How to Wholesale Real Estate with no Money

What's going on, YouTube?

What's up, guys? It's good to be back.

It is good to be back, Cory. We're definitely pumped and excited to be here today because today we just closed on our biggest deal yet. How much was it, Cory?

$86K.

$86K.

And that deal was with $0 of our own money.

$0. I mean, can you believe that?

No money out of our pocket.

No money out of our pocket. That is unreal. So basically, the reason why we're making this video, guys, this is our biggest deal yet. Our biggest deal before this was $78,000, so this one beat it. We're pumped about it, and we're making a case study and breaking it down on how we got deal, how it's negotiated, all the things that people want to know so you guys can learn and get deals like this yourselves.

So tell them, don't forget to like, subscribe, and hit that bell icon for notifications.

Exactly.

So stay tuned, let's jump into it. Yo Corey, so let's break down this bad boy. You can get us started.

Yeah, so this deal, we got it. It's in our home market of Salt Lake City, a suburb of Salt Lake called South Jordan. It's actually like, you know, 10 minutes from my house. So it was a really cool deal because it's really close, really easy for me to go check on stuff. But just outside Salt Lake City, we bought it at $344,000.

So we bought it.

You got to tell them we bought it. So our strategy, like we were going to wholesale it, but really like we weren't getting what we wanted.

No, right? And we thought it was worth way more.

I think assignment fees were like close to like $20,000 to $30,000. And we're like, yo, we could make way more on this, way more. So we took it down, we bought it, and we sold it at $460,000. Now that's obviously not what— we didn't walk away with that difference of $120,000 because there were fees, expenses, and some costs that go into that, and we'll break that down. But yeah, those were the numbers. $344,000, sold it at $460,000 on the market, listed with an agent, decided to wholesale it rather and then just wholesale it.

Exactly. So you guys are probably wondering, okay, why would a seller sell at such a discount where we could make $86,000, right? That's probably what a lot of people asking that question. So let's talk about the seller situation. The seller had inherited this property from her mom that had died, right? And the mom was in bankruptcy, right? Like she wasn't making her paying her bills and then she died. So the house had solar panels on it and there was a solar lien on the property and the daughter was trying to sell the house.

$47K.

Oh, the lien was for $47K. The people that sold her solar kind of screwed her mom over because $47,000 for solar? You kidding me?

Seems like a lot, but maybe it's not.

I don't know.

So anyway, the daughter was trying to sell the property and she was having no luck selling it because their lien was on there and investors weren't trying to buy it, you know, the lien on there.

Yeah, she tried selling to Opendoor, couldn't. Yeah, try another investor.

Opendoor said to her that she needs to pay off the lien and then they'll buy it. So she had to come up with $47,000 and And she didn't want to put it on the MLS because, you know, I'm assuming the same issues would happen.

So, you know, like a retail buyer is not going to be able to pay that off, right?

So she was struggling to sell with the solar lien, and, you know, we got the lead and we talked to her, and basically, you know, she was wanting way too much in the beginning. But after talking to her and telling her, you know, negotiating, we're able to negotiate it down to a price that even if we paid off the solar, we would have made probably $37,000.

Yeah, like $40,000.

So when we agreed to buy the house from her, we said, look, we're not gonna pay off the solar lien right now. We're gonna leave it, you know, we're gonna leave the money in escrow to pay it. And, you know, we're gonna try and fight it and get rid of it.

But she also wanted money like really fast. Yeah, that was another main motivation is like it wasn't just about the solar. That was a big part of it, but she wanted like money now immediately.

We actually had to front her money, $5K up front, but we knew it was a solid deal. So we gave her $5K up front. But by the way, guys, do not just give someone $5K up front without verifying that they're the owner of the property. You've submitted the paperwork.

Make sure they have the ability to sell it.

