How wholesale works and how to make money

• Todd Baldwin has made millions of dollars buying and selling real estate. Currently focusing on wholesale business.
• According to Baldwin, who won $1 million in five deals in 2022, it’s an efficient monetization method.
• Networking with other investors and potential buyers is essential to being a successful wholesaler.

Todd Baldwin built his wealth and achieved financial independence through real estate investments.

He purchased his first property in 2015 at the age of 23. It was his $506,000 six-bedroom home in the Seattle suburb. He made it work financially by “house hacking”. That is, he lived with his then-girlfriend (his now wife) in his master bedroom, converted the smallest room into an office, and rented out his remaining four rooms. his monthly housing expenses.

Because he was living freely and collecting rental income, he was able to save more money and continue to buy rental properties, in addition to earning a six-figure salary in his day job in sales. . By the age of 25, Baldwin’s net worth exceeded his $1 million, thanks in large part to his rental income. At 28, he became a millionaire and was comfortable leaving his 9 to 5 shift to double his estate.

In 2021, Baldwin has earned over $1.5 million. Most of that income came from the sale of his five properties. The insider showed a copy of his seller’s statement and payment from the tenant confirming these details.

Now a 30-year-old investor, he makes most of his fortune through wholesale real estate. In 2022, he will have made just over $1 million from five deals, and plans to close at least one more of his deals by the end of the year. Insiders confirmed this by looking at deposits in bank accounts.

He will have to pay taxes on his income, he explained. His tax rate on earned income is 40%, so he expects to have to pay his $400,000 in taxes.

As for wholesale, “I don’t use cash or credit. There are no costs,” he told Insider. “The only expense I would have would be for marketing or if I paid for a solicitation call, but I don’t do any of that. Virtually there is no risk to me. I literally have no middleman. is a person.”

He said it’s not only low-risk, but one of the most efficient ways to make money.

The mechanism is that someone acting as a wholesaler signs a contract for a house or land, finds a buyer (usually a real estate investor) willing to buy it at a higher price, and pocket the difference. . after the transaction is finished.

For example, earlier this year Baldwin struck a deal with a seller demanding $800,000 on his property. He didn’t want to list listings on Redfin or Zillow, deal with open houses or realtors, or lose money on sales commissions to brokers. Instead, he wanted to do something called an off-market trade – and he reached out to Baldwin to implement it.

“We agreed to make whatever Delta could do if we could sell it for $800,000 or more. So if we sold it for $825,000, we’d make 25 grand,” Baldwin explained. profit.

He estimates he spent about 80 hours on five trades in 2022.

These times included everything involved in the process from start to finish: sourcing the seller, marketing the property, talking on the phone with potential buyers, driving to and from the walkthrough. , perform walkthroughs, and conclude contracts.

He explained that one of the reasons he is able to make deals so quickly is because of the network he has built over the past seven years. We also create a list of investors who want to buy, sell or resell real estate. My list includes about 15,000 people, so I can answer the phone, review the list, and close the deal in 30 minutes. ”

4 steps to start a real estate wholesale business

If you want to try wholesale, you can also do it on a small scale.

To help novice investors get started, Insider has put together advice from Baldwin and another Seattle-based wholesaler, Ludmir Wanot, in a four-step guide to wholesale property. I got

Wanot operates a wholesale business called Evergreen Housing Network. His 11-person team makes about 60 deals a year, averaging $35,000 in revenue each, he told Insider. His company is now founded, but when he first started, “I had no idea what the hell I was doing,” Wanot recalled of his first deal. .

1. Understand how wholesale works

If you’re starting from scratch, you first need to understand exactly how wholesale works.

“Reading and listening to audiobooks is the cheapest way to learn wholesale,” says Wanot. “I want to learn as much as possible before starting a venture so I can minimize the chances of making a costly mistake.”

Some of his favorite wholesale books include “The Real Estate Wholesaling Bible,” “If You Can’t Wholesale After This After: I’ve Got Nothing For You,” and “The Best Wholesaling Book Ever.”

