Make Up to 6 Figures Your 1st Year Wholesaling Real Estate
Updated: Jul 31
Author: Lori Greene
RE Investor, Mentor and Co-Founder of RealEstateCompsToday.com
“Where home buyers and sellers (including investors) can get Unlimited MLS Comps from Local Realtors anywhere in the U.S. without contacting an agent directly – and do it all online today!”
How to Make Up to 6 Figures Wholesaling Real Estate in Your 1st Year
My Light Bulb Moment. There are many real estate investing strategies for finding good deals and making offers. I’ve read them all and tried just about everything.
But also having had a background in sales and marketing, I realized that some of the sales techniques I’d learned over the years could also be used to find more motivated sellers and get more offers accepted.
Maybe you’ve heard of the marketing tip where a salesperson should never ask a yes or no question, but should instead give the customer options to choose from.
For instance, which line of questioning do you think would be more likely to get a positive response: “Would you like to by it?” or “Which one do you like the best? This one or this one? What do you like about it?”
It’s well known in the sales and marketing industry that getting the customer to answer positively by giving them options to choose from can greatly increase conversions.
One day a light bulb went on in my head when it occurred to me to use this strategy to make offers. I call this strategy the Multiple Choice Offers Strategy.
It worked so well for me the first time I tried it, that I ended up getting 5 offers accepted in about the first 30 days. And it’s now one of the main strategies I teach.
How does Wholesaling relate to all of this?
Wholesaling in regards to real estate is when you get a property under contract and sell that contract to another investor for a fee. Then that investor takes over, funds and closes on the deal.
The reason wholesalers love this strategy is because it's a fast and easy strategy that requires very little money. And the investor flipping the property loves it because it saves them a lot of time finding and getting properties under contract.
The best part about wholesaling is that you can wholesale just about any property under contract no matter which strategy you used to secure it, including the Multiple Choice Offers Strategy.
The whole point of teaching you this strategy for wholesaling is because you can't be successful at wholesaling unless you have lots of contracts to wholesale. The Multiple Choice Offers Strategy is the fastest way I have found to get the most properties under contract.
Here’s how I did it. I started by putting ads on local online classifieds and putting out bandit signs, car decals, business cards, email signatures, direct mail, etc. The ad stated, "I will Buy Your House Today for Full Market Value."
The same day that first ad went out, I started getting calls. Stating full market value got people excited. And you’re probably thinking, “How can you make a profit paying full market value?”
Here’s How I Can Make a Profit at Full Market Value:
1. First of all, sellers often have an inflated idea of what their property is worth. And they like to start with a high asking price to leave room to negotiate. So the initial asking price usually isn't their bottom line.
Also Full Market Value is a relative term. It depends on what comps you’re using to prove to the seller what buyers are willing to pay for their property. It’s my job to do a very thorough analysis of the comps so I can help the seller understand my calculation of the true property value.
(Tip: Now you can Get Unlimited MLS Comps & detailed property value analysis from Local Realtors without contacting an agent directly. And these agents LOVE investors just as much as home buyers and sellers).
2. My ad states, “Full market value minus repairs.” So, it’s also my job to show the seller everything that needs to be done to the property to get it into sellable condition. That way I can discount my offer by the cost of the repairs.
3. When I submit my multiple choice offers, I encourage the seller to sell the property to me as a For-Sale-By-Owner. This way, I can discount my offer by the amount saved in broker commissions.
4. I encourage the seller to use Seller Financing. I do this by presenting Multiple Choice Offers with my cash offer being the lowest offer, my seller financing offer as the highest offer and my split seller financing offer (small down payment & seller financing the rest) as the middle offer.
Using all of these options not only gives the seller several options to choose from but it also allows me to make a discounted offer by showing them a numbers analysis that compares the end profit they would make with a full price offer through an Agent vs my offer.
I carefully create my offer to show the seller a slightly higher profit if they accept my offer rather than a conventional offer through an agent. You'll see an example of an offer like this shortly.
5. Knowing the Seller’s Motivations is Key. The trick to getting these kinds of offers accepted is helping the seller understand my logic and my offer.
I do this by writing them a very detailed email explaining all of the factors that make my offer better than any conventional offer because of commission and closing cost savings. And in that letter, I explain how my offer will satisfy all of their needs and motivations. Then I call them and go over it with them.
But first, you have to really get to know the mind set of the Seller. Before you put out the ad, think about the kinds of questions you should ask a Seller.
