Wholesaling is one of the fastest ways to start making money in real estate with little to no capital. You find discounted properties, put them under contract, and assign that contract to an investor—keeping the difference as your fee.

What is Wholesale Real Estate?

Wholesaling is the practice of contracting to buy a property at a discount, then assigning (selling) that contract to another buyer for a fee. You never actually buy the property—you sell your right to buy it.

Example Wholesale Deal

• Property ARV: $200,000
• Estimated Repairs: $30,000
• Your Contract Price: $100,000
• You Assign to Investor For: $110,000
• Your Assignment Fee: $10,000

The investor still gets a good deal (pays $110k + $30k repairs = $140k total for a $200k house), and you make $10,000 without ever owning the property.

Why Wholesale?

Advantages

• Low capital required: No down payment, no loans, no rehab costs
• Quick profits: Deals close in 2-4 weeks typically
• Low risk: You don't own the property, so limited downside
• Learn the market: Great training for future investing
• Build relationships: Connect with investors, contractors, agents

Disadvantages

• Active income: You only make money when deals close
• Competition: Many wholesalers chasing the same deals
• Reputation risk: Tying up properties you can't close hurts sellers
• Legal complexity: Regulations vary by state
• Smaller profits: Flippers and landlords often make more per deal

Step 1: Understand the Numbers

Before finding deals, you need to understand how investors analyze properties. The most common formula is the 70% rule:

Maximum Purchase = (ARV × 70%) - Repairs

For wholesaling, you need to buy below this number to leave room for your assignment fee AND still give investors a deal they want.

The Wholesale Formula

Your Max Offer = (ARV × 70%) - Repairs - Assignment Fee

If you want to make $10,000 on a deal, you need to contract the property at least $10,000 below what investors will pay.

Step 2: Find Motivated Sellers

Wholesale deals come from motivated sellers—people who need to sell quickly and will accept below-market prices. Common situations include:

Motivation Types

• Pre-foreclosure: Behind on payments, facing auction
• Divorce: Need to split assets quickly
• Inherited property: Out-of-state heirs who don't want to deal with it
• Landlord burnout: Tired of managing rentals
• Relocation: Job transfer requiring quick sale
• Financial distress: Medical bills, job loss, etc.
• Vacant properties: Owners tired of holding costs

Finding Deals

Driving for Dollars

Drive neighborhoods looking for signs of distress: overgrown lawns, boarded windows, code violation notices, mail piling up. Record addresses and contact owners.

Direct Mail

Send letters or postcards to targeted lists: pre-foreclosures, absentee owners, tax delinquent properties, probate leads.

Online Marketing

Create a simple website and run Google/Facebook ads targeting phrases like "sell my house fast" or "we buy houses."

Networking

Tell everyone you buy houses. Real estate agents, attorneys, contractors, and property managers often know of off-market deals.

MLS (Through an Agent)

Work with an investor-friendly agent to find listed properties with long days-on-market or price reductions.

Step 3: Analyze the Deal

Before making an offer, you need to know three things:

1. ARV (After Repair Value): What the property will be worth fixed up. Use recent comparable sales within 0.5 miles.
2. Repair Estimate: What it will cost to renovate. Get a contractor to walk the property or use cost-per-sqft estimates.
3. Market Rents (for rentals): If buyers might hold as rentals, know what it would rent for.

Quick Analysis Example

Step 4: Make Offers and Negotiate

The Initial Offer

Start below your maximum. If your max is $125,000, offer $110,000. This gives you room to negotiate up while still hitting your numbers.

Negotiation Tips

• Listen first: Understand the seller's motivation before negotiating price
• Solve their problem: Speed, certainty, and convenience can be worth more than a higher price
• Explain your position: Show them the numbers—repairs, holding costs, investor margins
• Be willing to walk: Not every deal works. Don't force bad numbers

Step 5: Get the Property Under Contract

Once you agree on price, you need a purchase agreement. Critical elements for wholesaling:

Assignment Clause

Your contract must allow assignment. Standard language: "Buyer may assign this contract to another party without seller's consent."

Inspection Period

Include a 7-14 day inspection period. This gives you time to find a buyer or back out if the deal falls through.

Earnest Money

Put down earnest money to show good faith—usually $500-2,000. This is at risk if you don't close, so keep it reasonable.

Step 6: Find Your Cash Buyer

Now you need to find an investor to assign the contract to. The faster you can do this, the better.

Building Your Buyers List

• REIA meetings: Local Real Estate Investor Association meetings are full of cash buyers
• Public records: Look up recent cash purchases in your market
• Facebook groups: Join local real estate investing groups
• Other wholesalers: They often have buyers they can't service
• Property managers: They know who's actively buying rentals

What Buyers Want to Know

• Address and property details
• ARV with supporting comps
• Repair estimate (ideally with breakdown)
• Your assignment price
• Photos (interior and exterior)
• Timeline for closing

Step 7: Assign the Contract

Once you find a buyer, you'll execute an assignment agreement that transfers your rights to purchase the property. The buyer pays you the assignment fee—either at signing or at closing.

Assignment vs. Double Close

Assignment: You assign your contract directly. Your fee is visible to all parties. Simpler, cheaper.

Double close: You actually buy the property, then immediately sell it. Your profit is less transparent. Requires more capital (transactional funding) and has two sets of closing costs.

Common Wholesale Mistakes

• Overestimating ARV: Use conservative comps or buyers won't bite
• Underestimating repairs: Always add contingency
• No buyers list: Build your list before you find deals
• Tying up properties you can't move: Hurts your reputation and the seller
• Ignoring legal requirements: Know your state's laws
• No earnest money: Sellers and title companies won't take you seriously

How Much Can You Make Wholesaling?

Assignment fees typically range from $5,000 to $20,000 per deal, with $10,000 being a common target. Factors affecting fee size:

• Property price: Higher-priced properties support larger fees
• Deal depth: How far below market you contracted
• Buyer demand: Competitive markets support higher fees
• Your reputation: Known wholesalers can command better fees

Full-time wholesalers doing 2-4 deals per month can earn $100,000-300,000+ annually. But most beginners take months to close their first deal.

Getting Started: Your First 30 Days

1. Week 1: Learn your market. Study comps, drive neighborhoods, identify target areas.
2. Week 2: Start building your buyers list. Attend a REIA meeting, join Facebook groups.
3. Week 3: Generate leads. Start driving for dollars, send your first mailer, or set up online marketing.
4. Week 4: Make offers. Analyze every lead and make offers on anything that might work.

Helpful Tools

• Wholesale Calculator - Calculate assignment fees and max offers
• ARV Calculator - Estimate after repair values
• Rehab Cost Estimator - Build repair estimates
• 70% Rule Calculator - Quick offer calculation