7 Proven Strategies to Wholesale Real Estate and Make $10,000 a Month in Extra Income
I’ve always asked myself, how can I supplement my income and make $10,000 a month in addition to my full-time job? It took me a while to discover the answer to that question. And when I finally did, I quickly discovered you can make a heck of a lot more money than just $10,000 a month. But I’m a conservative guy, I don’t want to overpromise. So for the sake of being a realist, let’s keep it at 10k. This is very doable, for anyone.
1) Find a Mentor
I know you what you are thinking. How will I make $10,000 a month if I’m shadowing someone? Here’s the deal. There are dozens of wholesaler’s and even more flippers in your market that are doing a high volume of deals every month. Some of them need help. I highly suggest partnering up with another successful wholesaler or house flipper that is doing a lot of deals.
Not only will you learn the business, but you can you still make money right away. You see, wholesaler’s are always looking for the next deal. If you can bring them a motivated seller lead and it closes they will love you forever and make sure you get paid for your efforts. Win-win.
Be a Bird Dog
Ever heard of a bird dog? This is essentially what you’ll be doing. Scouring Craigslist and Facebook Marketplace for FSBO ads, driving for dollars, and putting up bandit signs. Anything to find an off-market lead. If you are lucky enough to find one (and you will) most wholesaler’s will pay you 50% of the assignment fee. My average assignment fee is around 14k per deal. You do the math. In other words, you can easily make $10,000 a month in extra income while getting mentored.
So where do you find a mentor? Go to local REIA (Real Estate Investors Association) meetings and join Facebook groups. I have made hundreds of connections by joining my local real estate investor Facebook group here in Grand Rapids. Simply send messages to other investors and make introductions, ask them if they need any help finding deals and if they are interested in partnering up. Many wholesaler’s refer to this as a JV-ing.
It doesn’t hurt to be direct and ask if they would be interested in being your mentor. You might be surprised how receptive people are. This is also a great way to add buyers to your cash buyers list. Speaking of a cash buyers list…
2) Start Building a Cash Buyer List
If you plan on wholesaling, it’s never too early to work on your cash buyer list. It took me nearly 3 years to build up my list of over 500 buyers. Anything over 100 is a good number to target in your first year. You will always have your top buyers. In some cases you may only have 2-3 buyers that buy all of your deals. But that doesn’t mean you shouldn’t focus on building up your list.
Building a large buyers list comes in handy for those mediocre to not-so-great deals. Every once in a while you may have trouble moving a deal. I can’t tell you how many times I’ve sent out a deal to my buyers and I only get one response. The good news is, all you need is one buyer to move a deal!
How do you build a strong cash buyers list?
If you haven’t already, sign up for Propstream. You will thank me later. I reference Propstream quite a bit in this blog. It’s my goto for building out marketing lists. It’s also one of the top 6 apps I use in my wholesaling business.
Check out this video to see how I use Propstream to find active cash buyers in any market
In addition to using Propstream to find cash buyers, I also use Facebook. These are my top two resources. Facebook is rich with RE investor groups. Some better than others. Even in smaller markets you will surely find a couple groups. Join these groups and search “cash buyers” or “wholesaler add to buyers list” or any other combination of those keywords. If the group has at least a few hundred members I can almost guarantee you someone else has asked this question already. Probably several people. Scroll through the replies and send them a direct message through FB and introduce yourself. Get their email and phone number. Build your list.
Disclaimer: Don’t add these buyers to an email marketing platform like Mailchimp without their permission. Always contact them first and ask if they want to get added to your list.
“Whoever has the biggest cash buyers list wins.”
Unfortunately, I can’t give credit to the person who said that because I don’t remember, ha! I heard it on a podcast once. But it’s true. It doesn’t matter what stage of the wholesale journey you are in. Always remain committed to building the biggest list you can. This will help you make $10,000 a month fast!
3) Start Driving for Dollars
Anyone can start doing this as soon as today! There is no prep work or skill involved. Just hop in your car, drive to a nearby neighborhood and look for houses that are in need of repair. Look for peeling paint, shingles coming off the roof, junk in the yard, overgrown grass and landscaping, broken glass. Anything that looks unkept. Jot down the address and look for another one. This usually works better in older neighborhoods. Don’t go into a new development where the homes are less than 10 years old.
