It's often quite easy to spot the clues to vacant properties. They have overgrown lawns, a pile of newspapers outside the door, or trash in front of the house. Also, look for a tarp or plastic covering on the roof indicating fire or water damage to the house. In addition, keep an eye out for any kind of city notices on or near the front door. Finally, depending on where you live, the electric meter may be an indication of a vacant property. For example, in Houston where I live, a gray tag means the electricity is on while a red tag means it's been shut off.

An ugly property can be either vacant or occupied. There's no secret to spotting one--missing or damaged siding, bad roofs, broken windows, gutters hanging down, neglected paint jobs, etc.

Yup, I want you to avoid certain properties. Sound odd? Not really, if you remember the central principle of the wholesaling strategy--go after properties that no one else wants! So, you want to give a pass to any property with a HUD sign or realtor sign in its yard. There's too much competition for such properties; therefore, don't waste your time on them. Also, don't go after any newly repainted house, a remodeled property, or one with a dumpster in front of it even if it's vacant. These are often signs that a rehabber is working on them.

Wholesaling is finding bargain properties, putting them under contract, and then immediately reselling them at a higher price to bargain hunters. It's a "cash-now" strategy as opposed to "cash-later" real estate strategies where you hold on to a property for income and/or investment purposes.

With a cash-now strategy, you can sell the contract and flip the property, or you can rehab that property with the intention to resell. The profit is made in the spread between how much you get the property under contract to buy for and how much you get it under contract to sell.

Here's an example to illustrate how you can make money through wholesaling: Assume a property is valued at $100,000. You get it under contract for $60,000. Then you find another bargain-hunting investor who wants to rehab it and sell or fix it up and rent. You sell it to this person for $70,000. Your profit or "spread" is $10,000 ($70,000 - $60,000 = $10,000!).

Wholesaling is a very attractive strategy because it has several benefits.

As with any trade, you need the proper tools to get the job done right in wholesaling. Fortunately, the tools are simple and inexpensive. Here's a list of what you need to get started:

A digital camera - you need a camera to take photos of the vacant and ugly houses as you drive through neighborhoods. These days, you can buy one at around the $80 to $100 level.

Small, dry-erasable board - when you see a house you like, you'll want to write down the address on the board. Then, you raise it up and take a picture of the house so you have the address and property on one photo. That way, you don't have to keep a notebook (unless you prefer that system).



Flashlight - this is a definite must because many vacant or other properties don't have electricity or are boarded up. This means they're dark, and it's hard to see without a flashlight.


Phone/fax line - a fax hook-up is important because you'll be faxing contracts to title companies and sellers who are out of town.


Business cards - these are a must, but they should be interesting and not boring. Below is an example of a business card I use.

Note: Insert image of $1,000 bill business card.

When I hand it out to people, I say, "Hey, I'll exchange you money for your business card." That gets the person's attention. Then, the card design catches their eye. How do I know this strategy works? Because I get people commenting on how they still keep my card to remember me! So, you can see that it pays to have an attractive and interesting business card that stands out from all others.


Computer and Internet access - computers are a vital tool for you these days because they simplify work for you. An Internet connection is also important. It will give you access to my membership website and to skip-tracing websites that allow you to track down sellers. Be sure to get a DSL or cable connection. Don't get a dial-up connection. They're cheaper, but they tie up your phone line. This, in turn, can annoy prospects and customers who want to get in touch with you. The result-lost deals!

Skip-trace account - these accounts are invaluable because they allow you to locate the owners of vacant or ugly properties who may live in another town or another state. There are several companies on the web that offer skip-tracing services. Accurint is one. Its website address is http://www.accurint.com/. I use it because it's inexpensive. They charge $75 per month for unlimited basic phone search as of this writing. However, you do have to have a business or corporation license in order to get an account. You also have to have been in business for 90 days. If this is a problem for you, then try MerlinData (http://www.merlindata.com/). It's easier to get an account with them. As of this writing, they charge $1.00 for the basic phone report.


