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Hey everybody!

Welcome back to another newsletter discussing the topics of real estate and financial freedom.

Today, I wanted to talk about the topic of wholesalers.

And no, I am not talking about Costco or Sam’s Club.

I am talking about wholesalers in the real estate industry.

To start off, wholesaling is the process of getting a property under contract and then assigning that contract to an investor for an assignment fee.

Here is how Rocket Mortgage describes wholesaling:

“Real estate wholesaling is a legal practice you can use to make a profit by conducting real estate deals without ever purchasing a property.”

Source: (https://www.rocketmortgage.com/learn/wholesale-real-estate)

Investors should build relationships with wholesalers to help with deal flow and to get better deals than Zillow offers.

The wholesaler will typically get deals under contract using the following methods:

-Direct Mail Marketing

-Driving for Dollars

-Door Knocking

-Hustle

Once the property price is negotiated directly with the seller and put under contract, wholesalers then send out the deal to their buyers list with a higher price than they bought it for.

This mark up in price is what is called an assignment fee and is how wholesalers make their money.

Wholesalers are typically looking for properties that are distressed or owners that are distressed.

For example, if a house has boarded up windows and super tall grass, this is a house that needs to be fixed and taken care of.

A good wholesaler will make a note of that property and try to get ahold of the owner through a phone call, post card, or by knocking on their door.

When it comes to the financial distress, some homeowners need to sell their home quickly due to various reasons.

Instead of them going through the traditional home selling process with a realtor where it can take awhile to sell the house and they will have to pay commission costs, they can sell it right away to the wholesaler.

When figuring out the offer price, wholesalers have to be sure that they leave enough “meat-on-the-bones” for the investor to still have enough room in the deal to make a profit or execute their business plan.

There is a lot that goes into finding the properties and getting them under contract.

However, good wholesaling companies can find dozens of these properties each month by using their systems and processes in place.

When I was first starting out in real estate, I would only look online for deals in places like Zillow.

Now that I am more experienced, I have realized the real deals are found “off-market” through strategies such as wholesalers.

Working with wholesalers should be one of your next steps to finding your next deal.

In conclusion, investors like wholesalers because they help them find the deal and wholesalers like their job because they are able to make a profit without having to deal with the renovations.

That’s all I have for today.

Have a great weekend everybody!

Also, if you haven’t already, be sure to follow me on Instagram: @realestatewithcaleb

Disclaimer: My newsletter should be viewed as educational content and should not be construed as actionable advice without consulting the proper professionals.