Yeah, because, you know, we did verify that. But anyway, guys, so that's kind of the reason why we were able to get such a good deal is there was a solar lien of $47,000 that no one really wanted to pay off, and we kind of took the risk. We said, hey, we'll wait, you know, we're gonna list this anyway, we're gonna wholesale it, so we're gonna have the time to wait to get it removed with an attorney or just wait it out. And get the lien removed by the solar company. But she was not willing to wait. She wanted her money right then. So that's where we were able to solve a problem, get her her money, and she still made, what, like $800,000 selling the property?

Exactly. Yeah, she walked away with a big chunk.

So that's— that was the situation. So the negotiations that our acquisition guy had, he was back and forth. He said it took 5 phone calls to get basically, you know, lock it down. But then, you know, we had—

and after that, it was probably another 30.

Yeah, we had a ton of calls after that. But so going back in this case study, guys, how did we find such a good deal? We solved the problem, right? We were willing to buy the home with the sewer lien, even though if we paid it off like we said, we would have still made $37,000. By not paying it off and waiting and getting it removed, we were able to make that extra $47,000 or whatever the math is. So we, you know, we made $86,000 plus change. So we're actually going to break down the numbers for you right now, guys. Our flipping calculator— this is a calculator that's been given to us and made to help flippers so they know their numbers and how much they're going to make. So we're going to break down the math and show you why we decided to wholesale this instead of doing a full remodel and, or wholesale it. Cause you know, wholesaling was going to make us more money when we ran our numbers and it's actually what ended up happening and helping us make the most. So let's jump into that.

All right, everybody, what's going on? We're going to do a quick deep dive of this deal and why we chose to wholesale it instead of wholesale or fix and flip it. So the first thing you have to do if you want to be a serious real estate investor is have a calculator that calculates hard money, interest, closing costs, hold time, commissions when you list it and you resell the property. So on this deal, the first thing we did is we were like, "Okay, what would it look like if we flipped it? How much money would we make if we flip this property?" So I'll show you how to use this calculator. And again, you need one like this. So if you don't have one, you can look in the description below and I'll have a free link to get this calculator I'm using that we use in our business. So first thing you want to do is determine the ARV of the property and what it's worth when it's in pristine condition, when it's fully flipped. So this house is worth $500,000 fully flipped. That's what we believe it was worth from running our comps. We got it for $344,000. So we, uh, we know if we flipped it, we'd have to get hard money, 12% interest, 2% points to borrow the money. We'd have to bring 15% down to get the hard money. The whole time would probably be about 6 months. And usually it costs 3% for commissions, um, to list it and 3% for buyer's commissions. But we actually have an in, and I'll show you that later, but that's usually what flippers have to pay. Now, we had some contractors come in and they bid us $80,000 to $100,000 to flip the house in order to get it to its ARV of $500,000. So I just go right in the middle, just for an example. And usually if they bid you $80,000 to $100,000, it's usually going to be more expensive than that. It's never really a lot less. So if you look at these numbers, you'd say, "Okay, look, that flip doesn't really make sense. We're going to spend $90,000 to make $8,766. Not a good deal." Now, what we do is we have an agent that lists it for $1,000. So we zero this out. We just add $1,000 to the repair costs over over here. And that's, you know, you can see you can make a little bit more money. And also, you know, we, instead of paying 3% of the buyer's commission, we do 2.5%. So you would actually, for us, we would've made $25,000 by flipping this property. But for me, I was like, no, we can make way more on a deal this discounted in such a hot market. So we said, we're not going to flip this thing. So next thing he says, what if we wholesale it? Just get it done, get it quick. So we said, if we wholesale it, we first thought we could make $420K on the wholesale deal. And in order to check the wholesale numbers on this calculator, you have to zero out your repair costs and you have to zero out the cost of borrowing the money since you're just selling it straight up. So if we had been able to find a buyer that was willing, a fix and flipper that was willing to take it at $420K, we would've said, "Yeah, definitely. That's probably a good deal." But the buyers are coming out and the fix and flippers are like, "Yeah, you know what? I think we need this thing at $380K, $390K." $390,000. So even at $390,000, we're talking $42,000, which is a good deal. But I said to my guys and we decided we can make more than that. So I said, "What if we wholesale it? What if we just buy it, close on it with hard money, and then just relist it as is?" So we ran comps and we said, "Homes selling in as-is condition in this area with similar condition are going for $450,000." So he said, "Okay. Well, we're going to maybe have to do a little bit work. We're going to have to clean it up." So I think we spent $500 on the cleanup, and a cleaning lady, I think actually $700. And we would have to borrow hard money, 12%, 2 points to use the money, 15%, bring 50% down. We thought that the whole time we would take us 3 months to sell this thing. Remember our guy Nate, Nate Worthen? Shout out to Nate Worthen, our agent. He only charges $1,000 to list a property. So we didn't have to do that. And we did the buyer's commission for 2.5%. So we were like, "Hey, instead of making $5,000, 'You know, $22,000 on flipping this thing instead of wholesaling it for $42,000, let's shoot to make $74,000.' So what ended up happening is buyers came in, there was a bidding war. We actually ended up getting $460,000 for the property. And the whole time was actually only 2 months and everything else rang true. We got the interest and the hard money was that the whole time too, 15% down. And we had an agent that we only had to pay 2.5%. We had closing costs still, and we ended up making $86,000 $1,600 and something. So it's pretty spot on. So as you can see, wholesaling right now is the play, in my opinion, in hot markets because inventory's low and people are okay with buying properties that aren't fixed up because they want to get into a house. So I'm so glad we did this strategy because the other strategies we would've made money, but not as much. So what you guys need to do is look at your options, your exit strategies on what's going to make you the most money and do that. And you're going to succeed and make more money in this industry. But that was the breakdown. The calculator's super helpful, and this is how we analyzed our deal.

