How do you get started in real estate with no money? If you google something along these lines, you’ll likely find a list of articles, websites, and books that teach real estate investors how to “invest” with no money. Yes, there are many different techniques for acquiring real estate deals with no money, but there are better ways to get into real estate with no money than jumping into real estate immediately.
Getting experience as a wholesaler first and working from there can be incredibly beneficial for someone starting out in the industry. Keep in mind that consistency is key. Most strategies cost time and money. Building a real estate company doesn’t happen overnight, but it can happen without a minimum of capital.
But you may be wondering how to start wholesale real estate with no money.
Let’s lay the foundation first.
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Do you need a license to wholesale real estate?
A real estate license is not required for wholesale business, but it can give you credibility. It is a good idea to have specialized knowledge about wholesale and the real estate industry to avoid accidental malpractice. After all, wholesale can be a risky business.
How much money does a wholesaler make?
While the business can be risky, a wholesaler can make money in the short term. Some wholesalers make a few thousand dollars per sale, averaging $5,000. That said, there are certain deals, especially those with more expensive properties, that can run between $10,000 and $20,000.
The average number of wholesale deals per month is five to ten sales, so there is great potential to thrive in the industry if you play your cards right. Your monthly earnings can range from a modest $25,000 to $50,000 if you make the average amount per sale and multiple sales per month.
Remember that any business expenses will be deducted from your monthly income. But how do you get started without business costs?
To help those who want to know exactly what steps to take to start wholesale business with no money today, here is an easy step-by-step map to use.
Step 1: Do your research
Before getting started in real estate, it is imperative that you do your research. Talk to other investors about their experiences in your local market so you know what to expect. Short term success is possible in real estate if you have the specialized knowledge to achieve it.
You should also learn as much as you can about wholesale from reliable sources. This doesn’t mean that Jim from next door has dabbled in real estate once or twice.
It’s also helpful to learn about your environment. Knowing what homes are selling for and what different neighborhoods offer is an advantage for when you’re starting out.
Step 2: Compile a buyers list
The most valuable asset you will own and develop as a local real estate wholesaler is your buyers list. A strong list of people who will buy deals from you is your golden ticket to being successful in this business. The great thing about this is that it doesn’t cost any money to put one together; it just takes some effort on your part.
Here are a few outlets you can use:
Step 3: Find deals to market
Most wholesalers find deals by sending postcards, knocking on doors, putting up signs and networking with agents. But someone who literally has no money to start with may not have the capacity to do so. Therefore, if you are just starting out, it often makes sense to enter into a joint venture with other wholesalers for deals. You will find that there are other active wholesalers in your market that are constantly finding deals.
A viable strategy is to align yourself with a few of these wholesalers and help them find buyers for their properties. It depends on what you negotiate with the wholesaler, but you can typically build in a few thousand dollars referral fee for finding buyers for their properties.
Again, this is where having a good buyers list comes in handy. That wholesaler may have great resources for finding great deals, but you may have put together a strong list of buyers that can be used to sell those properties for that wholesaler. In a joint venture you could both to succeed.
Step 4: Graduate to Buying Real Estate
Once you’ve spent a lot of time looking at real estate and selling wholesale deals in your market, you’ll have a much better idea of what’s a good deal and what’s not. Over time, as you start to get some paycheck under your belt, you’ll be in a better position to start investing on your own.
In addition, you will find that you can choose the best deals that you come across for your own investment. It makes much more fiscal sense to have some cash reserves and experience before investing in real estate yourself.
Step 5: Find financing
Finding financing in advance can help you jump on a property when you find the perfect wholesale deal. The process of buying a contract can be speeded up if you have already secured financing.
You can find financing from a private or hard lender. However, hard money lenders often require you to put down some capital. Private borrowing is all about building connections and expanding your network, so start conversations!
Step 6: Have an exit strategy
Wholesale involves buying and selling a contract or duplicating a property within minutes. But what if something goes wrong?
As with anything, there are risks in wholesale. Preparing for the risk with an exit strategy can give you a head start. Plus, you can make decisions without fear of holding you back, which is an advantage in this industry!
How do you make sure you don’t get it? stuck with a property? Let’s take a look at some strategies:
- Buy and sell a contract rather than the property itself.
- Buy the property and then sell it as owner (can be done in minutes as a double close).
- Consider the possibility of renovating a distressed property or doing repairs and resale (fix and flip).
It is important to know your exit strategy before entering into a wholesale deal.
Find wholesale deals
Once you’ve developed your wholesale knowledge and understand what it takes to get started, you may be ready to know when you can get started. Here are some methods for finding your next wholesale home:
For sale by owner (FSBO) sites
These people are all ready to sell their homes. In general, you will find that they are too cheap to pay a broker, but you can still find a deal. It is better if you can use different strategies such as lease option or owner financing. Price is not a big factor in owner financing. The most important are the conditions.
Advertisements on Craigslist
The second way is through Craigslist. Name the ads “for rent” and “for sale by owner”. Again, this should be done every day. It will take time and diligence.
To work on this strategy, set aside two hours of your day each day to call these people. The more people you talk to, the more likely you are to get a deal.
The third tactic is the most difficult; it’s an old-fashioned strategy that uses cold calling. So you can start buying a list or finding absent homeowners. Then you would go to a site like 411.com or White Pages and see if you can get their information. At that point, you would try to make the first contact.
People use this strategy to get deals, but they work tirelessly on it. Perhaps you can go to your city’s website to see who has code violations and find and call the seller. This will take more time due to research. But if you don’t have the money and really want to get into the business, this can work. You can get a deal on the first call or the 101st call. The results will vary.
knocking on doors
The fourth way is by knocking on doors, and you can do this in two different ways. The first is by accessing a highly targeted list like a pre-execution list… or you can randomly knock on doors.
If you don’t have a car, you may want to go for a walk in your area. Or get on the city bus to another neighborhood and start knocking at the door. Most people will laugh and say, “If you don’t have a car, how can you buy someone’s house?” Ignore them.
It all comes down to how badly you want it. This company is not for the faint of heart. This company is for people who get out there and make things happen.
Common Wholesale Mistakes
If you want to make things happen, mistakes can happen.
Listening to Gurus
The fact is that gurus are out to make money from you. they want you depend on their knowledge rather than succeeding alone.
Many “gurus” pretend to be rich and successful in order to gain your trust and ultimately make a profit on you. They sell easy lifestyle and pretend real estate success comes overnight if you follow their exact steps.
However, building a real estate business does not happen overnight. It takes effort and time instead of ‘five specific steps’.
Cash investors don’t understand
Finding a great wholesale deal only goes so far if you can’t find the financing to back it up. You need to know at what price to buy the property to ensure money is invested. To know the price, talk to cash investors and other local real estate contacts to understand what cash investors are willing to pay.
Likewise, you need to know what buyers are willing to pay for a home. Your real estate prices should be low enough to pique the interest of your buyers list.
One of the reasons so many people are attracted to real estate is because of the opportunity to get started with very little capital. While this is the case, it’s important to handle it the right way. With a little creativity and dedication, just about anyone with a computer and a little network ability can start their real estate investment business.
More about wholesale for beginners from Pyjama People