6 Steps to Virtual Wholesaling (With Real-Life Examples)
Virtual wholesaling is a real estate investing strategy where you put properties under contract and flip them to cash buyers… without seeing the property in-person.
What is virtual wholesaling?
How can you use virtual wholesaling to expand the reach of your business and do more deals?
That’s what we’re talking about in this guide — we’ll start with a quick definition and then dive into 6 steps to virtual wholesaling. We’ll also share some real-life examples of virtual wholesaling throughout this article to give you a better idea of what the process looks like (skim the article for the videos if that’s what you’re most interested in).
Let’s get started.
What is virtual wholesaling?
Virtual wholesaling is a real estate investing business model that’s identical to wholesaling, except it’s accomplished virtually — without seeing the property before putting it under contract.
If you do a wholesale deal where you walk the property yourself, then that’s just plain old wholesaling, but if you do a wholesale deal where you don’t walk the property (whether it’s in your city or somewhere else in the U.S.), then that is virtual wholesaling.
Okay — but maybe wholesaling is a new term for you, too.
Here’s the wholesaling business model (intentionally oversimplified)...
- Find properties that will sell for less than market value.
- Get those properties under contract.
- Flip the contract to a cash buyer (another investor or your own flipping company).
- Make $10,000 or more as an assignment fee (for finding the deal).
Virtual wholesaling is just doing all of that from a distance.
And it’s entirely possible.
Of course, just because something is profitable doesn’t mean it’s beneficial.
The pros of virtual wholesaling are obvious — you can target any market in the U.S., thus growing your investing business and focusing on more profitable zip codes and you can operate a more lean business model, with faster turnaround, fewer team members, and lower overhead costs.
Is virtual wholesaling the right move for your business?
If you’re just getting started as a traditional wholesaler and you haven’t given your local market a chance yet, then it’s probably best to hold off.
Also, if you’re wholesaling successfully in your local market but you’re getting antsy and want to work in other markets, that doesn’t necessarily mean virtual wholesaling is the answer… have you increased your budget as much as possible in your local market and exhausted all the opportunity that’s there? It’s important to optimize your deal-flow as much as possible in your current market before moving into other markets — check out here how REISift can help with that.
Most successful real estate investors use virtual wholesaling in two different ways…
- Supplementally — It’s something that they keep in their back pocket for when the opportunity presents itself. They ask homeowners if they own properties in other states that they’d like to sell and they’re always open to doing deals in new places when it makes sense.
- For Growth — Sometimes, a real estate investor’s growth will plateau because they’ve built a successful business in their local market that’s consistently exhausting local opportunities. So they expand into new markets as a way to continue growing.
Most of you will just use virtual wholesaling supplementally in your business. And some of you will use it as a way to expand your reach outside of your local market.
We only caution that you be careful of starting as a virtual wholesaler (if you haven’t already been wholesaling in your local market) and that you avoid moving into new markets when it isn’t necessary to grow your business (why not just keep investing in what’s working?).
Otherwise, take the bull by the horns.
Here are the steps.
Step 1. Learn The Wholesaling Business Model
Before you start virtual wholesaling, you need to understand wholesaling.
Here’s a helpful video that describes the wholesaling business model…
If you’re new to this, then we recommend starting by trying to wholesale in your local market — for that, check out our wholesaling guide over here.
Once you’ve grown your business a bit, then you can start exploring other markets.
The following steps in this article are dedicated to things unique to virtual wholesalers and we’re not going to cover the basics of wholesaling since we’ve done so elsewhere.
Step 2. Choose Profitable Markets
If you’re going to virtual wholesale supplementally — as the opportunities present themselves — then you can probably skip this step.
(However, you’ll still want to get in the habit of researching every new market you go into to make sure you’re following the proper laws of the land and to make sure you understand the state of the market)
If you’re intentionally looking to start wholesaling in a few new markets, then the challenge is an overwhelming one… where do you start?
Well, to give you a baseline, here are the 11 best cities to wholesale real estate in the U.S., according to REFlipper…
- 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
Beyond that, you might have other cities that have peaked you’re interest for various reasons.
Here are some factors to consider…
- Investor Interest — Is there a healthy number of cash buyers in the area who you can flip contracts to? For wholesaling to be successful, investors need to be interested in the area.
- Inventory Supply — How many homes are on the market? Is there a healthy amount of buying and selling going on? Investors will be most interested in areas where they can easily buy and sell properties.
- Growing Population — A growing population is a good indication that wholesaling will be successful. Quite simply, more people means more properties and more opportunities for investors.
- Average Days On Market — The average days on market for the area should be healthy. If it’s long, then investors might be nervous about purchasing your deals.