So you guys just saw how we broke down the numbers and why we decided to wholesale the property. One thing that you need to decide on wholesaling is if the property condition isn't destroyed. You can't really wholesale a house without spending a ton of money if the house house is in terrible condition. But this one, it was just kind of dirty, it was outdated, but it was, you know, it was move-in ready.

Yeah, it needs a lot of work, it'll be a flip technically, right?

Exactly. So that's the condition of the house, was not that bad. And as you can see, our numbers were based on the house not needing a lot of work. But yeah, that's, that's, it was kind of the condition.

Yeah, so another good thing to know about this deal is it was an inherited house. So inherited or probate are great properties to target as far as like how to spend your marketing dollars or stuff like that.

Because like the best—

yeah, I mean, it's definitely one of the best. They're typically very motivated. They typically just want the cash over the house, so they're like, well, not emotionally invested either. Yeah, they're not emotionally attached to it typically, and they want a quick, easy solution without a lot of stress, so they're typically willing to take cash.

Yeah, so a lot of people might have the questions like, okay, Great deal. How many people were involved in your company to get this deal done? Well, the seller that we were working with was a little bit difficult because, you know, the lien was there. She wanted her money ASAP. So not only did Sean, our acquisitions guy, have to, you know, get the deal under contract, but our disposition guy had to call, get everything set up with title. I even had to hop on the phone with her. Did you talk to her?

Just text.

You texted. So pretty much everyone was involved in the team. To get this done. But you know, it was a little bit more of a difficult situation because of the lien, but you know, those are the people that were involved.

And you know, we had this deal from start to finish, came in like in October, November, October.

Yeah, and then we got it under contract. So from start to finish, it took us from the lead coming in 4 or 5 months. Yeah, from us getting the lead, 4 or 5 months. And that's, you know, that's fine. I'll make $86K in 4 or 5 months.

Yeah, ideally you got a lot of those going on at once, right?

Exactly.

So yeah, and for Sean to get it under contract, I think it took him 5 calls.

5 calls. And then after, probably took us like 30 calls of just talking to her, talking to her, talking to the title company, just like us just communicating.

That's just to like acquire the deal, right? To sell the deal, we used a realtor, one of our good friends. Yeah, she was on our podcast, Nate Worthen.

