Virtual Wholesaling: How To Do Real Estate Deals From Afar

 

Wholesaling has become a popular way for both new and experienced real estate investors to make money — it requires very little upfront capital and very little risk, and it returns a profit of $5,000 to $10,000 or more per deal.

Mix wholesaling with the technology of the 21st century and things get even more flexible — virtual wholesalers find and close deals in markets all around the U.S. from the comfort of their living room.

And in this guide, we’re going to show you how!

Call Porter’s U.S.-Based Reps Are Trained to Speak With Motivated Sellers. Want Them to Answer The Phone for You?

What is Virtual Wholesaling?

Virtual wholesaling refers to the wholesaling of real estate done in a city or state where the real estate investor does not reside. That is, it’s done remotely from another location in the U.S.

Virtual wholesaling follows the same basic process as traditional wholesaling…

  • Find under-market real estate deals.
  • Run due diligence — determine after repair value, cost of repairs, and your offer price.
  • Negotiate with the seller.
  • Flip contract to a cash buyer.

…with the difference that all of those steps have to be accomplished without you — the real estate investor — ever touching foot in the city or state where you’re doing the deal.

How do you do that?

That’s what we’re going to explain next!

6 Steps To Virtual Wholesaling

Here are the six steps to virtual wholesaling — from choosing a location and assembling your team to finding motivated sellers and sending contracts.

Step 1. Choose a Location

To wholesale real estate virtually, the first thing you need to do is choose a profitable location.

This means choosing a state, then a city, and ultimately a neighborhood where you want to wholesale homes. Of course, you can increase the number of locations where you wholesale over time, but we recommend starting with one area.

You can use tools like Zillow, Craigslist, and Pinpoint Profits to research new cities and neighborhoods.

Here’s the type of information you’ll want to understand…

  • Average Household Income
  • Crime Rates
  • Wholesaling Laws
  • Job Growth
  • Occupancy Rates
  • Average House Listing Price

Most wholesalers will want to choose somewhere where the average listing price for a home is between $100,000 to $200,000.

But don’t get overwhelmed — real estate wholesaling is a business model that can be profitable in just about any market, so you’re in safe hands.

If you have no idea where to start, though, then consider REFlipper’s list of top wholesaling states

  • Texas
  • Michigan
  • Florida
  • Tenessee
  • Pennsylvania

…and their top wholesaling cities…

  • Charleston, South Carolina
  • Memphis, Tennessee
  • Rochester, New York
  • Colorado Springs, Colorado
  • Tucson, Arizona
  • Boise City, Idaho
  • Grand Rapids, Michigan
  • Jacksonville, Florida
  • Philadelphia, Pennsylvania
  • Houston, Texas
  • Spokane, Washington

Then you just have to choose a neighborhood. To do that, look on Zillow for areas that are in your ideal price range and call some local real estate agents to get a better understand of the area.

Step 2. Get a Team

Virtual wholesaling is all about doing deals in areas where you aren’t.

And as expected, it’s a lot easier to wholesale remotely if you have a local team who can help you A) understand the laws of the land, B) check out properties, and C) find cash buyers.

So before you send out market materials, here are some people to “get on your team”…

  • Local Realtor — A realtor can help you with everything from running comps to finding profitable neighborhoods and even generating motivated seller leads.
  • Local Title Company — Find a title company to work with. They can help you process your deals as well as be a source (via their public records) by which you can find potential cash buyers.
  • Local Attorney — An attorney will help you understand the local laws and ensure that you’re operating within legal parameters.
  • Local Partners — Building partnerships with other real estate investors and splitting profits is a great way to get started in a new area that you’re still learning about.
  • Boots On The Ground — It’s also helpful to find someone who can be your “boots on the ground”. They can take pictures of properties for you, meet with sellers, drive for dollars, and help you find cash buyers. This should be someone you know you can trust. It might even be a good idea to pay them a portion of each deal they help you secure.

Step 3. Find Under-Market Real Estate Deals Virtually

Now that you’ve chosen your market and you have a team assembled, it’s time to send some marketing materials.

Marketing strategies for virtual wholesalers include…

  • Facebook Ads
  • Direct Mail
  • Website SEO
  • Google Ads
  • Display Ads (TV, Radio, Billboard, etc)
  • Online Auctions
  • Craigslist
  • MLS

These strategies will be mostly the same as they would be when wholesaling in your own city — if you want to drive for dollars or place bandit signs, though, you’ll need to pay someone in the area to help you do that.

