Learn about Wholesaling Real Estate

Wholesaling real estate traditionally has been used to make fast money without having to purchase properties. The property is put under contract with the longest possible inspection period so the buyer (investor) can sell the property without having to put up a deposit or actually close on the house.

When we first started in 1975 investors were few and far between.  At that time, they were mostly focused on buying rental properties where eventually the rents paid off the mortgage and the houses were free and clear. The investor then had the option of continuing renting until sometime in the future when he “cashed out” all his accumulated properties and retired. The stories are legendary of 50 to 100 properties coming onto the market at one time.  Other investors then bought them in bulk and resold them to individual homeowners or other investors.

The advent of the wholesaler really became prominent starting around the early 1990’s when more and more people started to realize that real estate investing was not a mystery and properties could be bought with creative financing, including no money down. The rehabbing craze started to take over and rehabbing on weekends supplemented many incomes. But still the option to “flip” properties wasn’t yet as developed as today because the communication between investors was still in its very early stages.

Wholesaling as a true “profession” began as real estate investment clubs started forming around the country and investors with different goals of rehabbing came together with “flippers” or wholesalers. The wholesaler provided the product for the end-users or rehabbers.  The operative words were “It doesn’t matter how much you make, just flip a property and make money”. This was partially true but it fueled a new buyer enthusiasm that has not ended. Since the same people that were buying the “flipped” deals were gurus teaching the courses, they offered advice on how much a wholesaler should make. “Proper” or acceptable spreads for flipping properties, so as not to be ‘greedy’, were taught to be in the $1,000 – $2,000 range. As investors realized that the remaining spread could be huge, these spreads went to $5,000 –$10,000.  Today they are whatever the market will allow, but seldom in excess of $15,000.

The spread is determined by the purchase price, the After Repaired Value (“ARV”), and how much work is needed to sell it at the ARV. We have been wholesaling with an overall average spread of $32,000. Some of our wholesale deals have netted us over $75,000 on a property that we paid $110,000 for. About now you should be saying “WHAT!” and rightfully so. But, these are not isolated cases as we have learned to “buy right” as sell to a pre-qualified buyers’ list.  Many of these individuals we have worked with for years. If there wasn’t still plenty of profit left, they wouldn’t be buying these wholesale deals.

So what is the secret of making more money wholesaling? The first is to buy lower. That’s really simple and if you could do it you would.  What if you shifted your prospecting to non-conventional methods that brought you deals before the sellers went public with their intention.  These are the killer deals that happen even before the neighbors know the property has been sold. We developed over 50 ways to prospect to the secret markets where motivated sellers hadn’t yet gone public. Some of these we put under contract eight months in advance!

Secondly, how many wholesale deals have you been out to look at where you had to climb through a debris-filled yard and home of the former homeowner’s household items? If the spread for the wholesaler on one of these deals is, for example $8,000, he can easily double or triple that by hiring a cleaning crew to throw everything into a couple dumpsters.

If the cleaned-out property no longer looks so very bad, the wholesaler can paint and patch the premises and add another $10,000 to his wholesale price. But it’s not done yet because if the wholesaler works on his buyers’ list for retail buyers, he now has the option to go a little further and finish the property with a buyer in hand at a retail price. This simple strategy should make the reader an extra $5,000 minimum on any wholesale deal he does if he buys the property right in the first place.

So let’s look at the above example, the cost to clean out the property and lot is say $1,000, increasing the wholesale spread to $18,000. Patch and paint runs $2,000 (high) but adds another $10,000 to the spread for $28,000 profit minus $3,000 in repairs. The $8,000 original spread has now become $25,000. Ironically, there will be more buyers for the property in this condition than as a “Junker”. The next step is to take the property up to a retail rehab and sell it for another $20,000 more for an estimated rehab cost of say $7,000. So the end result could be as much as $38,000+.

change your life mentoring click button j 300x236 1I have heard all the objections about why it won’t work – hard money costs, investor’s time is too important, he doesn’t know how to do it, what if he can’t sell it, can’t estimate repairs (get the “Deal or No Deal” Software at www.ExcelRESoftware.com), etc. If you believe these objections, they will be true.