Once you have a list of at least 100 houses, you can upload that list into a skip tracer such as Quality Skips or Batch Skip Tracing and pull owner info and phone numbers. From there, contact these sellers by calling or texting. Don’t know what to say?
Contacting the Owners
I’m not big on scripts. Personally, I think most people who use scripts sound robotic. You want the call to sound conversational. Introduce yourself as a real estate investor looking for houses in that specific neighborhood. Ask them if they have ever considered selling. That’s all you need to say. From there, if they do show interest, you can ask more specific questions about the property such as # of bedrooms and bathrooms, general condition, mechanicals working, etc.
Your goal is to schedule an appointment to see the house (you will need to take some pictures) and then ultimately put the house under contract using an assignable wholesale purchase agreement.
The best part about driving for dollars is… it’s free!
4) Determine Repair Cost and Calculate ARV
You found a motivated seller, ran the appointment and took good notes. Now you need to make an offer. This is where you need to think like an investor. Think like a house flipper. Your job is to come up with a fair price for the seller and still leave enough meat on the bone for the house flipper to make some money too.
Most investors that are flipping houses aim to make between 30-60k per flip. If it’s a smaller house or a light rehab and the project won’t take long to complete, 30k might be acceptable. On larger flips that are more time consuming, 50 or 60k is usually the target.
So how do you calculate an offer? First, you need to estimate repair costs. As a shortcut, there are 3 repair level categories. Light rehab, moderate rehab and heavy rehab. Every house is different but this will help give you a general rule of thumb on what to look for. Let’s assume this is a standard 3 bed 2 bath house with 1,500 sq ft of living space. That is a common size house that flippers target. Let’s take a closer look at each category.
Light rehab (10-15k)
Some flooring, paint, replace some bathroom fixtures, new lighting, light patching / drywall work, minor kitchen improvements
Moderate rehab (25-30k)
Some flooring, paint, replace most bathroom fixtures such as tub, toilet, vanity. New lighting, some drywall work, some electric or plumbing work, new kitchen appliances, counter tops, possibly cabinets if it’s a smaller kitchen but this can be a big expense. Exterior paint, landscaping
Heavy Rehab (40-60k)
All new flooring, paint, new everything in bathrooms, kitchen. New lighting, mostly new electrical and/or plumbing. Drywall repair, patch walls, ceilings. Exterior work such as new siding, decking, landscaping.
As you can imagine, there is a lot more that can go into estimating repair, especially with larger projects. I highly recommend bringing an experienced investor or contractor with you on your first couple of appointments. They can also help you itemize the repairs so you understand how much each repair costs.
Determine ARV
Once you know the cost of repairs, you need to figure out the ARV (after repair value). The ARV is basically an average of the nicest comps in the area. What are the nicest homes selling for that are similar in size?
If you have access to the MLS, use that. I don’t have my real estate license so I use Zillow. It works great. Type in the city and state of where the property is located and zoom in on the exact location. This is where it’s very important to “know the neighborhood”. Especially in urban areas where neighborhoods can change quickly from good to bad. In these areas, try to find comps as close as possible to the subject property. Preferably within a quarter mile. In rural areas it’s ok to extend the radius out to 1-3 miles or more.
In the upper left corner, you will see a pull down menu where you can change from “listed” to “sold” properties. That’s what we want.
From there, click on the “more” button and select “sold in last 6 months”. If you are in a larger market with more sales, you can select “sold in last 3 months” for more accurate data. If you are in a smaller market with much less recent sales activity, you may have to go back a year. I would not suggest going back more than a year for recent sales since the market can change quite a bit in a year.
Here is what your Zillow filters should look like
Once you have at least 3 solid comps, take the average of those comps to determine the ARV for the subject property. It’s not always cut and dry. You might have to make small adjustments if the comps have more or less bedrooms, bathrooms, square footage, etc.