Great guy.

Yeah, great guy. He helped us list it, and so then we listed it and we ran lots of buyers through it, got lots of offers, and ended up selling on an offer.

Yeah, and like, I think you hit on this earlier, we tried wholesaling it and we weren't getting what we liked. So the MLS was great, tons of offers. Yeah, you know, it was sweet.

Tons of good offers and tons of crazy fake offers.

Well, yeah, we actually got an offer that was $480,000 cash, $490,000 cash, and then they came back and tried to beat us up and we're like, now get out of here. I don't know what they're— what they were trying to get done. They're probably just trying to renegotiate.

But anyway, and so I'm sure you guys are wondering like, how did we do this without any of our own money, right?

Yeah, I mean, that's the main question on everybody's mind, right?

How do you make $86K with no money of your own invested?

First thing we did is we hit up our boy Matt Strong, the hard money lender that we use, and he funded I think 85% of the deal. Yeah, and then what I did is I went out on social media, I posted and said, hey everybody, I've already raised 85% to fund the deal that I'm buying. Who can bring 15% for the deal and I'll pay you a 10 to 12% return on your money? So I found someone that was willing to give us, I think it was $60,000 to fund the deal, and we paid them a return on their money. So we had the hard money lender brought 85%, we had the private money lender brought 15%, or whatever the numbers work out to be. We gave that private money lender 10% on their money.

Private money lender actually brought more than the 15% we covered, which is a good idea because it helps cover closing costs. It helps cover— like, even though we didn't fix it up, we did pay to do some minor repairs to like meet inspections. So if you can, when you're borrowing private money, always borrow more than what you need. And if you can get repairs repairs too.

And guys, this is my first time borrowing hard private money. I used to use my HELOC or my own money, but it was super easy. I told— I met with them, explained them, you know, why their money is protected. The title company got all the paperwork ready. I just had to tell the title company who's the one who lent the money, and they recorded— I think it was like a deed of trust on the property. And so to protect their interest, protect their interest in the property, so they would be like lienholders on the property. So when we sold it, they would have to get paid. So, you know, we only had their money for like 2 months and they made like $1,200 and they were stoked because their money was just sitting there. $60,000 was just sitting in the account, bank account, making no interest. Like maybe 1— not even 1%. I don't even know what it was.

Yeah, it's usually way below 1%.

Yeah, so they weren't making any money and I gave them, you know, I was able to give them $1,200. They're stoked about it. And that's how we were able to get this deal done, make $86,000 plus, you know, and some change with $0.

For them to make $1,200 with like no effort of their own with money that's not making any money, it doesn't get any better than that.

Yeah, most rich, really, really rich people give their money to hard money lenders and say, hey, yeah, I'm chilling, just give me a return. And they get like a 10% or 11% return. So anyway, money is everywhere. You just got to go on Facebook, you know, talk to people, let people know what you do. But next time you got a deal, instead of just wholesaling it, because that might be what you think is the best route, look at the numbers, the calculator that's gonna be in the link below. Look at the calculator, break it down. Should you flip it?

Should you wholesale it?

Should you wholesale it? See what the numbers do. And if you need to raise private money, you know, just throw it out on social media, see which one of your— anyone in your network that has money and, you know, say, hey, I've already raised 85%, I just need 15%, help me out and I'll get you a return on your money.

Yeah, that's about it, huh?

About it.

$86K.

So anyway, go do some deals, go do some deals.

And please guys, um, down below I'll attach like a PDF version of like this breakdown. And you know, if you are interested in learning the strategies like wholesaling wholesaling, creative financing, any of these extra strategies that help you make more money, reach out to me or Corey. We can—

I mean, we can help you out.

We can help you out. I mean, before, when we first started wholesaling, we, we only knew how to wholesale and we left a lot of money on the table. So now that we know how to wholesale, fix and flip, creative finance, all these things, we're making more money because we know more.

100%.

So reach out to us and we can help you out if you want to learn these strategies.

See you guys next time.

Later.