Tyson Smith breaks down real estate wholesaling without a license or large capital. Find distressed properties, offer 70% of after-repair value minus $45 per square foot, then assign the contract to a cash investor for $10-20k per deal. Twenty deals a year hits $350,000.
If you want to make $350 grand this year in real estate, here is the exact blueprint that you can follow. Now, this strategy is going to be based around finding distressed houses and selling them to investors for cash. And the best part is anyone can do this because it doesn't require a real estate license or a lot of money to get started. It doesn't require a lot of money to get started because we are going to be using other people's money or OPM. Basically, we are going to find a great investment property and sell it to another investor before we ever have to pay for it. Now, step number one is to find a potentially great investment property. Now, there are multiple ways to do this depending on how much money you have to spend. So if you don't have any money at all, you can find investment properties just by driving around your town and looking for properties that look like they may be run down. Telltale signs that a property is run down are the landscaping being unkempt, broken windows, roof looks like it's falling apart, etc. So if you have some money to spend, you can also pull lists of properties that are showing signs that they may need to sell quickly. I have an entire video showing you exactly how you can do that that you can watch right here. Now, if you do have a lot of money to spend, you can do forms of inbound marketing, which is what I do. This is where we run ads on Facebook, Instagram, YouTube, and Google targeted to homeowners who want to sell quickly. People will see your ad and fill out their contact information so we can call them and give them an offer for their home. Now, once you find a potentially great investment property, preferably a property that needs a lot of repairs, or even a nice property, but the owner is in a hurry to sell, Step number 2 is going to be to reach out to them and make them an offer to buy the property. Now, you need to keep in mind 2 things here. Number 1 is that you will never have to actually come up with the money you are offering for this property. This will be the OPM I was talking about earlier, which I'll explain more in a minute. The second is that your offer for the property is going to have to be quite low. We are not paying retail or market value for these homes. We need to find them at a discount. And that is why we are looking for houses that need repairs or houses that the owners need sold quickly. The name of the game here is to get a great deal for another real estate investor who will be able to buy that property and make money with it, whether that's by fixing up and flipping it, doing a BRRRR strategy, or something else. So the way we are going to get a great deal for them is by getting a big discount on price so that they can make money and we can also make money as well. In order to calculate your offer, you need to find the property's ARV. This stands for after repair value. This is what the property would be worth if it was entirely fixed up. Now, you can find this information by looking at what other properties in the neighborhood have sold for on Zillow. Find the nicest properties that are similar size and year built and use them to get your ARV. Then you will need to multiply the ARV by 70% and subtract the cost it will take to repair the property to get it up to ARV standards. You can estimate the cost it will take to repair the property by multiplying the house's total square footage by 45. This will give you your MAO, or max allowable offer. This is the most you can offer the owner for the property. Now, for example, let's say you find a 1,200-square-foot property and the ARV is $250,000. 70% of $250,000 is $175,000. And 1,200 times 45 is 54,000. 175,000 minus 54,000 is $121,000. So the most we can offer this homeowner for their property is $121,000. Now, one thing you need to keep in mind is a lot of people are going to be unwilling to take such a low offer for their property. This is a numbers game, and you need to continue making as many offers as you can every day and constantly follow up with everyone you've ever made an offer to. Because even if they say no the first time, they may change their mind. Now, once you've gotten somebody to accept your offer, you need to send them a contract to purchase the property. You can download the exact contracts I'm using to do this strategy nationwide at www.freewholesalingresources.com. Once you and the seller have both signed the contract, you are going to try and find another real estate investor to sell the property to for more money than you originally agreed to with the homeowner. This is usually between $10,000 and $20,000 more. Now, this is how we're gonna be using other people's money. The best part is finding these other real estate investors is super easy. So if you wanna learn all the strategies for finding them, go watch this video right here. Now, a common question people will ask me about this strategy is, "Tyson, what if I can't find an investor to sell this property to after I've gotten it under contract?" Am I just stuck with the property and I'm going to have to find a way to pay for it? And the answer to that is no. In the contract we use, there is a line that gives us an inspection period. The inspection period is usually about 20 days long, and we are allowed to cancel the contract during the inspection period 100% risk-free for absolutely any reason. Now, once we've found an investor who's willing to pay more for the property, you are going to assign your contract to them. This is how you sell the property to them before you've even bought it. You can download the exact assignment contract I use at the same website as before. And guess what? You get to keep 100% of the difference between what you contracted the property with at the seller and what you assigned it for to the other investor. So let's take the same example as earlier. If you got that property under contract for $121,000 and you assigned it for $140,000, you would get paid $19,000 at closing. There are no other fees that come out of this. Now, I have done this exact same process hundreds of times with hundreds of different properties. The average amount I've made across these hundreds of deals is $16,000 per property. So if you want to make $350 grand a year and you make an average of $16,000 on every deal you do, you need to do just over 20 of these deals a year. And that's less than $2,000 a month. I can assure you there are hundreds of thousands of properties that are in bad shape and have owners who want to sell them quickly. So now it's your job to go out and find them. If you have any questions, feel free to ask me in the comments. And for more tips on how to make money in real estate, go ahead and subscribe to my channel. But as always, thank you for watching, and I'll see you on the next trip.
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