On this post, we’ll talking about how to whole houses with no money. I received a question about this topic and I want to answers it. Here is the question…
“How do you get it under contract with out buying the house don't I need money to get it under contract?”
First of, let’s review What is a wholesale house?
It’s a house available to be acquired at less than it’s fair market value. The idea of “fair” goes out the window when there is distress. Fair would be to get rid of the distress at any cost.
To wholesale a house means to secure an equitable interest in the house at a price lower than the after repair value of the house minus the cost of repair.
It’s a profitable real estate investing strategy and anyone can start this business model even with no money to buy the house.
The value in the transaction is not in the actual money that exchange hands. Anyway, it’s all electronic wiring. But beyond that…
The actual value is in helping a distress owner get rid of a distressed property. So why would the owner of a house allow you to buy their house for less than market value with no physical cash in hand, then turn around and sell it for a higher price.
It’s simple. It’s because #1 - they are highly motivated to get rid of the property because of their personal life events.
Sometimes, a home owner simply don’t have the time to be fixing or staging a house for retail market. May be they have a bigger fish to fry in other areas of their lives.
So to answer the question, a motivated seller is willing sign a contract just for the hopes of getting rid of a particular pain attached to owning the house.
As a wholesaler, all you should ever offer in earnest deposit if they insist is $10. If they want more, they are not motivated.
What if you don’t find a cash buyer quick while wholesaling a house?
There are 2 possible reasons for that.
1. You are offering too much for the house as wholesaler.
2. You are not marketing the house to the right group of cash buyers There are 2 types of cash buyers; the ones that have cash in the bank and those that don’t.
So… it all comes down to motivation. Identify the actual motivation and use it as a reminder when you run into trouble or hiccups. If that doesn’t work, your seller is not motivated.
If someone is in pre-foreclosures and actually pick up the phone to call, it’s a nice teaser. It’s now your responsibility to identify the motivation and position your solution as a private investor to replace their pain.
How to Wholesale a House STEP by STEP
STEP 1 - Market to distressed owners
STEP 2 - Visit the property and make an offer that’s 65% of the after repair value minus the cost of repair.
STEP 3 - Get the contract signed
STEP 4 - Send a private message to your real cash buyers
STEP 5 - Create a legal partnership between you and cash buyer based on local attorney in your state’s advice that allows you to buy and profit immediately.
STEP 6 - Close the deal
STEP 7 - Congratulate the parties involved because that was a win-win-win.
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ABOUT YOUR HOST ::::|
Ola "Tux" Abitogun is the Creator of myEmpirePRO. He became a FULL TIME entrepreneur in October 2006.
He is a computer engineer and an engineering management graduate from New Jersey Institute of Technology; (NJIT) class of 2004/5. He was born in Dallas Texas and raised in Nigeria by his Nigerian parents. He considers himself a proud Nigerian American.
Today, he is a marketing addict, trainer, marketing and business consultant, real estate investor and all around serial entrepreneur. Most importantly, he is husband and father to their 2 Boys. The professional work he is mostly proud of is personally helping 1,000+ entrepreneurs around the world reach greater heights in their careers.
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