You can also learn about the topic by taking online courses or watching YouTube videos, Baldwin says.

2. Build a network with other wholesalers and build a list of potential buyers.

The sooner you start building your list of potential buyers, the better.

“Join real estate investment groups on social media in your area,” said Baldwin, who is a member of several Seattle-focused investment groups on Facebook. “Within those groups, we post, ‘Who would be interested in buying an off-market property? We have grown our list of legitimate buyers.”

Do a Google search to find your zip code community and start attending local real estate meetings. It helps you build your network and meet active buyers in your area. Plus, you can connect with other wholesalers and people who are already doing what you want and ask them how they got to that place.

“Surround yourself with other like-minded people who have successfully built their own wholesale business and learn tips and tricks that will help them,” Wanot advised. He recommends connecting with other wholesalers through Facebook communities, sites like Eventbrite and Meetup, and wholesaler conferences, which are typically held several times a year.

3. Drive around your neighborhood to find properties and potential sellers

When Wanot started his wholesale business, he spent an hour each day driving around his neighborhood looking at properties.

“I wrote down the addresses of all the bad properties,” he said. “We then skiptraced all the owner phone numbers using needtoskip.com and called each one individually to see if anyone wanted to sell the house.”

He had written down a script that he used every time he cold-called someone. It was a tedious activity and “a lot of people I called were really upset,” he said. I answered the phone.

“If you call someone, make sure the individual is not on the Do Not Call list. It is illegal to call anyone on this list,” he pointed out.

Baldwin also cold called when he first started working. He called landowners, especially those listing properties “for sale by owner” (FSBO). You can find FSBO listings on Craigslist and Zillow, he said.

“I just picked up the phone and started calling,” he said of the first wholesale deal in October 2021. Looks like I had a bit of beginner luck. To get people interested in selling to me. ”

You can also contact local wholesalers in your area to see if you need help with their trade, Wanot said. He used his Facebook group, WA Real Estate Investing, to reach out to a local wholesaler, and two of the people he contacted ended up needing help with the transaction. . In the end he sold one of the two houses and in one transaction he made $20,000. ”

If you have the budget, you can also outsource cold calling, Wanot added. For example, “You can use software like Roor to do ringless voicemail. This software gives your clients the opportunity to target large numbers of people at once at a low cost. If a homeowner listens to their voicemail and is looking to sell their home, they can be contacted directly by text or phone.”

4. Real estate marketing and sales

Once you’ve sourced a seller and got your property under contract, it’s time to sell it.

Ideally, you will already have a list of buyers in your area that you can reach out to. Please,” said Wanot. “Using an Excel spreadsheet, he keeps his email address and phone number in one place and contacts me when the property comes up for sale.”

To market your property, simply record a video of your space on your phone. Email it to a list of buyers with a description of the property. Baldwin said: “For efficiency, I’m using his template for e-mails with links and photos. Just change the name of the recipient and you can send it to the entire list.”

Of the thousands of people he may contact about real estate, about 100 are likely to follow up, he said. would like to see the property in person. When it comes time to do a tour, he lines them up back-to-back to make it as efficient as possible.

After accepting the offer, you will need to create a contract for the transaction. Baldwin does this himself with his LegalZoom, a site that allows you to create legal documents without necessarily hiring a lawyer. “On LegalZoom I found exactly the template I needed. It took him about 12 minutes to write the contract,” he said of his first deal. “And I didn’t even pay for it. I used the free trial but canceled it.”

I then used the free version of DocuSign to execute the contract. “I did the contract for free on LegalZoom and had the buyer sign it on DocuSign for free, so all costs were zero. The fee is different.”

If you don’t have an extensive buyer list, you can always do joint ventures with other large wholesalers, Wanot said. For example, he can help you sell your property through a buyer for 50% of the transfer fee, which allows you to close the deal on the seller’s house and close your first few deals at a profit.”