Where EarlToms Would Start Wholesaling Real Estate if I Could Do It All Over Again
I have been in Real Estate for 15 years. I’ve been on the side that held a license and the side of wholesaling houses. There are vast differences between the 2 sects of the industry. I have learned an incredible amount in my time in Real Estate. The successes are not the moments that stick out though. They are the moments when I couldn’t help a homeowner. Those will likely be the moments you remember the most as well. So if I was to do it all over again where would I start Wholesaling Real Estate?
Absolute First Place I Would Start
This is without a doubt the best decision I have made to date in my Real Estate career. I started in Real Estate with value. I learned how to value Real Estate before I did anything else. This is the aspect that gives most wholesalers trouble. There isn’t an exact formula to determine the value of a house. I often times see people in groups ask for help in determining the ARV of a house. I shake my head in utter frustration with some of the comments I see from people. Use 70% of this or MOA should be this or that. The problem with those formulas and comments is you have to know where to start before you can arrive at the answer, i.e., 70% of whatever. They tell you where to end not how to get there. A small percentage of wholesalers can explain value intelligently. The rest talk over you instead of explaining to keep from exposing their lack of knowledge of valuation.
The value aspect is where you make your money. You will always get better deals if you know how to discuss the reasons why a property is worth $200,000 but their neighbors house is worth $300,000 with a seller. In turn, the same applies when you discuss with the investor why they can get $300,000 for the house. Without an adequate amount of knowledge in the valuation of Real Estate you will leave money on the table on both sides of the deal.
Image you didn’t have the knowledge on every one of your deals for a year that helped reduce the sales price with the seller. Let’s say you missed the actual cost of a roof and paid $5,000 too much for every deal. If you close 10 deals that year because you don’t understand the impact a roof has on the value of a house you left $50,000 on the table just on the buying side for the year. That’s a good annual salary for a lot of people.
There are a lot of online courses you can take to learn more about value and how it impacts decisions that buyers and sellers make in Real Estate. I would recommend the Appraisal Institute. You don’t have to have a license for most classes so therefore passing or failing doesn’t really matter. It’s better than reading a how to flip houses book. It will make you more money also.
An easy way to get initial leads is to drive around and look for houses that appear to be vacant. If you find a house you need to write the address down. An online search for the County, State GIS will give you the results for the property information at the courthouse. GIS is important so make sure you include it in your search for courthouse records.
You can search online for seller letter templates. If you find one that you like you can download it and use it to send the seller. They are easy to edit in Word or Docs. In the beginning you shouldn’t be afraid of saying that you are new. You might think it will cost you deals but the opposite will happen. A seller will either think they can take advantage of you or they will become relaxed thinking you are not a professional We Buy Houses scam artist.
The advantage you will carry by starting to wholesale houses now is because of the wholesalers that have come before you. There are too many wholesalers that make offers on every house, chase every lead, and promise the world to sellers without delivering. By giving yourself a solid foundation with a professional manner you allow yourself to somewhat instantly get more deals than other wholesalers due to how you conduct yourself and your business. Buyers and sellers will notice.
This is the scary part for everyone. Eventually you just have to go for it. You need to gather as much substantive information as you can prior to jumping in. You also need to understand this a business and if you are looking to get rich quick you are chasing fairytales. I don’t care what any guru says. That’s a hard reality to accept but it’s the truth. If you build a solid foundation with the nuts and bolts of Real Estate without rushing it you will have an opportunity to be very successful.
When you go for it remember to be honest with sellers. The days of having to lie to a seller and tell them you are buying are long over. You are an investor and have client’s that trust your judgements to supply them with houses. It’s that simple.
You will never have all of the answers in Real Estate. No one should think they should have them or ever will have them. You are a professional not perfect. It’s very acceptable not to have all of the answers. Surround yourself with people that will know the things you don’t is important.
Real Estate is not hard in terms of principles. We shop and compare every day in our lives. Houses are products too. It’s important to me to keep things simple in Real Estate because it was the way the old timers intended it to be. Over time people have somewhat messed up Real Estate.
If you look along the East Coast where English Colonies were settled you will see the remnants of perfect circles on the map for city limits. They didn’t have GPS, lasers, satellites, or fancy survey equipment in the 1700’s but they could survey a perfect circle for a city. They used steel & rope. That amazes me.
If you understand the meanings of deeds it continues to be simple. Quit Claim means you are quitting your rights to the property without making any warranties. A Warranty Deed, General or Special, is giving you a Warranty on the ownership of the property the same as a contractor would on work they do for you.
Now we have double reverse wrap around lease option deals. I’m exaggerating about double reverse but you understand what I am talking about with Real Estate. There are so many that don’t understand the impact of the decisions being made to close a deal it’s alarming and will likely be the cause of the next crash. What happens when the lease option tenant gets cancer or suddenly passes away and can’t pay the mortgage? Does the person you bought it from, who is still responsible for the mortgage, have to start paying it again? Does the option heirs sue because they thought they had a rightful claim to ownership of the house only to find out a wholesaler sold it to them illegally based on the clauses of the seller’s mortgage? Seller’s are just as guilty for these transactions but you see my point.
Whenever you start Wholesaling Real Estate I hope you will work with EarlToms to make the wholesaling industry more respectable and professional.