The more you know about the property, the equity, the status of the mortgage loan and especially about the seller, their situation and motivations, the more likely you are to create several offers that will appeal to them.
Having all of this information will also help you to plan the most beneficial exit strategy.
Over the years of perfecting my Seller’s Questions Sheet, I’ve come up with a strategy that I call the Seller’s Categories Method. It includes 3 categories in which I classify sellers based on the information gathered from the Seller’s Questions Sheet.
Using Seller’s Questions to Determine the Investing Strategy
REMEMBER THIS: The Situation of the Seller, the Property and the Loan ALWAYS Determines the Strategy!!!
Your Seller's Questions should include questions about the property and why they want to sell. Have a friendly chat so they will open up to you about their situation. And, most importantly, ask them whether or not they are current on their loan and how much they owe on their mortgage.
Once you have this information you can put the sellers into one of the following categories.
Seller Category 1 – Delinquent + No Equity = Short Sale.
Seller Category 2 – Current + No Equity = Seller Finance Rental.
Seller Category 3 - Current or Delinquent + Equity = Straight Purchase.
Take Seller Category 1 for instance. If the seller is delinquent on their mortgage payments and they have no equity, then a straight purchase for a discounted offer won’t work because they have no bargaining room. And a seller finance isn’t ideal because you have to pay off the bank or at least bring the delinquency current.
So, in the case of Delinquent + No Equity, a short sale is often the best solution. A short sale is when you get the bank to agree to take less than the payoff amount, thus giving you some room for profit.
If you’re considering a short sale, make sure to do plenty of research on the subject. Or you can simply wholesale a Short Sale contract to another investor who has experience with that strategy. Short Sales can be easy if you know what you're doing.
Seller Category 2 is Interesting. When the seller has no equity (no bargaining room) and is current on their mortgage, most investors would give up at this point figuring that the seller wouldn’t be motivated enough. But this is the perfect situation for a Seller Finance Rental deal. Later in this article is an example of a motivated seller I met who fit perfectly into this category.
Seller Category 3 Example. In the case of Current or Delinquent + Equity, it doesn’t really matter if the seller is current or delinquent as long as they have enough equity for you to make a profit. This is when a straight purchase is perfect as long as the seller is motivated enough to take a discounted offer.
Of course, a delinquent seller will be more motivated than a seller who is current on their mortgage. But, since my offer says “Full Market Value”, I also get calls from seller's who are current on their mortgage hoping it’s not too good to be true to get a fast sale at full price.
Those can be great deals too as long as there is some other motivation for a quick sale. You'll see examples of these situations shortly as well.
Here is an Example Multiple Choice Offer I Made:
Offer A: $212,000 - 100% Seller Financing for 3 years.
Offer B: $195,000 -$15,000 Down & Seller Financing of $180,000 for 2 years.
Offer C: $179,000 - All Cash Now.
Here is an Example of the Numbers I Showed This Seller:
(Illustration of End Profit, Realtor Contract vs. our Offer A)
Offer through a Realtor of $245,000 – Selling Costs: 6% REA commission ($14,700) + 3% Closing costs ($7,350) + 6 mortgage payments at $2,000 while waiting to sell ($12,000) = $29,600 in selling costs.
$245,000 - Purchase Price
- $34,050 - in Selling Costs
=$210,950 - True Purchase Price after Selling Costs
-$135,000 - Loan Pay-off
$75,950 - Seller's End Profit
Our Offer A of $212,000
$212,000 - Purchase Price (no selling costs)
-$135,000 - Loan Pay-off
$77,000 - Seller's End Profit
Here’s how it all worked out. They were current on their mortgage, had a ton of equity and the place needed no repairs. The husband was being transferred and they needed to sell quickly. That’s why they called me, for a fast sale.
They were asking $249k with an appraisal of $263k. They owed $135k. I showed them that their house would not sell for more than $240k by showing them the comps most comparable to their house and by showing them why the comps in their appraisal were too far away in a higher end neighborhood.
I also showed them in my numbers illustration that even if they sold their house through an agent for $245,000 (more than it's worth), they still wouldn't make as much money as if they sold it to me today.
After going over my 3 offers above, they told me they would consider $212k All Cash Now (combining the price of Offer A with the terms of Offer C). They saw my logic in the numbers and their end profit after saving Realtor costs. But they wanted All Cash Now, not Seller Financing.
