Econohomes buys the properties from mortgage lenders and servicers and resells them on their site. When you look at the site, you’ll see the prices are low – some priced in the teens. The downside of this site is that once you get beyond the Mississippi River, there are very few properties. For instance, in Colorado where I’m located, there are two properties listed (at the time I’m writing this).

This site led me to the conclusion that there may be some value in scanning the site or setting up their alerts, but is finding deals online the best place? Or is it a better approach to use online sources as a part of your wholesale deal finding strategy?

Let’s explore how to search for wholesale deals online – the right way.

Searching databases is easy, but is it the best place? If you’re searching for properties in online directories, I’m willing to bet you’ve got at least 100 other peers searching at the same time. The question to ask here, “Is this really going to get you the best deal?” It might, if you can get in touch with the seller. But at this point, the property is most likely with a reseller looking to make a profit. Kind of like you.

Screening the “For Sale by Owner” listings for deals. Now, here’s a strategy I’ve recommended many, many times. Look on your target market’s Craigslist or use SearchTempest.com to narrow the results for “For Sale by Owner” listings. Keywords include: motivated seller, seller financing, must sell, etc. These leads can get you in front of a captive audience for wholesaling a property. Here’s a tutorial on how to approach these sellers.

Working the MLS for deals. The Multiple Listing Service can be a wholesaler’s best friend when it comes to finding wholesale deals online. You just need to know how to work it! Here a few tips for how to put the MLS to work for you. You may need the help of a real estate agent for some of this.

• Use a public MLS site and search for “Under Contract.” Your strategy here is to be the “backup deal.” Contracts fall through all the time (financing issues, property issues, relationship issues, etc.). You can come in and offer up another route out of a property when this happens.
• Use the right keywords. Look for vacant, motivated seller, must sell, needs work, handyman special and find opportunities to discuss moving the property. You can find these properties on the public MLS sites as well.
• Find expired listings. It’s not uncommon in this economy for multiple listings to expire. Expired listings mean the properties have been sitting on the market for a long time. Get a realtor to pull you a list and start working it!

Stay tuned to the Investor Insights blog this month for more tips on wholesaling.

1. Always know your numbers. Knowing all your numbers (top price you’ll pay, percentage fee to a flipper, deposits, etc.) will help you negotiate with more confidence. You’ll be prepared when a seller comes back with a counter offer. You’ll know how much wiggle room you have when unexpected repairs pop up. You’ll be able to walk away when the deal just won’t work. Numbers give you posture. Know them inside and out.

2. Care about the people you are dealing with. I said this last week in my article on becoming a wholesaler that you have to adopt a helpful attitude. It’s true. Sure, we’re all in this business to make money, but we’re also here to help people out of bad situations (which we get a nice paycheck from). But if you’re not willing to be helpful and caring in your conversations, you’ll close fewer deals and come across as shallow.

3. Document everything. Sure a handshake is a huge part of business, but documentation keeps things civil, legal and helps in negotiations. If you have a question or your buyer/seller disputes something, it’s best to have it in writing so you can clear it up before someone walks away from a deal.

4. Be willing to compromise. Real estate is all about wheeling and dealing. You have to be willing to make a few concessions. However, don’t make concessions if you won’t get the deal you need to make a profit. It’s one thing to lower the amount you will make by a few hundred dollars or to make an allowance you can make up when you flip or sell, but it’s quite another to make a concession and not make a profit. It’s better to walk away than negotiate your profit out of a deal.

5. Always have an exit strategy. There’s a saying in advertising, “Don’t fall in love with an idea.” The same is true in real estate. Don’t let yourself fall in love with a potential deal. Don’t bank on a deal closing until it’s signed, sealed and delivered. You need to be able to get out of a deal at any point and need to structure your contracts so that this is always possible.

Stay tuned to the Investor Insights blog this month for more strategies on negotiating deals.

What kind of capital do I need to get started?

The simple answer is not a whole lot because you’re main job is to find motivated sellers and rehabbers. You’ll need business cards, signs, deposit money, a simple website (optional but recommended), a cell phone and a computer. Other than that, you’re pretty good to get started.