Check out our detailed marketing guide for real estate investors to learn more about your options.

Step 4. Do Due Diligence on Virtual Real Estate Deals

As with all real estate investments, it’s important to find a good deal.

So once your phone starts ringing and you generate some quality leads, it’s time to run comps on the owners’ properties and determine your max offer.

If you’ve got someone with boots on the ground, then you can pay them to do a walk-through of the property for you and take pictures. If not, you could ask the homeowner to take pictures for you.

(But you’ll have more success using your own representative)

Then — using the photos, information from the seller, and your comps — you need to calculate…

  • After Repair Value (ARV) — This is the value of the home once it’s been repaired.
  • Cost of Repairs — This is how much the home will cost to repair so that it sells for its ARV.
  • Buyer’s Profit — This is how much you want the buyer to make.
  • Wholesale Fee — This is your wholesale fee.
  • Other Costs — These are other miscellaneous costs.

With those numbers, you can find your max offer. Here’s the formula…

Max Offer = ARV – Cost of Repairs – Buyer’s Profit – Wholesale Fee – Other Costs

So if we have an ARV of $200,000 and the repair costs will be $30,000, we want the buyer’s profit to be $50,000, and we want to make $10,000 (assuming there are no other costs), then we have a max offer of $110,000…

110,000 = ($200,000 – $30,000 – $50,000 – $10,000)

This means that if you got the home for $110,000, you’ll make $10,000 and your buyer stands to make $50,000 after they’ve repaired the home.

Cool, right?

If you don’t know how to run comps, check out Ryan’s video below…

For your first few virtual wholesale deals, it might be worth paying for a professional appraisal before you agree to purchase the property — this will take longer but it’ll also protect you from making expensive mistakes.

Step 5. Make Your Offer & Send The Contract

Now you’ve got to negotiate with the seller.

Start by making an offer that’s lower than your max offer so that the seller has room to negotiate with you. If you have someone with boots on the ground who you can trust and the seller prefers to negotiate in person, then you might let them handle the negotiations.

If you and the seller agree to a price, it’s time to create the proper contracts and send them to the seller.

Keep in mind that the contracts you need to create and sign will be a little different for every area — this is where your local attorney comes in. Ask him/her to help you create the correct contracts.

So long as the state or county doesn’t require ink signatures, you can use a tool like DocuSign to send documents and request signatures.

 Step 6. Find a Cash Buyer

Now that you’ve got yourself a deal, it’s time to find a cash buyer.

Well, actually, you might want to do this first.

We included this as step 6 so that we’re covering everything chronologically, but the truth is that it’s often smart to find a few high-quality cash buyers before you start searching for deals in a new area. That way you’re not scrambling to close within the seller’s time frame.

Traditionally, the easiest way to find cash buyers is by networking and attending auctions at the local courthouse. But you can’t do that when you’re wholesaling remotely.

Instead, the easiest way to find cash buyers virtually is by asking your local realtor team member to help you identify cash purchases within the past 6-12 months.

Craigslist is also a great platform for listing your properties for cash buyers.

And if you have some investing partners, then you might just use their network of cash buyers.

Once you find a buyer, you just need to send the proper contracts and do either an assignment or a double closing — we recommend a double closing.

Pros & Cons Of Virtual Wholesaling

There you have it! That’s how you can wholesale remotely in 6 steps. Now let’s look at some of the pros and cons of virtual wholesaling.

Pros

Wholesale In The Most Profitable Markets — Virtual wholesaling allows you to operate in the most profitable markets in the U.S. rather than being restricted to your hometown.

Build a Business That Scales — Virtual wholesaling also requires you to build a business that’s scalable and as automated as possible. Since you don’t live in the city where you’re wholesaling, you’ll be forced to build a business with efficient processes.

Cons

More Research — Since you’re not living in the area, you’ll have to do a lot more research than you would otherwise.

More Risk — There’s a bit more risk involved since you’ll be trusting people to give you accurate information about the property.

Sellers Might Not Like It — Some sellers will refuse to sell to you because you’re not local.

Final Thoughts

Wholesaling is an awesome business model.

And virtual wholesaling is even awesome-er — because it allows you to close deals and make money from the comfort of your sofa.

The most important thing is that you approach it with care. Do your due diligence, hire someone with boots on the ground, build a relationship with a realtor, and get a local attorney.

From there, it’s just a matter of taking action.

Good luck!

Call Porter’s U.S.-Based Reps Are Trained to Speak With Motivated Sellers. Want Them to Answer The Phone for You?

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