I countered at $195k. They countered again at $205k. I countered at $200k and they said, "No". I accepted their offer for $205,000 All Cash Now.
My high comps were $247k. There were no repairs needed. I sold within about 60 days at retail for $239k, giving me a $34,000 gain. After about $16,000 in selling and closing costs (because I used a Realtor to help me sell faster) my end profit was about $18,000.
The best thing about this deal is that we both got what we wanted. Win - Win. They got to sell their house immediately for the unexpected move at a profit higher than through an agent and I got a great investment property.
Deals like these are great for both buyers and sellers. Even if you're not a real estate investor, you could use this technique to buy a home with nothing down because of the instant equity. Again, Win - Win.
We recently found a motivated seller in a for-sale-by-owner ad. She was about to be foreclosed on and willing to take what she owed for the house, which was $142,000. Her house was worth $180,000 as is. It cost about $50,000 to fix it up. The After Repair Value (ARV) was $265,000.
If you found a house like that, you could not only get into it with nothing down, but you could also end up with some great equity even before fixing it up and a lot more after fixing it up!
These are techniques investors use to find houses they can wholesale or flip for a profit. But first time home buyers can use these techniques too.
Now, here's another example of a Multiple Choice Offer I made from that same ad:
Offer A: $101,500 - 100% Seller Financing for 3 years.
Offer B: $95,000 - $5,000 Down & Seller Financing $90,000 for 2 years.
Offer C: $86,500 - All Cash Now
This seller told me he had recently built a small house with a plan to rent it out as a cash flow investment. He didn’t have luck renting it out, so he had rented it to a friend for $500/mo and his mortgage payment was $850/mo (a $350/mo loss).
He was about to start school which was going to be expensive, his friend was ready to move out and his wife was threatening divorce if he didn’t sell that house!
After running comps, we could see that the property value was no more than what he owed the bank. He had zero equity (no bargaining room). So, we had to get creative to make room for a profit.
Knowing that we couldn’t offer him less than he owed the bank, we realized the only strategy that made sense for this particular situation was a Seller Finance Rental.
Our plan was to make his mortgage payments for several years while we rent the place out, in which time the house value would appreciate while the mortgage balance would decrease, creating room for profit in the end.
The value of the property at the time was about $105,000 and he owed $101,500. Appreciation in the area was about 6%/yr at that time. We projected the property would be worth about $118,000 in 2 years and $125,000 in 3 years.
Our rental market research revealed that we would only be able to rent the place out for about $650/mo. Since the place was almost brand new, we wouldn’t have any rehab costs. We asked that he pay $200/mo towards the mortgage (hey, a $200/mo loss is better than a $350/mo loss, right? because now he's got $150/mo more than he had).
This One Worked Out Well in the End:
We knew he wouldn't be able to accept offers B and C because he owed too much and was short on cash. But the beauty of Multiple Choice Offers is that the less appealing offers make the other ones look better. That's the whole point.
And sometimes they go for an offer I wouldn't have expected them to take because something about it appealed to them. Maybe they preferred All Cash Now more than a higher price, or maybe the like the combination of a higher price plus less seller financing time.
And, often, they'll take what they like about one offer and what they like about another and combine them into their own creative offer. When I get creative so do they and we can usually negotiate until we come up with something that works for both of us before I ever submit a formal contract offer.
This seller ended up accepting our Offer A for full price with 3 years Seller Financing while we rented the place out.
He was willing to pay the $200/mo towards the mortgage because it was saving him $150/mo. He was also relieved to turn everything over to someone else and looking forward to getting out from under that house at the end of the contract.
After about 3 years, we sold that house for $126,000 as an FSBO. After costs, we made about $20,000 in profit. Not bad for a deal that appeared to have zero profit potential at first glance.
And we didn't have to do anything except advertise for renters (who ended up staying the place the whole 36 months).
To Make Up to 6 figures in Your 1st Year, you have to close more deals:
To close more deals, you have to get more creative with offers like these. That's how I bought 5 houses in my first 30 days using this strategy.
And Most Importantly: Keep in mind that, immediately after closing these deals, you can wholesale them out to another investor and easily make $10,000 per month or more without having to fix and flip houses or come up with any funding. I will show you how to wholesale properties in a moment.
Steps to the Multiple Choice Offers Strategy:
Step 1: Create a Detailed Seller’s Questions Sheet.
Step 2: Put Out the Ad in as many places as you can: “I Will Buy Your House TODAY for Full Market Value minus repairs.”
