- Real estate investors agree that wholesaling can be an efficient way to make money.
- To be successful, you need to network with other wholesalers and build a list of potential buyers.
- Then, you’ll want to find a potential seller, which involves cold-calling property and land owners.
Todd Baldwin hasn’t yet found a more efficient way of making money than real estate wholesaling.
“As far as number of hours worked in exchange for dollars, I haven’t found anything better for me than wholesaling real estate,” the Seattle-based investor told Insider. And Baldwin has a variety of revenue streams, all of which earned him more than $1.5 million in 2021, according to documents viewed by Insider.
The way wholesaling works is, the person acting as the wholesaler enters into a contract on a home or piece of land, finds a buyer — typically a real estate investor — willing to purchase it at a higher price, and then pockets the difference in price once the transaction closes.
For example, in Baldwin’s most recent deal in May 2022, the seller wanted $800,000 for his property. He didn’t want to list it on Redfin or Zillow, deal with open houses and real estate agents, and lose money on the sale to agent fees. Instead, he wanted to do what’s called an off-market deal — and he reached out to Baldwin to execute it.
“We agreed that if I could sell it for above $800,000, I’d just make whatever the delta was: So if I sold it for $825,000, I’d make 25 grand,” explained Baldwin, who ended up selling the contract on the house for $900,000 and profiting $100,000. Insider verified the sale by looking at the seller’s statement.
Another Seattle-based real estate investor is earning six-figures from wholesaling. On his first deal, Ludomir Wanot profited $160,000.
Shortly afterwards, he decided to quit his job at Amazon to focus on wholesaling. In August 2020, he co-founded a wholesaling business, Evergreen Housing Network, with his business partner Vernie Gonzalo Dahl. Wholesaling remains his biggest revenue stream. In 2021, Wanot and his partner earned nearly $1 million in profit, according to documents viewed by Insider.
“We find people that want to sell their homes without the headache of listing it on the MLS or waiting months for their house to sell,” explained Wanot. “Once we get a property under contract, we source a buyer from our list of investors or home buyers and sell them the property directly for a higher price. Our business earns an assignment fee for each deal that we close, similar to how real estate agents earn commission for selling a house.”
Wanot’s 11-person team does about sixty deals per year and averages $35,000 per deal in revenue, he said.
It’s possible to do wholesaling on a smaller scale though. That’s how both Wanot and Baldwin got started, and they didn’t know much about the process at first. “I didn’t know what the heck I was doing,” recalled Wanot of his first deal.
To help other beginner investors get started, Insider compiled their advice and put together a four-step guide to wholesaling real estate.
1. Educate yourself on how wholesaling works
If you’re starting from scratch, you first need to understand exactly how wholesaling works.
“Reading or listening to audio books is the cheapest way to learn wholesaling,” said Wanot. “Before I start any venture, I like to learn as much as possible so I can minimize my chances of making expensive mistakes.”
His favorite wholesaling books include: “The Real Estate Wholesaling Bible,” “If You Can’t Wholesale After This: I’ve Got Nothing For You,” and “The Best Wholesaling Book Ever.”
You can also educate yourself on the topic by taking an online course or watching YouTube videos, said Baldwin.
2. Network with other wholesalers and build a list of potential buyers
The sooner you start building a list of potential buyers, the better. After all, once you connect with someone who wants to sell their property, you need to find someone to buy it.
“Join real estate investing groups on social media that are in your area,” said Baldwin, who’s a member of several Seattle-specific investing groups on Facebook. “Within those groups, I’ll post, ‘Who’s interested in buying properties off-market?’ And over the past three years or so, I’ve grown a legitimate buyer list of about 15,000 investors.”
Do a Google search to find a community in your zip code and start attending local real estate meet-ups. It’ll help you build your network and meet some of the active buyers in your area. Plus, you can connect with other wholesalers or people already doing what you want to do, and ask them how they got to where they are.
“Surround yourself with other like-minded people that have successfully built out their own wholesaling businesses, and learn tips and tricks that worked for them,” advised Wanot. He recommends connecting with other wholesalers through Facebook communities, sites like Eventbrite or Meetup, and wholesaling conferences, which typically happen a few times per year.
3. Drive through neighborhoods to find properties and a potential seller
When Wanot started wholesaling, he spent an hour each day driving through neighborhoods in his area and looking at properties.
“I wrote down the addresses of every distressed property,” he said. “After that, I used needtoskip.com to skiptrace all of the owners phone numbers and I called each one individually to see if anyone wanted to sell their home.”
He had a script written out that he used every time he cold-called someone. It was a tedious activity and, “a lot of them were really angry that I called,” he said. It took about 300 calls, but a landowner interested in selling his property finally picked up the phone.
“If you call anyone, make sure that the individual is not on the do-not-call list. It is illegal to call anyone on this list,” he noted.
Baldwin also cold-called when he was first getting started. He called up landowners, specifically those listing their properties “for sale by owner” (FSBO). You can find FSBO listings on Craigslist and Zillow, he said.
“I just picked up the phone and I started calling,” he said of his first wholesale deal in October 2021. It appears he had a bit of beginner’s luck: “It didn’t take me very long — five or six phone calls — to get someone who was interested in having me sell.”
You can also reach out to local wholesalers in your area and see if they need help with any of their deals, said Wanot. He used a Facebook group called WA Real Estate Investing to reach out to local wholesalers, and two of the people he contacted ended up needing help with their transactions: “I offered to source a buyer for their deals and they offered to split the assignment fee from the deal with me. I ended up selling one of the two homes and earned $20,000 on one transaction.”
If you have a bit of a budget, there are ways to outsource cold-calling, Wanot added. For example, “ringless voicemails can be performed through softwares like Roor that offer clients the opportunity to target large groups of people at once for a low cost. Once homeowners listen to the voicemail and are looking to sell their home, they can reach out to you directly through text or call.”
4. Sell the property
Once you’ve sourced a seller and have a property under contract, it’s time to sell it.
Ideally you’ll already have a list of buyers in your area who you can reach out to. To grow your list, “keep track of other investors or flippers who purchase off market houses,” said Wanot. “Use an Excel spreadsheet to keep their email and phone numbers in one place, and contact them when you have a property for sale.”
To market the property, start by simply recording a video of the space on your phone. Email it, along with a description of the property, to your list of buyers. That’s what Baldwin does: “To be efficient, I use an email template with links and photos. I just change the name of who I’m sending it to, and then I can send it out to the whole list.”
Of the thousands of people he reached out to about the property, about 100 followed up, he said: “Out of the 100 people that wanted more information, three people actually wanted to go take a tour of the property, so I gave tours to three people. I lined the tours up back-to-back-to-back, all in one day, to be as efficient as possible.”
One of those three ended up making an offer that Baldwin accepted.
As for writing the contract for the deal, Baldwin did it himself using LegalZoom, a site that allows you to create legal documents without necessarily having to hire a lawyer. “I found a template on LegalZoom that was exactly what I needed. It took me maybe 12 minutes to write the contract,” he said. “And I didn’t even pay for it. I used a free trial and then I canceled it.”
Then, he used the free version of DocuSign to execute the contract. “I wrote the contract for free on LegalZoom and I had the buyer sign it for free with the DocuSign, so, all in, my expenses were zero — except the gas that I spent to drive to the property for showings.”
If you don’t have an extensive buyers list, you can always joint venture with other larger wholesalers, said Wanot: “If you’re just starting out and haven’t yet built your credibility or your buyers list, another more experienced wholesaler can help you sell your property through their buyers for 50% of the assignment fee, for example. This will ensure that you can close on the sellers home and close your first few deals with a profit.”