I have found that we average over $32,000 on wholesale deals and if we rehab them to the retail level we average over $61,000 net profit per deal. So would you rather do four (4) wholesale deals with $8,000 profits to equal one of our wholesale deals, or would you rather do eight (8) wholesale deals to make the same as one of our retail deals? This isn’t a trick question because the real answer is your decision.

To your limitless success,
Dave Dinkel

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.

Learn about Wholesaling Real Estate

Wholesaling real estate traditionally has been used to make fast money without having to purchase properties. The property is put under contract with the longest possible inspection period so the buyer (investor) can sell the property without having to put up a deposit or actually close on the house.

When we first started in 1975 investors were few and far between.  At that time, they were mostly focused on buying rental properties where eventually the rents paid off the mortgage and the houses were free and clear. The investor then had the option of continuing renting until sometime in the future when he “cashed out” all his accumulated properties and retired. The stories are legendary of 50 to 100 properties coming onto the market at one time.  Other investors then bought them in bulk and resold them to individual homeowners or other investors.

The advent of the wholesaler really became prominent starting around the early 1990’s when more and more people started to realize that real estate investing was not a mystery and properties could be bought with creative financing, including no money down. The rehabbing craze started to take over and rehabbing on weekends supplemented many incomes. But still the option to “flip” properties wasn’t yet as developed as today because the communication between investors was still in its very early stages.

Wholesaling as a true “profession” began as real estate investment clubs started forming around the country and investors with different goals of rehabbing came together with “flippers” or wholesalers. The wholesaler provided the product for the end-users or rehabbers.  The operative words were “It doesn’t matter how much you make, just flip a property and make money”. This was partially true but it fueled a new buyer enthusiasm that has not ended. Since the same people that were buying the “flipped” deals were gurus teaching the courses, they offered advice on how much a wholesaler should make. “Proper” or acceptable spreads for flipping properties, so as not to be ‘greedy’, were taught to be in the $1,000 – $2,000 range. As investors realized that the remaining spread could be huge, these spreads went to $5,000 –$10,000.  Today they are whatever the market will allow, but seldom in excess of $15,000.

The spread is determined by the purchase price, the After Repaired Value (“ARV”), and how much work is needed to sell it at the ARV. We have been wholesaling with an overall average spread of $32,000. Some of our wholesale deals have netted us over $75,000 on a property that we paid $110,000 for. About now you should be saying “WHAT!” and rightfully so. But, these are not isolated cases as we have learned to “buy right” as sell to a pre-qualified buyers’ list.  Many of these individuals we have worked with for years. If there wasn’t still plenty of profit left, they wouldn’t be buying these wholesale deals.

So what is the secret of making more money wholesaling? The first is to buy lower. That’s really simple and if you could do it you would.  What if you shifted your prospecting to non-conventional methods that brought you deals before the sellers went public with their intention.  These are the killer deals that happen even before the neighbors know the property has been sold. We developed over 50 ways to prospect to the secret markets where motivated sellers hadn’t yet gone public. Some of these we put under contract eight months in advance!

Secondly, how many wholesale deals have you been out to look at where you had to climb through a debris-filled yard and home of the former homeowner’s household items? If the spread for the wholesaler on one of these deals is, for example $8,000, he can easily double or triple that by hiring a cleaning crew to throw everything into a couple dumpsters.

If the cleaned-out property no longer looks so very bad, the wholesaler can paint and patch the premises and add another $10,000 to his wholesale price. But it’s not done yet because if the wholesaler works on his buyers’ list for retail buyers, he now has the option to go a little further and finish the property with a buyer in hand at a retail price. This simple strategy should make the reader an extra $5,000 minimum on any wholesale deal he does if he buys the property right in the first place.

