What is Wholesale Real Estate?

Here is where we’re going to talk about the concept. What is this concept we’re talking about? Now, remember when I was driving down the freeway, I was going to a pool and landscape appointment. And this guy got on the radio and was talking about and having stories about how you could flip houses using no cash, no credit, and having no experience. And he shared stories of guys making five, 10, or $15,000 in a month, doing their first deals. Now, remember, I was skeptical. I thought it was a joke. I thought you had to have money to get started. You had to have money to buy the property, had to have money to renovate the property, and you had to have money to hold the property and sell the property. So that was my preconceived notion. And that’s why I didn’t believe it was possible. And then he shared the concept and the concept is an incredible thing because I never knew you could do this.

And some of you might be watching this right now, and this might all be brand new to you. Maybe you’ve never been part of real estate before, and you’re going, “What is this concept, and how it works?” Well, this concept has literally changed my life. This concept alone has allowed me to go from living month to month, having credit cards, that are basically Capital One credit cards that are just introductory credit cards at the age of 33, no travel points or nothing like that, literally having no savings, literally having no net worth, literally having no assets or anything like that to taking this concept and being able to literally change my life where now it’s great. You get platinum Amex cards, black cards, be able to fly first-class anywhere I go, either private or commercial, bought a beach house in Southern California, it’s amazing.

Be able to travel all around the entire world, be able to do whatever I want with who I want without any money, being able to buy over $30 million worth of commercial properties, being multifamily properties, doing tens of millions of dollars in wholesale flips over the years and having a blast doing it, learning. And then also getting into the education space, which is my passion. And that is you and I being able to because it’s just you and I that are here right now watching this, right? Meaning I want this to change your life. I want this to go and make whatever dream you have, whether it be spending time with your family, whether it takes care of your family, whether it goes out and become immensely, wealthy and successful, way far beyond what I’ve ever done.

Whatever you want to do, it is here. The support system we have, the training we have, the education we have, it is here right now. And this concept that I’m going to share with you right now will change your life. So what is this concept? It’s called wholesaling. Wholesaling, right? Now, people do it in Amazon, right? Yeah. They buy a product from another country or whatever, and they turn around and stick it on Amazon and they get it for a buck and they sell it for 10 bucks. And guess what? They wholesale it. They make $9 plus less shipping in their cost of doing business. Right? It’s the same thing. But we do it with houses. We wholesale with houses. We get a property for 50,000 and we sell it for 60,000, right? To a cash buyer, and it’s done on a quick basis, right?

Where a buyer’s going to come in and they’re going to purchase that property and they’re going to want to close on it quick because it’s such a good deal. Now we can’t do that in the stock market, right? We can’t do it where you get Apple for instead of getting out of, I don’t know what the stock is today, 400 bucks, but whatever, and you can’t get Apple for 200 bucks or get it for a hundred bucks or get it for 50 bucks. You can’t do that, right? Because that’s insider trading. You can’t make that happen. But with real estate, you can, which is phenomenal. So with wholesaling, explain what is wholesaling. Wholesaling is described as controlling equitable interest in a property and quickly reselling that interest for a profit. So when you sign a contract, a real estate purchase contract with a seller, it gives you that equitable interest.

Now here’s the thing. A seller can’t sign a contract legally with three different people, five different people, 10 different people. You can’t give equitable interest away with a real estate contract to four, five, six, seven, 10 different people unless it’s fractional interest. But when you typically sign a real estate purchase contract, you’re controlling 100% of that deal, 100% of that house. And what happens is now that we have controlling equitable interest in the property, then we can turn around and quickly resell that interest for a profit. Now, pretty interesting, huh? So all we got to do is sign the contract. So the contract is the Holy Grail of wholesaling. What is said in the contract, what are the disclosures in the contract, what is the timeline in the contract, what is the money that you have to put up in the contract, 10 bucks, right? So that is the concept of wholesaling.