Do your research and then make an informed decision — you can’t know for sure until you give it a try.
And to close this section out, here’s another example of an investor who did a $10,000 virtual wholesale deal and how he did it…
Step 3. Assemble Your Toolkit
Even if you’re not wholesaling virtually, you’d still want to use the right software to keep things as streamlined and simple as possible.
When wholesaling virtually, assembling your toolkit is twice as important — knowing how you’re going to send and sign contracts, contact buyers, work with title companies, send marketing materials, and more.
Here’s our top 10 picks for wholesaling software to consider.
And check out the video below to learn about some more tips and tools that’ll be useful for virtual wholesaling…
If you want to learn how we’re changing the game with our real estate investing software at REISift, then click the link below to get a 7-day free trial…
Step 4. Create Your Buyer’s List
Before you start trying to find deals, it’s a good idea to make a list of cash buyers in the area.
Here’s a list of 10 ways to find cash buyers that we put together.
The pertinent strategies for virtual wholesaling within that list would be…
- Use ListSource — On ListSource, you can pull a free and clear list for properties that have been purchased in the last 12 months. That’ll give you access to cash buyers in the area.
- Craigslist — By searching in the “apts / housing” category, you can find landlords and people who are trying to fill their properties with tenants. You might be able to find some cash buyers by calling those homeowners.
- MLS — If you build a relationship with a real estate agent in the area (definitely recommended), then you can ask them to pull a list of all-cash transactions over the last 90 days.
- Hard Money Lenders — A cash buyer doesn’t necessarily need to have all the cash on hand in order to buy your real estate deals… they just need to have access to cash. Call hard money lenders, tell them what you’re doing, and ask them to connect you with their clients. It’s a win for you and a win for them.
- Google — Try searching in Google to find real estate investors and cash buyers in the area.
- Display Ads — You can also run newspaper, radio, or billboard ads to increase brand awareness in the area and attract both buyers and sellers.
Step 5. Identify Partners
Even though you’re going to wholesale virtually, it’s still a good idea to have people in the area on your team whenever possible.
This could mean building relationships with real estate agents, other wholesalers, and title companies — it could also mean hiring someone to be your “boots on the ground”, someone who can take pictures of properties, speak in person with sellers, and coordinate contract signing (after all, some homeowners will refuse to work with you if you don’t have someone local to the area).
Before you enter into a new market (unless you’re doing so supplementally), it’s a good idea to assemble a “team”.
Find a real estate agent to work with, speak with wholesalers to get an idea for market conditions and see if they’re open to co-wholesaling, chat with hard money lenders, and find a good title company.
The wholesaling process will be easier if you’re preemptive about this.
Step 6. Build Marketing Flows
Assuming that you’ve chosen a profitable market, built relationships with key players, created a buyer’s list, and assembled your toolkit, now it’s time to create your marketing flows.
We lay out a detailed marketing plan for real estate investors in this article — and that’ll work just as well for virtual wholesalers as it will for other types of investors.
The basic marketing flow looks like this…
- Pull Data — The first step is to pull data for the area you’re targeting. You can do that using a tool like Propstream.
- Clean/Organize Data — Then you’ll need to clean and organize your data in a spreadsheet. Or better yet, upload it to REISift and we’ll keep everything organized for you.
- Skip Trace — Then we recommend skip tracing where necessary. This will provide additional information like address and phone number for otherwise sparse records. You can use REISift to skip trace records.
- Send Direct Mail and/or Cold Call — Then it’s time to send direct mail campaigns and/or cold call homeowners. Once you’ve uploaded your data to REISift, you can send high-performing direct mail (via Ballpoint Marketing) and track your cold calling efforts.
- Follow-Up — Due to the nature of making low-ball offers, the follow-up process is where you’ll secure 90% of your deals… so it’s critical to have a clear-cut easy to follow process so leads don’t fall through the cracks. REISift allows you to tag and organize records so you know exactly where each prospect is at in the marketing and follow-up process.
- Keep The Process Squeaky Clean — Keep everything clean (your data, your processes, and your workflows). REISift makes that easier than it’s ever been before with software that’s specifically designed to help real estate investors manage and grow their businesses.
To learn more about this process, check out the dead-simple sales funnel system we created — we call it the Sensei Flow. This video is a little long, but watching it could be a serious game changer for your business…
Once you’ve taken the 6th step and built marketing flows targeting the new market, the rest of the process follows the traditional wholesaling method — negotiate with sellers, make offers, sign contracts, and flip those contracts to cash buyers.
The value of virtual wholesaling is that you can do it anywhere and — if you’ve exhausted the deal potential in your own market — it allows you to continue to grow your business.
Is it the right next step for your business?
Only you can make that decision.