Virtual wholesaling is the key to market expansion for many local real estate wholesalers. In this article you’ll learn how traditional wholesalers approach each of five different parts of wholesaling real estate. Then, you’ll find out what is specifically needed to branch into virtual wholesaling for each part, and helpful tips to keep in mind.
Here is what I’ll be covering:
- Building and managing a productive active buyer database.
- Locating potential properties for deals.
- Locating the owners of suitable properties, making contact, and implementing follow-up marketing for possible offers.
- Evaluating the properties financially and for suitability for your targeted buyer types.
- Locking up/buying properties and funding.
Let’s start first with a high level overview of the skillset and activities of a wholesaler who works locally.
Overview of The Traditional Local Real Estate Wholesaler
The local real estate wholesaler understands that their value to their investor buyers is in their abilities to locate deals faster or better than their customers.
Often their buyers are also their competitors, as active real estate investors are constantly shopping their market areas for deals.
The wholesaler must develop a system of locating deals their investor buyers cannot or will not locate through their own activities.
Day to day activities of the local wholesaler
A quick review of these:
- Building a list of active buyers and knowing their requirements, so that they can find properties that fit those criteria.
- Systems to locate potential motivated sellers in the market area. This is critical, as the better their systems, the more likely they are to locate suitable properties their buyers will want but have not found on their own. Many traditional wholesalers drive around their market areas to locate abandoned properties as potential deals.
- Systems to market to effectively market to your sellers
- The skills, tools, and data to evaluate a property for after repair value (ARV), costs of rehab if needed, and if the property is a match for buyers on their list.
That was the 30,000 foot view, and in the next sections, I will describe those traditional local wholesaling activities and then show you how to accomplish the same tasks, virtually.
Keep reading to dig into the how virtual wholesaling is different than local. Also, see how virtual wholesaling can expand your market opportunities.
The Local-to-Virtual Real Estate Wholesaling Difference: Why Wholesale Virtually?
Expand your operations nationally
This is covered in detail below, but think of franchising as an example of expansion. Think of your local wholesaling business as the headquarters of a franchise operation with businesses all around the country.
There is a huge difference in the amount of business you can do, but you have the advantage of not needing the overhead or headaches of running a franchise operation.
Technology now makes it possible for the real estate wholesaler to serve the needs of buyers in hundreds or even thousands of markets all around the country.
And you will do this off the same kitchen table or office desk, with the computer you are using now for a local market wholesale operation. You will learn how to scale up through virtual wholesaling.
Avoid down-cycles and ride the wave
Setting aside the leveraging of your time through technology, the most compelling reason to go virtual is that “real estate is local” , and so in order to break out of local, you have to go virtual.
The reason to get out of the local limitation is that markets run through cycles.
If you serve only one market, then you are at the mercy of the current cycle, doing less business in the local down-cycle.
When you can pick any other local market around the country that is experiencing an up-cycle, you continue to profit.
Conversely, if you are in a market that is too hot, or heavily saturated with competition, that is altogether more reason to go virtual.
I have just covered the major differences between local and virtual wholesalers, and how virtual wholesalers can expand their markets and stay on top of housing trends. Now let’s work through the five ways you need to go virtual, starting with the first one: Building and managing a productive active buyer database.
For each of these ways I will do a brief overview, followed with the activities or skills that apply to all wholesalers, and then how a virtual wholesaler would accomplish the same task, nationwide.
Building Your Buyer Database
You may see a lot of coverage of this topic using the words “buyer list.”
This is a limiting term. If all you maintain on a buyer is their contact information and a couple of information fields about their preferred areas/neighborhoods, you will do fewer deals and get more rejections.
You do not want a list; you want a database. This is easily attainable, as there are so many online and software tools available, many at no cost.
In your database, you’ll want to maintain information on your buyer, such as:
- Their complete contact information.
- Their preferred and backup investment types, such as rental property or fix and flip.
- If a long term rental investor, do they want only ready-to-rent properties, or are they willing to take care of minor repairs and cosmetic issues.
- ARV price range of homes they want to buy.
- If they will be using financing or paying cash.
- Their investment criteria. An example would be a rental investor who will only buy a property if they can pay 5%-10% below property market value or ARV.
In order to start filling this new database, you can use different methods to find cash buyers.
One of the easiest ways to attract buyers is with a website with a lead capture form specifically for buyers.