So let’s look at this right here. So let’s say we have here on the screen, a motivated seller, right? And there’s multiple, and we’re going to get into marketing and how to talk to and find motivated sellers. But there are basically three types of distress, right? And I’m not going to get too deep into this right now because we’re going to get into this into later videos. But the stressors financial distress, there’s circumstantial distress and then there’s physical distress, physical distress of the property. So maybe you see a boarded-up property with a bunch of tall grass and the house is vacant and the meter’s off. That would be a distressed property, right? It’S the eyesore of the neighborhood. Just think about it. If you drive around your neighborhood, there’s always one or two properties that are a mess, right, that no one’s ever gone by, that needs fixing up, that needs to be kept up, right?

That is who you want to talk to. You want to talk to that seller that essentially has given up on that house. That’s a seller that will sell a property at a discount, right? So physical distress, maybe someone is losing their house because they can’t pay their mortgage, that’s called a foreclosure, or pre-foreclosure. Maybe they’re in a divorce situation and now you can help them out of that divorce instead of having to go through a whole process. Maybe it’s probate, maybe it’s an inherited property situation. There’s a lot of different types of distress and we can show you how to locate sellers like that.

So let’s say, theoretically, we have a distressed seller that’s in financial distress. Let’s call it a pre-foreclosure. They haven’t paid their mortgage and they want to sell. And what we’re going to do is sign a contract with a seller, right? Let’s say the house all fixed up is worth $100,000. And let’s say you sign a contract with the seller for $50,000 because there’s maybe 10 or 15 or $20,000 worth of work that needs to be done to it and he wants to sell quickly. So what we do is we’re going to put on the contract, two very important things. We get a 30 day close and we get a 30 day inspection period, right? 30-day close and 30 day inspection period. Now that’s going to give us, in that inspection period, time where we can eventually either help sell the property or cancel that particular contract. We call that our AB or our purchase contract with our seller.

Now we have a contract. Now, in part of this training, I’m going to take you through the contracts. I’m going to tell you the contract. I’m going to give you the contracts we use. I’m going to go through line by line so you understand the contract and we’re going to go through that. I’m going to show you how to find the sellers, talk to the sellers. I’ve got scripts for you to talk to sellers. I tell you what to say when you meet a seller, right? How to qualify if a seller is motivated or not. We’re going to talk all about that. You’re going to get everything in this course, which is amazing. Now what we’re going to do is now we find a cash buyer that’s going to purchase a property.

Now, we’ve got a killer software that you can literally go in, you can pinpoint your property you want to sell, you can draw basically a circle or a square around it and it’s going to give you all the cash buyers in that area, that purchased houses in the last 12 months. And guess what? You can click on them, you can skip trace them, find their number, call up those buyers, do a little investigative, find those buyers and ask them if they want to buy a property that you just got under contract. That’s just one way to sell properties super quick.

Anyways, so you sign a contract for $60,000, right? Now, remember, your contract before was for 50. Now you’ve got a contract for 60 and on this contract, there’s going to be a seven-day close versus a 30 day close and there’s going to be no inspection period, right? So if you have no inspection period, they’re going to have a seven-day close. So what happens is you can close with your seller in 30 days on or before 30 days. And now your buyer’s going to close within seven days. So now remember, the seller wanted to sell quickly. So now you get this guy, he wants to buy quickly within seven days. Everybody’s happy, he buys it for 60,000.

So what happens is now what we’re going to do is we have two contracts. We have a contract from a buyer, we have a contract from a seller, right? And now what you can do is now you’re like, “How do you get it closed?” Well, what you do is you bring it to a closing agent. Now, depending on where you are in the US, where you’re watching this, you either have an escrow company, you have a title company, or you have an attorney, right? That’s going to close it. If you’re in Atlanta, Chicago, New York, New Jersey, you might have attorneys that close the transactions for you. If you’re in Arizona, maybe in New Mexico I think, you’re going to be in an escrow state, or you’re going to be in a title state, maybe if you’re in California.