Step 3: Interview Sellers when they call in. Keep your Seller’s Questions Sheet with you everywhere you go. You don't want to miss out on a great deal. Get inside the Seller’s head to understand their motivations so you can craft your offer to meet their needs.
Step 4: Preliminary Due Diligence and Analyzing the Deal. This step is one of the most important and requires further explanation.
Doing in-depth research on a property is critical to a successful deal because your entire offer, strategy and projected end profit are built on the property value.
But what if you're wrong? What if you used an instant home value website like Zillow for your property value and you projected a $20,000 profit but the property's actual property was $50,000 less than you thought? That's a $30,000 loss which could ruin you.
And that's a mild example. I've seen those sites be off by hundreds of thousands of dollars. I did a test on my own house which was valued by an appraisal and a CMA (Comparative Market Analysis) at about $500k. But several instant value websites showed my house value over $700k. Can you believe that?
If I had based a real estate deal on a value that was $200k off from the actual value, it could be devastating!
And since the secret to getting more deals done is a quick analysis process, you need to have the perfect combination of accurate research that is also super fast, which is where a CMA from a Realtor comes in.
You can do twice as many deals and make twice as much money if you turn this part of it over to an expert and then you'll be sure of the property value as well.
Once you’ve used your 5 minute phone interview to identify the seller’s motivations including what they owe, whether or not they are delinquent and how much they’re asking, you’ll know if they’re motivated enough to accept offers like these.
Next you need to get an accurate As-Is Value for the property and an accurate ARV (After Repair value). The only way to get accurate values to run your offer numbers is to get a local agent who lives in the area and knows it well to run your comps and value analysis.
It’s okay to start with instant value sites to get a vague idea of a house’s features and photos. But beware that those sites can be extremely inaccurate when it comes to property value.
You can do a simple test to prove it. Do a Google search for: home value websites. Compare the values you get from the various property value estimation sites for one house. You’ll see how widely the values will differ. The only way to know what a house is really worth is to get real comps from a local agent and have then help you analyze them carefully.
The formula for analyzing comps for an accurate house value is a discussion in itself.
For the very most in-depth and accurate value analysis, you will definitely want a CMA. A detailed CMA can be as accurate as a $500 appraisal because it also makes value adjustments for the differences between the subject property and it's comparables.
And you'll be amazed at the amount of information there is about all of the properties in a CMA report. Plus a CMA can save you a ton of analyzing time because it automatically does all of the analysis for you and you'll have your Realtor's personal insights of the property and the neighborhood in addition.
Fortunately, there's now an easy way for investors to get MLS comps from a local Realtor without the hassle. Just fill out the 2 minute order form right here on this site and you’ll get your comps within about a day.
And if a particular property value is of ultimate importance to you, you can even order a One-on-One Phone Consultation with a House Value Expert to help you analyze and understand your comps for the most accurate value possible.
If you base your offer on an inaccurate value from an instant house value site, you could lose thousands. Don’t risk your financial future. ALWAYS Use a Realtor for Comps!
Step 5: Visit the Property. Make sure to visit the property and the seller in person to confirm the repairs, the condition of the property and their motivations. While you are there, make sure to take a look at any comps or appraisal the seller has. Then show them your comps (which you have previously analyzed very carefully). Show them all of the details that confirm your property value number.
For example, if your comps are more comparable in size, age, location or condition, make sure to point it out. If they have no comps or appraisal, just show them all of the details of the comparable homes in order to help them understand your property value calculation.
This step will help tremendously with the amount of offers you get accepted.
Step 6: Create and Present Your Multiple Choice Offer. Now is the time to take all of the information you’ve gathered so far to craft several offers that will appeal to the seller as I did in the offer examples above.
Step 7: Email the Sellers a letter explaining the logic of your offer and illustrating numbers crunches that show how they will make as much or more profit from your offer than an offer through an agent, but point out that it will happen today.
Then call them or visit them in person to go over all of the particulars of your multiple offers. If they don't choose one of your offers on the spot, follow up with them a day or 2 later after they've had a chance to think it over.
Once your offer is accepted, you can use your due diligence period to do deeper research on the property to confirm with county records things like how much the seller owes, whether they are current or delinquent on their mortgage loan, if there are any liens on the property and more.
This is also when you should have an inspection done. Never skip the inspection. It will reveal many things you didn’t know about the property that will directly affect the profit you make in the end.