So let’s look at the above example, the cost to clean out the property and lot is say $1,000, increasing the wholesale spread to $18,000. Patch and paint runs $2,000 (high) but adds another $10,000 to the spread for $28,000 profit minus $3,000 in repairs. The $8,000 original spread has now become $25,000. Ironically, there will be more buyers for the property in this condition than as a “Junker”. The next step is to take the property up to a retail rehab and sell it for another $20,000 more for an estimated rehab cost of say $7,000. So the end result could be as much as $38,000+.

change your life mentoring click button j 300x236 1I have heard all the objections about why it won’t work – hard money costs, investor’s time is too important, he doesn’t know how to do it, what if he can’t sell it, can’t estimate repairs (get the “Deal or No Deal” Software at www.ExcelRESoftware.com), etc. If you believe these objections, they will be true.

I have found that we average over $32,000 on wholesale deals and if we rehab them to the retail level we average over $61,000 net profit per deal. So would you rather do four (4) wholesale deals with $8,000 profits to equal one of our wholesale deals, or would you rather do eight (8) wholesale deals to make the same as one of our retail deals? This isn’t a trick question because the real answer is your decision.

To your limitless success,
Dave Dinkel

Frequently Asked Questions

1. What Should I Do If a Seller Ghosts Me?

If you feel you have been ghosted, act decisively and quickly. If you have tried texting and calling, it’s time to drive by the seller’s location. I always take the recorded Notice of Interest or Memorandum of Contract to leave, so the seller knows it exists. Go by at a time when you know they will be there and don’t be confrontational, just get the facts.

In our experience with new investors, the chances of losing a deal with no contract is likely over 85%. Verbal commitments do not apply in contract law; get everything in writing, especially contract changes.

Different ‘gurus’ have different opinions, but our experience is finding motivated sellers and then a buyer for your deal. Ideally, you should be finding motivated buyers from day one, so you are ready when you find a seller. Buyers are easier to find as you can see at https://davedinkel.com/products/

Prevention only comes about by thinking a Black Hat wholesaler will be coming after your deal. First, educate the seller that an unscrupulous investor may come by and illegally offer more money, have the seller sign your “Notice to Homeowner,” stating that he understands he cannot accept another offer.

There is nothing illegal about changing their mind, it is called seller remorse and occurs about 25% of the time. However, if they have signed your contract, it can’t be cancelled for any reason unless acceptable to the investor/buyer.

If price is an objection, you need to find out how important it is to sell fast and for cash. If the seller isn’t under a time constraint, has a money issue, or has a personal dilemma, he may not agree to the price you need. Offer to help move and build it into your price before you make your offer. However, never give the seller money; only pay the moving company, and only after closing (escrow with a closing agent). If fear is the seller’s issue, break it down into what the real problem is and answer their objections one at a time.

You can get to the root of motivation for a seller by asking a few questions. First, “Why are you selling?”, “How soon can you close?”, and Are you ready to sign an AGREEMENT today, if not, what do I have to do to make you comfortable?’. The answers to these questions will determine the truth about your seller’s motivations.

The best times to involve your attorney in your deals are to have him review your contracting, review the signed contracts from the seller and end buyer, have him open escrow and start the title work, negotiate with city or counties for lien reductions or mortgage payoffs with lenders, and to close the transactions.” Your attorney is not the adversary; it’s the opposing party’s attorney who is a deal killer, and having your attorney allows him to help overcome this obstacle.

The key to successful prospecting and bringing back deals that didn’t close is to follow up until the property is transferred in the public record. Some of our deals have been where the seller came back to us months and years later because they felt comfortable with us and not the other “pushy” investors who contacted them.

Your contract’s most important clauses are inspection period (as long as possible), when the EMD must be deposited if at all, your ability to access the property, any added clauses specific to the property that will protect you against seller claims later that were verbal only.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.