Do I need to take any classes to get started as a wholesaler?

The short answer is that you don’t necessarily need a class, but I highly recommend it. You can check out some of my courses under products if you want a good primer. I have my Flipping Fortune: The Complete Guide to Making Big Money Wholesaling Real Estate available at a special price for a limited time. This guide gives you the basics of getting started as a wholesaler. Check it out and tell me what you think.

How do I find buyers/investors?

Good old fashioned networking is the best way to find buyers for your wholesale properties. I recommend you start building a buyers list as soon as you make the decision to go into the wholesaling business. You can find several articles here on the Insights blog related to building a buyer’s list.

I also give a monthly webinar for free on real estate investing. No pressure, but if you want access to some of my past webinars on the topic of wholesaling, check out Investors Insight Elite, where you’ll find resources such as my recent Top 25 Ways to Find Deals and Wholesaling: How to Bring Buyers and Sellers Together for Unlimited Profits webcasts.

Don’t you need good credit to wholesale properties?

No! You don’t. Credit is not involved because you are basically playing matchmaker. Your role is to get a contract on a property and to negotiate the sales price and then turn the contract over to your investor. You make a fee for getting both parties together. All you need is a little deposit money to show the seller you’re serious about helping them sell the property.

What kind of person do you need to be to make money as a wholesaler?

Great question! A lot of the real estate gurus will tell you need to be a hustler. You do need to be self-motivated and ready to sell, but you also need to be caring, genuine and interested in helping people out. If you adopt this attitude early on, you’ll make more contacts, more deals and more money. Believing in yourself is the perfect place to start as wholesaler.

I know I didn’t cover everything in this article and I didn’t intend to. I want to hear your questions. Please post them in the comments below.

That’s why I’m talking about wholesaling. This is a low-risk; easy way to get your feet wet and to learn how to find deals. That’s where we’ll be focusing a lot – on finding deals. The deal is the secret to making money in investing.

Here are a few tips for getting started as a wholesaler and finding deals.

1. You need a corporation. If you try to become a wholesaler as a sole proprietor, you’re asking for trouble and if you’ve ever read this blog, you’ll know I think running any business as a sole proprietor is a really bad idea. Here’s an article about why this is so important.
2. Understand how wholesaling works. You’re not buying anything. You’re getting a contract on a property and then finding an investor to purchase the property. You’ll assign the contract to the investor (also called a rehabber or flipper) and collect an assignment fee.
3. Adopt a helpful attitude. If you don’t care about the people you’re helping get out of a distressed home situation, you’re not in this for the right reasons. Sure, we’re in this to make money, but if you don’t come across as genuine, it’s going to be hard to gain the trust of even a desperate seller.
4. Understand how to make an offer. All of the money in real estate investing is made on the purchase, not the sale. You have to get the price right to make it worthwhile. In a wholesaling situation, your seller needs to get out of the mortgage or financing situation fast. You need to make some money and the investor will need to make some money on the flip. Getting the offer just right takes a little homework on your part. You need to know the following:
   1. The fair market value – Get some comps from the past 90 days and see what the neighboring properties are selling for.
   2. The seller’s situation. – If you don’t know this, you might as well walk away.
   3. The investor’s percentage of market value. – Investors are in this to make money, so the offer has to be good enough for them to make repairs and a profit. A rehabber can give you his/her percentage of market value.

After you have this information, you’ll be able to craft your wholesale offer. Don’t make an offer on any property unless you have all the numbers straight. Read more on getting the offer just right here.

Stay tuned to The Investor Insights for more tips on becoming a real estate investor through wholesaling this month.

* 6 Simple Steps to Wholesaling Success
* 8 Fast and Easy Ways to Get Houses at Rock Bottom Prices
* My 3 “Buyer Bandit” Strategies to Generate an Instant List of Buyers in Any Area
* How to Set Up Your Wholesaler Website For Less Than $20
* 5 Potential Wholesaling Deal Killers and How to Overcome Them
* Contract Assignments and Double Closings Step by Step
* The Magic Question That Forces Any Seller to Tell You the Least Amount They Will Accept for Their House
* And much, much more…

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