So whether you are either in a title state, escrow state, or attorney state, what they’re going to do is facilitate, we call them closing agents. That closing agent is going to facilitate the actual closing. So you’re going to give them the contracts. And what they’re going to do is they’re going to handle all the legal paperwork, the deeds and they’re going to make sure the title is clean on the property. They’re going to make sure that the right seller is selling the product. They’re going to get the notarized documents, prepare all the closing statements.

They’re going to handle all the paperwork, right? And they’re going to handle all the money. So that means the buyer’s going to send them the earnest money deposit. The buyer’s going to wire them the funds. The closing agent’s going to wire the funds or get a check to the seller and the closing agent’s going to get you the check. So they’re going to facilitate the entire transaction. Your job is just to get the contract from the seller and get the contract from the buyer. So your entire mission is to get the contract, right? Now, we give you the contract. We’re going to show you how it works and we’re going to show you how to talk to a seller, to get the contract, talk to the buyer, to get the contract. So this whole entire course is about you able to get the contract from the seller and get the contract from the buyer and then you can bring them to the closing agent.

And guess what? You get the difference. You get the difference. So in this particular case, and I’ll go back here, the ways to get paid our assignment, right? And I’m going back a slide here, and there’s assignment, there’s double escrow, or there’s transactional funding. An assignment is where you sell your property. Now if you tell a closing agent, “I want to do an assignment,” guess what? They’ll prepare the assignment document for you. If you tell them you want to do a double escrow, they’ll facilitate a double escrow process for you. And transactional funding is where you get a lender to lend you 100% without ever checking credit. They’ll close on the transaction so you can resell it to the buyer, the same day. Most, 100% of the transactions we have done have been either via assignment or double escrow. You won’t use transactional funding in this course. It’s mostly done for bank-owned properties or hud properties and stuff like that.

What’s going to happen is you got one for 60, one for 50. You’re going to get the difference on the assignment for the $10,000, right? The difference goes to you. So what happens is $50,000 goes to the seller per their contract. The buyer gets the property for 60,000. He’s excited because he has instantly 40,000 in equity because we said it was 100, and now you get your $10,000 check for pretty much marrying those together, bringing those two parties together. Huge. What if you did that one a year? What would take on your current position to get a $10,000 a year raise? Think about it. Let’s think about it. What would it take for you to get a $10,000 a year raise on your current employment position?

You’re probably thinking, “I don’t know, man. I’d have to come in earlier, stay late, sell” Right? And that’s just one deal a year, part-time basis. What if you did two, three? What if you did one deal a month? That’s not a lot of work. That’s a part-time job. You can do one deal a month. Now one deal a month, and you kept it consistent, that’s $120,000 a year of additional income that you could have, or it could be your full-time job, $120,000 a year. Right? What if you did 10 a month, 10 a month? Well, now you’re talking $1.2 million a year, right? You could have some fun doing that, couldn’t you? Anyways, the bottom line is this is my first check. Look at the date, right? 5/20 of 2003. That’s Metro Title back in 2003.

That was my first check of $11,008.81 cents. That was my first deal I’ve ever done and that changed my life forever. That is my mission. Part of this course is getting you your first check. Now, I can’t do it for you. I’m not going to talk to the sellers. I’m not going to fly to where you’re at, meet them, talk to them, sell them. That’s why I got to make this education so good, right, and inspire you so much so you can go out there and take that action with Dean, give you the right mindset, give you the right tactics so you can go out there and crush it.