Your website should present, at a minimum:
- Your business
- Your skills
- Past deals information or locations
- If possible, testimonials from buyers
The website should be dedicated to buyer acquisition or have a prominent section focused on buyers and their needs.
The All-Important Contact Form
There should be a contact or question form for them to use to contact you. It can ask some or all the questions about their business as above, but they should not be mandatory.
Or make the initial contact form very simple, allowing them to ask a question or access your current inventory. Once they have made contact, send them an email link to a more detailed form for your database. Make it clear that you are a full-service wholesaler and can serve them better with these information items to fill their property orders.
Nationwide Buyer Website
The screenshot above is how a website designed to attract buyers may lay out a page for inventory views. Notice that this one has properties in CA and NC, at opposite sides of the country. By structuring the website to feature your national reach, you attract buyers from all of those areas.
**Leverage Potential: Staying local means buyers and sellers limited to your local area, as well as dependence upon market cycles. Going virtual means you can connect any buyer anywhere with a suitable property, whether in their local area or across the country. Your deal opportunities explode.
Locating Properties Based on Seller Types or Motivation
Motivated Seller Data Sources For Outbound Marketing
The local wholesaler is using sites like Zillow and Realtor.com, or driving for dollars. If they are aggressive, they are also using a paid lead service that allows them to search their local area for properties meeting certain criteria, usually based on seller/owner characteristics. Seller categories include:
- Absentee Owned
- Vacant Property
- High Equity Owner
- Low Equity Owner
- Empty Nesters
- Trustee Owned
- Corporate Owned
- Seller Financed Property
Depending upon your deal strategy and buyers, you may need to search at least several of these categories or all of them.
Skip Tracing: When you are paying for leads from one of the online sources, be sure that you also have access to skip tracing resources. When the owner’s address is not the property’s address, you must be able to track them down. Why bother? You bother because some of the most valuable leads you get will be owners who have abandoned a property, are tired landlords, or for some other reason are not living in the property. They often are highly motivated to sell.
Websites as an Inbound Lead Source
Every wholesaler needs a website that speaks to sellers, especially focusing on information of importance to motivated sellers.
The website should, through a contact form, offer more detailed information about the local market and how to get their home sold quickly.
Nationwide Lead Lists
The virtual wholesaler needs all the same capabilities as the local wholesaler but must get out of the local mentality and market to sellers in other targeted markets. It no longer makes sense to drive for dollars, you have to scale your operation nationwide, and that always means paying for leads.
Paid lead sources for the categories above should be set up and used for targeted lead generation. These paid lead sites are extremely valuable and well worth the per-lead cost if the leads are focused and you market to them adequately.
You can find the most highly motivated sellers with multiple motivation criteria in any lead lists tool by stacking them.
Nationwide Websites, Localized
As far as the website goes, although almost all the information distressed sellers seek on the Web is common to all locations. Yet because sellers are local, it’s important that your website provider allows you unlimited landing pages, one for each location in your nationwide expansion. Google likes this as well with pages that are location based, outranking those that are general in nature.
**Leverage Potential: You go national, or you choose multiple markets of opportunity. You become a resource for buyers who are going virtual with rental property ownership. These are buyers who want to own properties outside their area of residence. Never experience a slow market lull again.
Systems for Marketing and Follow-up to Seller Leads
An Efficient CRM, Customer Relationship Management System
This is crucial, as all the leads in the world are of no value if you cannot reach them and get a response.
Before the first lead is captured, the wholesaler should have an efficient system into which the lead is categorized by type, area, and other information fields.
The best systems drop the lead into the CRM system from lead capture tools, such as the website, direct from phone calls, or other contact methods.
The CRM should have automated features that can trigger certain actions like email campaigns based on the source or type of lead.
For full value from a CRM system, it should automate tasks and follow-up actions/marketing for the various systems below.
Automated Marketing Tools for the Virtual Wholesaler
Some of the tools that follow would be used in local wholesaling as well. However, tools like virtual phone numbers and others are of great value to the virtual wholesalers.
Once you have the contact information for a lead in your CRM system, you can reach out and follow up in some combination of these ways or resources:
- Local virtual phone numbers – Virtual numbers are incredibly valuable when you are working many geographical areas. Local numbers build trust, so it’s important for you can have a local phone number for each of your marketing areas. The most motivated sellers may not respond as quickly with a form than they would to a phone number. If highly motivated, and they see your local number on a website or marketing material, they may want to speak to someone urgently to see if they have a chance to unload a property. Virtual phone numbers allow you to assign numbers to different lead sources so you can track where the lead originated.