Calculating The Offer
We have the cost of repairs and ARV, now we need to calculate the offer:
ARV x .70 – Repairs = Offer Price (less your assignment fee)
Example: ARV $200,000 x .70 = $140,00 – $30,000 repairs = $110,000 Offer Price – (Your assignment Fee).
Why .70? This is a multiplier that includes profit, holding costs, closing costs, and other costs of doing business. Occasionally you can get away with using .75 or even .8 on a larger flip. It also depends on your market and how competitive it is. If you are in a large market with a lot of buyers, you’ll be able to get away with a higher multiplier more often. If you are in a smaller market with less buyers, you may need to use a lower multiplier such as .65 or .70.
Remember, $110,000 is the price an investor would pay, but you need to add in your assignment fee. If you want to make 10k on this deal, I would start by offering $100,000 or less to leave room for negotiating.
Tip: Always ask the seller if they have a price in mind they were hoping to get for it first. This puts you in the drivers seat as a negotiator and gives you the advantage. This is also a time saver especially if they give you a number that is way too high and won’t budge.
5) Find Motivated Sellers Through Texting
SMS marketing is a great way to find off-market leads. There are dozens of platforms out there, I use Launch Control. They have an easy to use interface, batch texting, proprietary routing algorithm, drip campaigns, and most importantly they are TCPA compliant. As mentioned above, we pull marketing lists from Propstream and then use Quality Skips for skip tracing. Simply import the list into the Launch Control Platform and you are ready to go.
What I like most about Launch Control is the automated first message builder. Texting is becoming highly regulated and mobile carriers are blocking messages that appear to be spam. Launch Control is a step ahead and has developed an algorithm that gets the first message delivered at a higher rate. It also tells you what words are most likely to get flagged on a first message.
Here is a screenshot of the dashboard with KPI’s
Launch Control pricing starts at $297/mo which isn’t bad at all considering that gives you up to 2,500 monthly contacts. I typically get 8-10 leads per month and we close 2-3 deals per month from SMS campaigns. This marketing channel is extremely effective in terms CPL (cost per lead). It’s by far my lowest CPL out of the channels I use.
The only downside is the follow up required to convert the leads. You’ll also need to sift through the lukewarm responses and deal with some not-so-friendly responses. However, Launch Control keeps it above board with the TCPA compliance and Blacklist Alliance, a premium litigator scrubbing system for added protection.
While texting is a cheap way to get leads, it can be time consuming and I definitely recommend hiring a VA (virtual assistant) to help with follow up and drip campaigns. This will help you stay in front of your leads and convert them into appointments and deals.
Texting is an effective (and inexpensive) marketing channel that will allow you to make $10,000 a month (or more) in wholesale assignment fees.
Sign up for Launch Control using this link and I will send send you the exact templates & initial messages I use in my wholesaling business.
6) Find Motivated Sellers by Sending Direct Mail
Believe it or not, snail mail still works! Especially for the 60+ crowd / baby boomers. Here’s the deal though, everyone sends direct mail. Nearly every deal I’ve won from direct mail has been a competitive bid situation. Every seller had a stack of postcards and called the top 2 or 3. Your postcard or letter must stand out! Do not use a basic WE BUY HOUSES template. Be different. Be creative. Create your own content. You need to look credible and not send the same thing everyone is sending. People like local businesses so stress that you are local.
There are a boatload of sites you can use for direct mail. Yellow Letters HQ, Click2Mail, RESimpli and more. Out of the 3, I prefer RESimpli mainly because I use their CRM and direct mail is integrated. RESimpli CRM is excellent for my business because of all the automation, drip campaigns, RVM (ringless voicemail) and direct mail integration. What’s really cool is you can assign a unique phone number with each campaign, so when the seller dials the number you know exactly what mailer it’s from. This is especially helpful if you having multiple mailers out at once.
Direct Mail Template
People often ask me, what template do you use for direct mail? Honestly, I’ve probably had the best success with a basic message that says:
“Hi (Seller), my name is (name) and I’m interested in buying your house at (Property Address). I buy as-is, pay all cash and close in 2 weeks. Please call me at (phone number).”
You can also add that you will pay all of their closing costs, and there are no fees or realtor commissions.
