This article was going to be about how to wholesale real estate with no money and/or bad credit but I quickly realized that there are hundreds of such articles out there on the interwebs. What I am going to write about is my plan for getting started with little to no risk.
I myself am getting into wholesaling with money in my bank account and a credit score nearing 800 so I wouldn’t have a problem getting a loan. But here is the kicker, I don’t want to use my money or get a loan from the bank. I want to “act” like I have no money and credit. The reason is that having money and credit I’m at great risk of ruining both! Think about it for a second…The person who has no money and bad credit could care less if they ruin their credit or lose all their money, CAUSE THEY HAVE NONE!
I don’t want to ruin the good credit I’ve built up for years and drain the money I’ve saved for a rainy day, so I’ve come up with the best way for me to get into investing and I wanted to share it with you.
Step 1: Select a “Farm area” where you want to concentrate on. This is usually the town you currently live in. Just make sure it’s not to large, maybe 5 mile radius at most.
Step 2: Get to know this market like the back of your hand. Go to all the open houses, talk to the Realtors and study the demographics. You want to know if it’s a town where young people buy their first homes or the elderly come to retire. It makes a difference because you want to know what the “bread and butter” homes are.
Step 3: Find all the active investors in your area. Stop by houses that are being rehabbed. Call all the For sale by owner (FSBO) and For rent by owner (FRBO) signs and definitely all the We buy Houses signs. Get to know these investors and what they are looking for. I will ad to this that I’ve run into many investors who really don’t know what they are looking for and tell you “anything that is a good deal.” Keep these people in mind but they are probably new just like you.
Step 4: Develop a marketing plan that can be done on the cheap, even it’s just driving for dollars. Hunt down all the motivated sellers, hand out flyers, leave business cards on tables and park benches. This is going to be the life blood of your success, you need to be able to find the deals. I struggle with this all the time and you will at first too. Just don’t give up and you will learn the little tricks of the trade for your market.
Step 5: Start bird dogging your leads to the other investors. This is a very valuable step and one where you will learn a great deal about what an actually deal is. You will also start earning some money! The idea is you are selling information to the wholesalers/investors. The following information is basically what you should be getting for any lead you find…
- Owner’s Name and Contact Information
- Asking Price of the house (if they will give it to you)
- Mortgage Information and payments
- Any Liens on the property
- Photographs of the house
- Most important, are they motivated?
The more info you can give the more you’ll likely get paid. You could get any where from $500 to $10,000 depending on the deal. Typically though you will only get paid if they close on the deal, so don’t go bugging for money until then. Because this is a credibility business, you usually take the other investor’s word that they will pay you when they close. If the do not pay you, take it as a lesson learned and NEVER deal with that scum bag again. His career will be short when word gets out.
Step 6: once you have built up confidence in your deal location abilities and you have gained a buyers list (read my other article about building a buyers list) you can start putting the houses under contract yourself and wholesaling them to other investors. This will mark the first time you will actually be taking ANY RISK what so ever and just look at how much experience you have, all the contacts you have made and all the money you have built up just from bird dogging.
But just remember…
If you have a good deal , the money and buyers will be there!
Hope this helps…
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