In our last article we talked about putting a property seller under contract and then assigning that contract to a third party for a fee, this is called Wholesaling. Most contracts are assignable - unless of course the contract states: this contract cannot be assigned! I do see this language occasionally - most often with various agreements and forms typically used by real estate brokerages. I use my own contracts and I would suggest you find your own forms and contracts to use. Be sure you consult with an attorney to ensure that any form/contract you use is acceptable within your area - better yet, ask your attorney if he/she can draw up a set of contracts and forms that you can use...this may require picking up a lunch tab or two, but well worth it in the long run.
So now you are armed with the knowledge necessary to help your seller with their property headache, and when the time is right you have the right paperwork to get the property under contract correctly and legally. Before we dive into our main topic, let's review your seller. THE SELLER: It goes without saying but I'll go ahead and say it anyway: the terms you have under contract with your seller MUST be very attractive terms. You need to know your local market because we're not talking about market value here, or even below market value...we are talking about obtaining property for fifty to seventy cents on the dollar. This type of seller may be experiencing some type of financial/personal distress - they NEED to sell, not just want to sell.
The type of seller that wants to sell are already listed with an agent on the MLS, the type of seller that needs to sell are looking for you to help them. OK, you already knew that. Let's jump in - how do you find buyers to assign a contract to? For our purposes, we are going to assume the property you have under contract needs some work, so the type of buyer we are looking for here is an investor and/or rehabber. A retail buyer is another type of buyer you will want to have on a list - typically for pretty houses you have under contract or for a property you have rehabbed and now need to retail...but today, let's find investor/rehab buyers we can wholesale our properties to. Here are some ideas that are easy on the bank account: Ads: Placing an ad in the newspaper and sitting back waiting for your phone to ring will only lead to disappointment.
While newspapers are still relevant, you definitely need to be on the internet. The Internet is (arguably) our dominant media and Craigslist (FREE) is one of the web's most visited sites - let the world know that you are looking for property. At the same time, set some time aside and get into the habit of scanning other ads for investors in your area, call them and get their information for your list. Local REIA: Not only does this group provide a good educational experience, but you also will meet and mingle with a host of people that may purchase your properties or even joint venture with you in the acquisition of other properties.
You need to join and attend every meeting - your mission is to collect as many business cards as you can from people who are interested in buying houses. Auctions: This can be a good platform for the acquisition of property as long as you do your homework. In the meantime, auctions are also a great way to meet other investors. Set some time aside on your calendar and attend a number of these gatherings so you can pass your cards around, and just as importantly, collect as many investor business cards as you can.
As with anything, consistency is the key. I schedule these activities as appointments right into my Outlook calendar to make sure I am consistently doing the small things that help build my business. Once the label of real estate investor is accepted into your consciousness, a shift in perspective may be necessary: everyone you meet from now on could be a potential buyer, seller, or partner that may eventually need your help.