Keep it simple. Now that my brand is established I do use my logo, BBB A+ badge and 5 Star Google Review Badge. I emphasize that I am local and that I make “fair” offers (vs lowball offers). Again, you need to stand out and be different than all the other mail pieces they receive. Here is an example of one of my recent postcards.
You will notice it’s not too busy with colors and graphics. Straight, to the point messaging that says I’m local and suggests that I make “better” offers than my competition. There is no magic bullet when it comes to direct mail marketing and you’ll want to experiment with some different designs, but this seems to work well for me.
The second most important aspect of a good mailer is your list. There are many different types of lists you can buy: Pre-foreclosure, tax liens, probate, vacant, etc. These specific motivated seller lists can work, but usually the lists are smaller and they are heavily targeted. I’ve found a lot of the data to be inaccurate, depending on what your source is. Propstream has a feature called “Quick Lists” where you can easily target sellers that fall into any of these categories. I love Propstream and I speak very highly of it but I haven’t had much success with their Quick Lists.
I’ve had the most success targeting equity lists in specific zip codes. I recommend keeping it simple and target 2 groups of sellers. Owner occupied and non-owner occupied.
Here are the Filters I use:
Geography: Selected Zip Code(s)
Owner Occupied: Yes / No
Property Classification: Residential
Property Type(s): Single Family / Multi-Family 2-4 / Multi-Family 5+ / Apartments (generic)
On Market: No
Years of Ownership: 5-100
Estimated Value: $0 to $250,000
Estimated Equity %: 70% – 100%
If you have money for direct mail, (at least $2,000/mo to start), the combination of using these templates and lists should give you enough leads to make $10,000 a month in assignment fees.
7) Launch a Website and Optimize with SEO
I saved this one for last because if this is done well, you will make $10,000 a month wholesaling real estate in your sleep. In fact, if you are not making 20 or 30k a month you are doing something wrong! Now, getting organic website leads will take time. Don’t expect leads right away. But with a little patience you could be bringing in 5-10 motivated seller leads every month within a year. In larger markets, this number could be much higher. The best part? These leads are 100% free.
Every market has “We Buy Houses” websites. But the truth is, many of them are really bad. The high ranking sites are usually larger companies that enter new markets and do virtual wholesaling. While they have lots of resources and money to optimize their websites with SEO, many homeowners aren’t looking for larger corporations and out of state companies. They want local people like you and me. Mom and pop shops, if you will.
That’s where you come in. Paint the picture that you are a local, family business. You solve problems, people like you and trust you. Write great content. Focus on features and benefits and how you can help them.
Features & Benefits
- You can close fast!
- No realtors!
- You will pay all closing costs, including seller costs!
- Don’t worry about making costly repairs!
- No appraisals!
- No need to clean!
If you are familiar with launching websites (hosting, WordPress, etc) and SEO you can go ahead and get started but you will need to start from scratch with content. Carrot is a great place to start for out-of-box content. I got started with Carrot and they still host my site today. The big benefit with a Carrot site is you get can launch a site immediately after signing up with pre-written, SEO optimized content designed to attract motivated sellers. Sounds awesome, right? The downside is there are thousands of Carrot sites so if you don’t change the content you’ll have the same content as every other Carrot site out there. You won’t rank well in search engines unless you customize the content.
That’s where understanding your customer (the seller) comes into play. You need to relate to them and show them how you can solve their problem, all with well-written, SEO optimized content. I recommend Jerryll Noorden’s SEO For Real Estate Investors. He knows what’s up when it comes to SEO. He will give you the blueprint on how to rank number #1 in a Google search, in any market. I purchased his program in January of 2020 and I rank #1 in multiple markets in West Michigan.
Here is my site: www.lakeshorehomebuyer.com
Are you excited about your wholesaling journey!? Ready to make $10,000 a month (or a lot more!)
Wholesaling real estate is one of the most profitable side hustles. I know this because I’ve experimented with many. It’s no surprise that real estate has created more millionaires than any other industry, by far. The best part about wholesaling is you can use the proceeds to quickly build your real estate empire. Follow these 7 proven strategies and you’ll make $10,000 a month wholesaling real estate in no time!
Related: Million Dollar Side Hustle
