One small note before I begin, if you don't know how to play Solitaire, now is the time to go and learn how to play.
There was one time Tim and I were battling out our skills on solitaire. Almost to the end of the game where he was leading 2-1 against me, an idea popped in my mind. You see, in order to win the game, you've got to arrange the cards in order with red and black colors consecutively. Not to spoil the fun of learning the game for some of you, one little trick I often use when being stuck is bringing the turned in cards back down or exchange cards from different rows. It's hard, huh? I know, I know :), I bet even Einstein couldn't understand what I just said. So how about try to imagine this scenario:
Einstein, one of the finest minds on the planet, was alive and wanted to become a real estate wholesaler. So, he sat down alone and put his powerful brain to work. Pretty soon, he came up with a great mathematical theory of wholesaling real estate, announced it to the world, and waited for the world to beat a path to his door.
He didn't make a single deal.
What went wrong? Several things! First, he forgot to put people into his theory. Second, he acted alone and expected people to come to him. Third, he had no teams to get the word out about his really cool theory. Fourth, he had scary bad hair! (Just kidding on that one!)
My point: Nothing gets done in real estate without networking. Wholesaling is not a solo venture; it's a profitable team sport! Just like Solitaire, use different cards across the stacks to win. Be flexible!
So, if you're new to the wholesaling field or haven't had much success so far, your first order of business is to build and maintain an informal team to support all your efforts. Include the following members on your wholesaling team.
Real Estate Agents
It's simple. Realtors have access to the all-important Multiple Listing Services (MLS), and you don't (unless you're an agent yourself). Without MLS, you can't determine the value of a target property in comparison with other properties in the area. So, you definitely should have one or more realtors on your team in order to obtain access to this vital information.
Lenders
As a wholesaler, you don't need lenders yourself, but you do need to find them for your buyers to make it easier for them to buy the contracts from you.
There are two basic categories of lenders-private and "hard money" lenders.
Private lenders are individuals with money to lend. Always try them first because they can lend you money at lower rates than hard money lenders.
Hard money lenders are also known as "brokers." As the name indicates, their function is to act as go-betweens for private lenders and financial institutions like banks. Be aware that brokers are more expensive than private lenders; they charge upfront fees for their service and higher interest rates.
To net it out, develop good relationships with private lenders. Those relationships will keep expenses down and put more money into your wholesaling bottom line.
Title Companies
Title companies search property titles for you and provide you with vital information on those titles (ownership, liens, etc.). As a wholesaler, you need to find title companies that know double closing procedures and are willing to do them. If you're not familiar with the term "double closing," it simply refers to a situation where you buy and sell the property on the same day or date.
Be aware that title company requirements change all the time. Their guidelines get stricter or looser depending on market conditions and regulation changes.
Contractors/Repair Estimate Tools
Always choose professional, experienced contractors to do repair bids for your wholesaling business. Look for a combination of quality work and reasonable prices, not necessarily just the lowest bid. Remember, shoddy work is more expensive in the long run because you have to come back and fix it.
I also recommend that you use software tools like Instant Rehab Estimator which you can find at my brother Tim's website www.HotBargainProperties.com. It automatically calculates repair estimates, but isn't as accurate as an actual contractor bid. However, it's very useful because the estimator permits you to list out all of the repairs you think are needed. You can then email the list to three or more contractors, and they all receive the same information and fill in their prices for each item. That way, you can compare prices item by item and see who's offering the prices you want.
Inspectors
You don't require inspectors yourself for wholesaling. However, buyers do sometimes require inspections so you should have contact information available for them. Think of yourself as a service provider in this regard. The easier you make it for buyers (and sellers) to do business with you, the more likely it is that you'll make that wholesale deal.
So, what's the moral of my story? You don't have to be Einstein or real good at Solitaire to be a successful wholesale investor; you simply have to be a people person. Oh, and if you have Einstein's hair, definitely do something about that! You want to attract customers, not to scare them away!