- Email campaigns – These should be emails specific to the seller type and motivation. You should be able to have multiple email campaigns, and have leads added to follow-up campaigns automatically. You should be notified of activity and responses, and reminded of unworked tasks.
- Text messaging campaigns – With current surveys showing that 93% of text messages are opened within one minute, you will not find a better lead follow-up marketing tool. As with email, you can have multiple campaigns with automated texts. Replies would be routed to you immediately for fast follow-up.
- Ringless Voicemail – This is an exciting method for communication with leads to get them to call you instead of you calling them and getting declined in most cases. You send them a ringless voicemail that does not ring their phone, instead placing the voicemail in their inbox for the next time they check or get notified. If they are interested, they will call you.
- Outbound cold calling – And the facts are that cold calling still works, because most of your competition is not willing to do the hard work. If you are going to do effective cold calling, you must have a lead system that supplies phone numbers, or skip-tracing to help you find numbers. You would combine this with a virtual phone number for your own privacy. Using different virtual phone numbers for different areas is a powerful tool as well, where the lead is more likely to pick up the phone when it’s a local number on the caller ID.
**Leverage Potential: Anyone who has been successful at real estate wholesaling will tell you that enormous amounts of time were required to contact a list of seller prospects, especially with some skip tracing, gather info and move some toward conversion to a deal. With the tools above, the wholesaler can automate and make the process more efficient. Better yet, the process is leveraged across multiple markets. The potential is amazing.
Property Valuation & Deal Evaluation
Justifying Your Numbers
Now that you have all these great leads that you got on the phone, what’s next? These are still only leads, not deals. You do not have a deal unless and until all the numbers justify a profitable exit strategy. This is where the rubber meets the road.
The numbers are what this is all about.
Examine All Exit Strategies
Another important factor in choosing resources for property valuation and deal evaluation is to not just focus on one exit strategy.
Sure, you may have started out wanting a ready-to-rent property for an active and profitable rental investor. Once you got the condition information, you find that there are significant repairs necessary. If you are tightly focused only on the rental investor, you would chuck this deal and move on.
What you could be missing is a great deal selling to a fix and flip investor. However, if your deal evaluation financial tools are not giving you exit strategy options, you could pass on a profitable deal.
You need a thorough financial analysis spreadsheet for everything any of your buyers of any type will look for in determining if they will do a deal. You need a side-by-side comparison of exit strategies.
Know your Numbers
When selling to fix and flip investors, there are two areas of extreme importance; those are the ARV, After Repair Value, and the costs to rehab the property. With those two pieces of information, you can determine if there is a deal in the making for a potential fix and flip buyer in your database. As many of the homes they rehab will end up purchased by rental investors, the wholesaler needs to have accurate numbers for all the financial calculations used by every type of buyer.
A thorough due diligence process involves hundreds of fields of data and dozens of financial calculations for things like:
- All the property information, location, characteristics, etc.
- Current value of the property, ARV if in need of rehab.
- Local comparable properties sold information for valuation.
- Cost to repair and rehab the property.
- Rental potential and rental market analysis.
- Loan history on the property.
- Property tax valuation and records.
- Compare the numbers and bottom line for different exit strategies.
These are detailed and time-consuming processes that will determine if there is a deal possibility and the ultimate profitability for the wholesaler.
Due Diligence, On Steroids
For virtual wholesaling, you will need all the above information and resources, even more so because you are leveraging your business into multiple market areas.
You will need the tools to manage these many calculations and financial comparisons in whatever area in which you have deal prospects.
It is more challenging because it isn’t your market area of residence where you have personal experience.
Visualize the time required and the complexity of analyzing properties for one area, and then multiply it across several others around the country.
The virtual wholesaler enjoys immense opportunity, but it will require streamlining the process and maintaining accuracy for multiple market areas.
The best approach for the virtual wholesaler would be to pull together online services that would feed the process with nationwide data fed into wholesaling specific analysis tools.
While virtual wholesaling may not be for everyone, if done properly it can carry very little more risk while multiplying profits considerably. With an efficient system and a suite of tools and resources as explained, the potential is unlimited. And you do not even have to get a bigger kitchen table for your business computer!
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Lead lists, CRM, text, email, and ringless voicemail marketing automation campaigns, lead capture websites, virtual phone numbers, cold call tools, robust analysis tools, and pro property reports.
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