So people always ask, they watch HGTV, they watch all these flipping shows on there. What’s the difference between a fix and flip and a wholesaling deal? Well, fix and flip, first off, you find the property. You have to come up with the capital to close on the property. So let’s say, theoretically, I just did a fix and flip recently, and my wife loves doing all the design work. She’s phenomenal at it, she’s amazing. And she has an eye for making things that are ugly, beautiful. Right? So I’ll give you an example. We bought this house, $300,000. So guess what? I had to cut a check for 300 grand. Closed on the property, cash. So I cut a check for 300,000. Find a good trustworthy contractor. That’s difficult in this market. It’s difficult, I tell you that. Pay and renovate the property. So our renovation costs were over a hundred plus thousand dollars for renovation. Had to cut a check for over $100,000 for that.

Time to manage the property, right? My wife was pretty much the project manager on that, so she was down there, she was doing a lot of it. That was her thing. She took ownership of it and did most of it, time management. Manage the budget, right? So keeping it under budget. That was a little bit difficult for her because I’m like, “You got to stay on budget.” Right? But we got it good. Massive risk to mitigate, right? Risks to mitigate. Like what if you go in and you rip the place apart and you find out that there’s a cracked slab in the property, or there are other issues in the property that have issues. We’re closing on a property this week, we’re about to close, we found out the septic tank is complete a mess. Right? Well, guess what? It’s a good thing we got that inspected prior to closing because that’s an $11,000 mistake if we wouldn’t have caught that.

So there’s a risk involved in real estate. Hope the appraisal is good, right? So we got this property for 300, put over $100,000 in it. The highest comps sold in the area is a little bit bigger with a pool for 600,000. We were able to match that comparable sale without a pool on a smaller property because it was so meticulously renovated. And then takes 90 days plus to realize a profit or more, right? The bigger the rehab, the more the project it takes time to turn around and sell. So there’s a lot involved. So we ended up buying it for 300, over $100,000 into it. Sold it for $600,000, realized a great profit on it, but it took about four or five months to be able to go through that process.

And that’s a lot of capital outlay time and energy that you’re dealing on that property. Now that’s fixed and flip. Now I know a lot of people that do a bunch of fix and flips and you might be a type of person where you’re trying to transition into wholesaling and you’re going, “I do fix and flip,” right? But fix and flip in a down market is not what you want to do. I had a big fix and flip, I’ve fixed and flipped hundreds of properties. And I fix and flip properties in 2005, 2006, 2007, as the market was crashing. Right? And I can tell you what happens is you fix and flip a property and the market starts to crash. Guess what? You don’t get the appraisal and you lose money. And we lost about half a million dollars on about 10, 12 fix and flips we had all going while the market was crashing. Guess what? I’ll never do that again.

So there’s inherent risk when it comes to fixing and flipping properties versus wholesaling, the risk is limited, right? The risk is limited to your marketing, whatever marketing. And there are free methods to do the business when it comes to marketing or there are paid methods, right? So you get 10 to $500 earnest money, fully refundable. If he can’t find a buyer, you can cancel the contract. There’s little to no risk other than your marketing budget, significant return on investment. Can be run from a 90 minute Monday morning meeting, and massively scalable. You can scale it to all across the entire country. We do deals all across the nation and it’s virtual because of this business. Now yet means we’re closing deals over the phone versus closing deals locally.

So is wholesaling legal? People go “Oh my gosh. Is wholesaling legal? If I can’t do it.” Yes, it’s legal. You can get a property under contract and you can turn around and flip that property and do it. Now, what you can’t do is act like a realtor, meaning you can’t go to a seller and say, “Hey, I just want to sell your house,” and not have equitable interest in the property. You have to have equitable interest. If you have equitable interest in the property, you do it via the contract we show you. And guess what? wholesaling is legal. Now, realtors out there, would love to make it illegal. Why? So you would be forced to use a real estate agent. But that’s a little bit farfetched because that would bleed into the commercial world. And guess what? When you can track the property, you have the right to turn around and sell that contract, whether it be commercial or it would be a very difficult thing for them to press. “Successful people do what unsuccessful people are not willing to do. Don’t wish it were easier; wish you were better.”




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