Microsoft Word and Access - these software applications often come with new computers. If you don't presently have them, be sure to buy them. Word allows you to create marketing letters with ease and minimal cost. Excel allows you to sort your lists. The "mail merge" function makes it easy to merge the letters with list and put a direct mail campaign into action.

Multi-function printer/copy/fax machine - you'll be printing, copying and sending contracts out all the time, so one of these machines is a good investment. These days, printers are cheap, but the ink tends to be expensive so look for a machine that's easy on the ink.


Filing cabinets, file folders, tickler system - you need to stay organized and have information at your fingertips. One of the best ways to do this is with a "tickler" system. This is an organizational method in which 12 folders represent months and 31 folders represent each day. You arrange them to remind yourself of activities to be done each day. On a particular day, you open the numbered folder representing that date and take all the items out of the folder and put the empty folder into the next month. It's an excellent way to keep on top of prospects and contracts. Here's an example of how you can use it for follow-up with property sellers: Assume that you're to follow up with a seller in two weeks. So, if today were the first, then you'd contact this person on the 14th. So, you take that person's property information sheet and put it in the file folder for the 14th. On the 14th, you reach into the folder and all the information is right at hand. In other words, the system "tickles" your memory at the beginning of each day, and you know exactly what you need to do and whom you need to contact.

There's one other VITAL TOOL you need to succeed in wholesaling-- a willingness to learn and continue learning. The true real estate investor knows that things constantly change in the market so there's always something new to learn in order to stay ahead of the competition.

My advice is to LEARN WHEREVER AND WHENEVER YOU CAN! Attend as many seminars as possible to pick up the knowledge you need. But don't stop there--read books, listen to CDs, view DVDs and videotapes, or attend community classes. So, never, ever stop learning! That's where the true profits lie.

1 You don't need any money to buy the property because, in effect, you're not actually buying it. You're buying the contract and then re-selling it. Many times, your name won't even be on the property title unless you choose to double-close it

2 You don't need a good credit rating because, again, you're not buying the property. In the "regular" real estate market, you won't get anywhere without good-to-excellent credit because lenders don't like risk. Wholesaling has no such barrier. It doesn't matter what your credit rating is; you can dive in and start making money using only your brain and hard work.

3
There's minimal risk because you're selling paper or a contract, not the property itself.

4
There are no holding costs. You don't have to pay mortgages or do any maintenance. You can buy "as is" and sell "as is."
5
The condition of the house doesn't matter. Wholesaling is all about price.
You have the ability to make money quickly (closing on a property between 14 to 30 days).

6
There is an abundant supply of wholesale properties and not as many investors going after them (compared to other real estate strategies).

As with any real estate strategy, there are disadvantages.
1There's more competition since it's the easiest profit center in real estate investing.

2 You make less money per deal compared to rehabbing and selling to owner-occupant buyers.

3 There's no residual income. You must continue to do deals to make money.

However, the advantages of wholesaling far outweigh the disadvantages. When done right, it's a very profitable strategy. And, it can serve as a stepping-stone to longer-term investments within the real estate market. In essence, I'm giving you the key to unlock the door to a whole new world of financial security.

Let's take a closer look at the profit potential in wholesaling. Assume you want to keep your present job and plan to start in wholesaling part time. With my system, you can make $3,000-$5,000 per wholesale deal doing one transaction per month. On a yearly basis, this adds up to $36,000-$60,000. Not bad for part-time income, is it?

Now, let's assume that you want to pursue wholesaling as a full-time job. You can make $10,000-$15,000 per deal at two deals per month. That means you can make from $240,000-$360,000 on a yearly basis!

So, you can set goals for the amount of money you want to make in the real estate market and be independent at the same time. Essentially, the ability to meet those goals will depend on two things-your negotiating experience and the ability to get a deep enough discount to make a profit.

T he key to wholesaling success is this - take an extra step to separate yourself from your competitors. That step is simple - track down the sellers of distressed properties that no one else knows about and no one is working on. It makes great business sense, doesn't it? With little or no competition, you have a clear path to profit-making deals! Now, tell me the truth- "don't you really love ugly now?"

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