How to wholesale a property virtually
A big part of successful virtual wholesaling is having systems in place for every step of the virtual wholesaling process. This includes:
- Finding leads and marketing
- Capturing lead information and following up with leads
- Analyzing deals and conducting due diligence
- Writing and executing contracts
- Marketing the deal to investors
- Coordinating a remote closing
Finding leads and marketing to sellers
The first and arguably the most important step in virtual real estate wholesaling is finding a motivated seller. This can be done in several ways. Some wholesalers look in the multiple listing service (MLS) for properties that are valued below market, reach out to expired listings that never sold, or submit low offers on properties that have been on the market for a long time. Fortunately this tool, among other online marketing tools like the use of social media or paid advertising, can be used anywhere without any change to the process or system.
Others who utilize direct mail marketing will likely need to take their process virtual. There are dozens of direct mail companies that will handle every facet of a direct mail campaign, including verifying addresses on your mailing list, printing, stuffing, and addressing the envelopes, and mailing them at the proper time. Communication about who has replied and what envelopes came back as rejected or underivable is done through an online system, which means you aren't wasting marketing dollars on future campaigns.
Bandit signs that say "I buy houses cash" or other similar sayings are also popular marketing tools among wholesalers, but they can be difficult to manage virtually. You can hire someone locally to place the signs, but verifying they've completed the task can be tricky. If you still want to put out bandit signs as a virtual wholesaler, try to hire someone you know and trust to do the job and be explicit about where and how you want the signs placed.
Capturing leads and following up
Once your marketing campaign is underway, you'll need to capture inbound leads. Most letters have a "call to action," an explicit message telling the reader what to do next. This could be to call you personally or to call a phone answering service that logs leads for you. It could also tell them to visit your website, or you could provide them with both your website and phone number. What matters is that they have a clear understanding of how to contact you.
It's a good idea to have a website with a lead capture tool. Lead capture is a section of the website that captures a lead's information such as their name, phone number, email, or other important information. Beyond the lead capture, your website should explain who you are, what you do, and what the process of working with you is like. Carrot is a website platform designed to help capture leads for real estate investors and has plug-and-play templates for all of this and more. It's a really easy way to get a website targeted for wholesaling up and running.
It's also a good idea to have a customer relationship management (CRM) tool that organizes information on leads, mail campaigns, and other important aspects involved in a real estate business. You can save a lead's contact information, add property information, take notes about the property or your conversation with the owner, or set reminders to follow up at a later date. Having an organized system means leads won't fall through the cracks and will increase your chances of converting a motivated seller into a deal.
Analyzing deals and conducting due diligence
An important part of real estate wholesaling is being able to assess and correctly value the property in its current state and after it's been repaired. This means you need to understand the local market and what properties in that area sell for if they are in poor condition, renovated, or for the intended use of a rental. Luckily online websites can assist with valuations, helping you get a fairly accurate picture of values.
If you're virtual real estate wholesaling, seeing the property face to face likely isn't possible. You can combat this by having boots on the ground, such as an assistant or Realtor. Additionally you can request the property owner send you pictures of each room in the property, but this isn't always a viable option and depends greatly on who the seller is.
Writing and executing contracts
Hopefully, at this point you've received calls or website submissions and made some offers, maybe even getting one accepted! If so, this is where you'll need to get it in writing. Most wholesalers have their own contract they use, which will include special language based on the state you're working in. As a virtual wholesaler, it's ideal if the selling party has an understanding and ability to work with technology to close the deal, signing contracts digitally with e-signature programs. However, some may not. In this case you'll need to mail them a hard copy to sign with a prepaid, pre-addressed return envelope.
Marketing opportunities to investors
In order to make money from the deal, you need to find an end buyer, someone who is able to pay cash or has the transactional funding lined up to purchase the investment property. It's a good idea to constantly focus efforts on growing your cash buyer network, keeping information in a CRM or email software program. That way when a deal comes along, you have a quality list of buyers to market it to. If you're branching into new markets, have a list for each market you're operating in and keep them organized in your email or CRM program.
Coordinating a remote closing
Once you've secured a buyer, you'll want to execute an assignment contract with the buyer using the same e-signature software. Ideally you'll be working with a title company or attorney of your choice familiar with wholesale real estate, but if not make sure the title agency or closing agent is aware that this is a virtual wholesale transaction and that any paperwork needed by you will need to be executed beforehand and mailed in or signed electronically. Luckily in today's age, most title companies and closing agents are well versed in remote closings and are prepared to coordinate and work with all parties, wiring proceeds to the proper parties after closing.
Pros and cons of virtual wholesaling
A huge pro to virtual wholesaling is the opportunity to branch into new and multiple markets. If you're located in an area that faces high competition, it can be challenging to find a wholesale deal. By utilizing virtual wholesaling, you can expand to a different market that has less competition, allowing you to do more deals and make more money. Another big benefit is the ability to work remotely. Many investors, especially as of lately, have realized the freedom remote investing can offer.
The biggest disadvantage of virtual wholesaling is the inability to work with the seller directly. Some sellers prefer to be able to meet with the buyers, shake hands, and sign the papers in person. Not being able to meet face to face could lose the deal. Another drawback is relying on others to be your eyes and ears. Most of the time, this works just fine, but if they are inexperienced, they may not notice small things that could be big issues like you would. Evidence of water intrusion, foundation issues, or other expensive but often hard to see issues could be missed and could end up turning a deal into a dud.
Tips for virtual wholesalers
Virtual deals to take a special skill set, ideally someone who is comfortable and familiar with the use of technology and willing and able to take some risks outsourcing certain tasks to others. Even if you aren't super skilled when it comes to technology, you can always hire a virtual assistant to help make sure each step of the process is being completed in a timely manner. If you're considering wholesaling, educate yourself on the process of traditional wholesaling and start identifying what markets you may want to branch out to. Familiarize yourself with the various technologies that are available to use, and make sure you have an efficient system to help you through the entire process.