trades and creative financing solutions can lead to better deals. In Ryan's case, securing a rental property for a lower upfront cost proved more beneficial than a traditional wholesale deal alone.
- Effective Marketing: Quickly advertising the property to a targeted list of buyers ensured the deal got traction and interest, facilitating the unique trade arrangement that followed.
Insights and Takeaways for Aspiring Investors
Importance of Adaptability
Every wholesale deal can present unique challenges and opportunities. Being adaptable allows you to explore various options and find innovative solutions that benefit all parties involved.
Leveraging Technology
Tools like DealMachine can be invaluable for new investors, offering important data and automation to streamline the process. Having reliable data at your fingertips makes it easier to make informed decisions.
Building Strong Relationships
Success in real estate wholesaling often hinges on strong relationships. Whether with sellers, buyers, or fellow wholesalers, relationships built on trust can lead to more opportunities and smoother transactions.
"In the real estate investing world, your network is your net worth. Cultivating strong, trustworthy relationships can lead to quicker deals and more profitable outcomes." - Ryan
Investing Time Wisely
Spend significant time assessing the property and the seller's situation. Understanding the context can lead to better offers and terms acceptable to both parties. Balancing property assessment and rapport-building yields the best results.
Conclusion
You don’t need a massive bank account to get started in real estate investing. Strategies like wholesaling offer profitable opportunities even for those with limited capital. By staying proactive, leveraging technology, and building strong relationships, you can achieve substantial financial success. Real estate wholesaling provides a fast track to building wealth and financial freedom. Start your journey today and learn from the experts!