If you do find issues with the property you can add an addendum to the contract adjusting your offer or the terms as long as you do it before the end of the due diligence period.
Step 8 : How to Wholesale Your Deals Like a Money Making Machine
Now that you've got some deals closed, how do you move them quickly? It's easy. There is no shortage of investors, cash buyers and flippers looking for good deals.
Why would they pay you for deals when they can get their own? Because, in this business, time is money! And you've just saved them a lot of time by finding, analyzing, offering and closing these deals.
Once you have a deal to wholesale, you have to move quickly.
1st, create a PDF that is basically an ad for the property. Think like a Cash Buyer in your presentation. What kind of deal and presentation would make you want to buy it if you were going to fix and flip it?
Show them the detailed numbers with a breakdown of the After Repair Value minus all of the projected costs (including your wholesaling fee) and the final profit. Your wholesaling fee should typically be less than 20% of the total profit so that the Cash Buyer can have at least 80% of the profit. Cash Buyer's love deals like this!
Tell them about what repairs or upgrades are needed. Show them photos of the property inside and out.
Wow them with all of the homework you've handed over to them on a silver platter. THIS AD IS WHAT WILL SELL THE DEAL FOR YOU.
Here are the elements of a great Wholesale Deal Presentation:
Below are the numbers in a Wholesale Deal Presentation I created for another fantastic deal that came to me from that ad. This house was one of the dirtiest houses I've seen and the smell was horrifying. It would send most buyers running for the hills.
But a smart buyer knows that this kind of house is an investor's dream because these issues are all on the surface and easy to fix. The house needed about $25,000 in remodeling, but the gap between the As-Is Value and the After Repair Value would leave plenty of room for a great profit.
Our low end comps for houses in this kind of condition showed an As-Is Value of about $90,000. Using the As-Is value, these sellers had almost no equity and were seriously delinquent on their mortgage coming dangerously close to foreclosure. SHORTSALE!
As mentioned earlier in reference to Seller Category 1 - Delinquent + No Equity, this situation was perfect for a Short Sale. We didn't give this seller multiple offers to choose from because we felt the best option was a short sale and the purchase price would be determined by the bank anyway.
Because of our in-depth comps analysis of other nearby properties in poor condition, we were able to prove to the bank a $90,000 As-Is Value. The sellers owed $87,000. We showed the bank that any buyer would be upside down in the property after paying to get the house into livable condition.
With our detailed list of repairs and remodeling costs we were able to convince the bank to let us buy the property for about $65,000.
Our comps analysis of similar nearby properties in top condition showed an After Repair Value of $131,500.
Short Sales and Bank Owned Properties (also known as REO's) can also be wholesaled once under contract but there are special tricks to these strategies because of bank involvement. Rentals can even be wholesaled out because you can show the Cash Buyer monthly cash flow in addition to an end profit at some point.
If you'd like help with implementing any of these strategies check out our real estate investing mentor programs.
Below are the elements of a great Wholesale Presentation using this particular deal for the Cost and Profit Breakdown.
Example Title to Wow Cash Buyers:
"Deeply Discounted Fixer-Upper - INVESTORS DREAM!!!"
Example Cost & Profit Breakdown:
$131,500 After Repair Value
(65,320) Purchase Price
(24,780) Repairs & Upgrading
(5,240) Closing Costs
(4,500) Financing Interest
(1,200) Taxes & Insurance
(5,900) Wholesaling Fee
= $24,560 Cash Buyer's PROFIT
Actual Sold Comparables
Estimated Repair Details
Call to Action:
We have a huge Cash Buyer’s list. This one will go fast. Don’t delay!!!
Your Contact Info
Here are some screenshots of how it looks:
2nd, blast your presentation EVERYWHERE! Hopefully, you've already started building a Cash Buyer list. Investor networking sites like Bigger Pockets and Connected Investors are perfect places to find Cash Buyers.
Email your presentation to your Cash Buyer's list. Also copy and paste all of the info from your presentation into online ads and posts on investor networking sites, Facebook Investor Groups, Linked-In Investor Groups, CraigsList, local online classifieds, etc.
Then take your PDF in paper form to local Investor Club Meetings and any real estate auctions you can find. This is where Cash Buyers hang out and they are hungry for deals!
Using these steps, I bought 5 houses within 30 days which you can repeat again and again to make 6 figures in your first year. Once I started making Multiple Choice Offers like this, I became a much more successful investor and you can too.
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