Technology continues to transform the real estate investing industry. The pandemic forced the majority of wholesalers to change the way they do business, from in-person to remote sales, even in their own local market.
Virtual real estate wholesaling is the new way of doing business, and it’s likely going to stick around, even after the pandemic is long gone.
A true virtual wholesale strategy provides a competitive advantage over other types of wholesaling, since you can target and change to any market in the country at a given time instead of being limited to your local area. It can take your REI business to the next level and increase your deal flow and profits.
What is Virtual Wholesaling?
Virtual wholesaling is the process of securing contracts and reassigning them to buyers through the use of (online) technology. All you need is a computer, a smartphone, a way to send and sign contracts digitally, and a strong Wi-Fi connection, and you can virtual wholesale from anywhere.
The attraction of virtual wholesaling is not only being able to work remotely but also operating in any market across the country, regardless of where you are.
How to Make Money Virtual Wholesaling?
It’s worth noting that wholesaling is different from flipping houses and other types of real estate investment. In wholesaling, you do not assume ownership of the property, nor are you responsible for fixing it up, but instead you get the property under contract, and then sell the contract to a cash buyer.
So what? So virtual wholesaling not only opens you up to a large volume of properties but also a large volume of real estate investors and buyers, thus increasing your ROI. You’ll make your money by attaching a wholesale fee to the transaction – at least 5% to 10% of the property cost.
Pros and Cons of Virtual Wholesaling
In real estate investing, there are benefits and drawbacks to every strategy. Here are some of the advantages and disadvantages of virtual wholesaling:
Pros
- Saves You Time: because you’re not visiting all the listings
- Allows You to Target the Hottest Markets: without geographic limitations, you can target the best markets and change to a new city whenever a market cools down
- Expands Your Reach: to close deals in any market across the country
- Inexpensive: to invest in, but also no travel fees or repair costs
Cons
- Research Extensively: to find the right properties and cash buyers
- Takes Time: to earn a profit
- Hidden Issues: since you don’t see the properties in person
Steps to Virtual Wholesaling
Wholesaling and virtual wholesaling are perfect if you want to break into real estate investing but don’t have much money. A virtual wholesale strategy can be lucrative if you follow these steps:
Step 1: Research
Familiarize yourself with the wholesaling and virtual wholesaling processes. Learn the laws and legal requirements for both so you’re compliant. Understand how to calculate offers, the legal language, market requirements (some metros require licenses), and also what kind of software you need to manage leads and your business.
Step 2: Find Profitable Market Areas
This is an extension of step 1 but so important, it is its own step. This is also one of the biggest advantages of long distance wholesaling: you can wholesale wherever the market is hot.
You want a location where homeowners are motivated to sell fast and under the market value, but also where cash buyers want to purchase. The Buyers Zip Code Method is guaranteed to improve your virtual wholesaling. What is this method? Simply put, it is searching, buying, and selling real estate in areas with a high volume of distressed owners and cash buyers.
Use our exclusive Hottest Zip Code Finder to find the best markets with motivated seller leads and high cash purchase flows. To learn more about how the tool works, watch the video below.
Our tool is free and comes with a unique Guide, free to download, for easy use and profitability.
Step 3: Analyze Desirable Properties
Profitability is only obtainable if you secure properties under market value that your end buyer wants to acquire. Some things to consider:
- Property type
- Average market value
- Specifics of the location and niches
- Profile of properties buyers have purchased
- Crime and poverty rates in the area, even amenities (this will impact the type of end buyer)
- Start researching how to find buyers and even get their list of requirements
For every property that captures your attention, you should crunch the numbers to be sure it’s worthwhile. Verify its fair market value by researching comparable properties in the area that recently sold. Also take into account valid property data, like rental income, cash flow, damages, etc. All this information will help you decide if it’s worth investing in and what your maximum allowable offer (MAO) will be.
Step 4: Get in Touch with Motivated Sellers
Before you can even make an offer, you need to reach as many sellers as possible; after all, wholesaling is a numbers game. Many tools and applications make it easy to find seller information. Rather than a generic pitch, you should alter your message to address the owner’s distress factor, and so be the solution to their problem. Your data should be scrubbed, skip traced, and undergo list stacking and scoring, so you can start with the “most likely to sell soon” leads.
One of the main issues wholesalers encounter is the lack of quality of data, even after skip tracing. GoForClose can solve that issue by providing quality data, with over 92 distress factors taken into consideration when lead scoring the sellers. We also market to qualified leads and nurture them till they are ready to sell, at which point we provide a warm transfer to you to wholesale the contract.
Step 5: Get Property Under Contract
Present your offer to the seller, be sure to follow up frequently, and get the property under contract. If you’ve done a proper investment property analysis, you’ll know exactly how much to offer: too low, and you risk getting passed over; too high, and you may not get a profit on the buyer deal – even if this happens, though, you should still attempt to close the deal; it is worth the effort to establish a relationship with a cash buyer and get a better understanding of what to offer next time you encounter a similar property.
Step 6: Market Wholesale Contract to Buyers
Ideally, you would start wholesaling with an existing buyers list. However, that is not always the case, especially when starting out. Technology enables you to build a wholesale buyers list: as soon as you have the property under contract, you can market it to potential buyers, based on their investment preference or what you know to be the most desirable aspects for investors in that location. Be careful when publicizing it, though, as you don’t want your seller to find it and return to you with questions.
Step 7: Assign the Contract
Once you have a buyer, you can use a digital contract software, like DocuSign, to assign the contract and close the deal virtually. The contract should state how and when you get paid (this was part of Step 1) your wholesaling fee.
Virtual wholesaling is an excellent opportunity and strategy for anyone in real estate investing, as it requires almost no capital to get started. It also allows experienced wholesalers to expand and grow their business.
GoForClose Finds You Motivated Sellers
GoForClose’s motivated homeowners list is unmatched in the industry and market exclusive, and available to one investor at a time. Our list has unique data sets, like probates, pre-foreclosures, water shutoffs, etc., and is scored to identify the owners who are most likely to sell fast and to an investor (or wholesaler).
Using inbound and/or outbound marketing tactics, we identify and engage seller leads for you. Our Inside Sales Associates (ISA) live answer lead responses, prequalify, and schedule appointments on your calendar. This way, you can focus solely on making offers, signing contracts, and closing deals with your buyers.
If you have questions or are curious to know more, request a free consultation below.
Wayne Hudson
Wayne Hudson has a background in sales and real estate - but with a passion for economics. He uses his knowledge of economics and real estate to help clients think strategically and make decisions to optimize their outcome.
As the company's business developer, Wayne works to help GoForClose grow.
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
