The real estate industry offers one of the most lucrative job opportunities. However, entering the field can be challenging since you must have a real estate license and established connections.
One of the real estate business ideas that many beginners try is digital wholesaling. It’s perfect for those wanting to get into real estate without funds, license, or experience.
If you want to venture into virtual wholesaling, this guide will provide everything you need to set up your virtual wholesaling process, learn about the market, and start selling properties from home.
- What is Digital Wholesaling?
- How Does Digital Wholesaling Work?
- What is the Difference Between a Wholesaler and Dropshipper?
- What Do You Need to Do Digital Wholesaling?
- The Best Virtual Wholesale Markets
- What is the Average Virtual Wholesaling Real Estate Salary?
- How to Do Digital Wholesaling
- The Best Virtual Wholesale Real Estate Course for Free
- In Summary
What is Digital Wholesaling?
Digital wholesaling, also known as virtual wholesaling, house flipping, or contract flipping, is a real estate investing business model similar to traditional wholesaling, except everything is virtual.
With traditional wholesaling, you visit the property in person and may need to meet with potential sellers or buyers. Meanwhile, with digital wholesaling, you don’t have to see the place, sellers, or buyers in person to sell the property.
Virtual real estate wholesaling also differs from other models in that you don’t own or purchase the property; instead, you assign it to a different buyer.
Successful real estate investors use this approach to supplement their deals by keeping tabs on properties from other places and finding the opportunity to sell them. It’s a great way to expand into new markets and grow their business.
And since you don’t own or purchase the properties, you don’t need funds to enter the market, making a highly lucrative career or side hustle.
What is a Digital Wholesaler?
A digital or virtual wholesaler is a person who enters a contract to sell properties online. You usually don’t have to be a licensed real estate agent to become one. However, some states, like Ohio, require property agents to have a license.
To avoid incurring fines, check your state’s laws regarding digital wholesaling, and be careful when working as a virtual real estate wholesaler. Avoid expanding into new markets unless it’s necessary to grow your business.
Digital wholesalers also often deal with cash buyers who urgently need to find a home. As a result, they handle fast-selling properties and tend to avoid costs related to regular professional inspections and maintenance.
How Does Digital Wholesaling Work?
The virtual wholesaling process starts with you finding properties or sellers. After finding suitable properties to sell, you then get those properties under a contract.
Then, you’ll market the properties you contracted online using a website, social media, online ad, or your connections. It’ll be easier if you already have a list of potential buyers.
When you find interested cash buyers, you flip the contract to them. Meanwhile, you make money by including an assignment fee in the contract. The rate depends on you.
Remember that all real estate transactions are online. Some of the perks of digital wholesaling include targeting other markets, having lower overhead costs, and experiencing a faster turnaround.
What is the Difference Between a Wholesaler and Dropshipper?
A virtual wholesaler puts a property into a contract for a specific period, finds interested buyers, and transfers the contract to the buyer. They don’t own the property they sell, and they earn profit by including an assignment fee in the deal.
In contrast, a dropshipper sells products from suppliers who directly ship the items to the buyers. Dropshippers never have to get the package and ship the item to the customer.
Although similar in concept, a wholesaler and dropshipper have the following main differences:
- Practice: Wholesalers must find sellers, get into contracts, find buyers, and close deals, while dropshippers only need to partner with suppliers and sell their products online. Dropshipping is simpler than wholesaling.
- Profit: Wholesalers receive large payments per property, but deals don’t come often. Meanwhile, dropshippers earn smaller but steady incomes.
What Do You Need to Do Digital Wholesaling?
To establish your virtual wholesaling process, consider getting some of the best real estate investing apps to make your processes efficient and maximize your earnings.
You may also need to pay for some software, but free versions are available. Here are some platforms and tools you may need to run a successful digital wholesaling business:
- Internet-connected Device: Have a laptop, computer, or smartphone connected to the Internet to help you find sellers, market your properties, and contact buyers.
- Website: If possible, create landing pages via WordPress, Wix, or another platform to promote your properties and get leads. It’ll make finding buyers easier, especially if the properties are outside your city or state.
- Real Estate Marketing Tools: Invest in social media marketing, direct mail campaigns, email marketing tools, and SMS platforms for real-time updates and promotions of your properties.
- Lead Generation Tools: Although not required, having lead generation tools help you efficiently find motivated sellers, market to your target audience, and get high-quality cash buyers.
- Cold-calling Software: Cold calling helps generate leads for a real estate wholesaling business, and getting a cold-calling software or service can make this process more efficient and effective.
- Inbound Call Solution: An answering service lets you keep in touch with digital real estate investors and prevent missing important phone calls. It’s not required, but it’s an excellent way to answer inquiries, especially during inconvenient times.
- Data Tracker: Track your campaign performances by linking your website or platforms to Google Analytics or Google Data Studio.
- Real Estate Skills: To close deals successfully, a good digital wholesaler must possess good communication skills, negotiation skills, active listening, problem-solving, tech savviness, and industry knowledge.
The Best Virtual Wholesale Markets
Where are the best markets to start digital wholesaling? Here are some of the top states you can enter:
Texas is one of the best real estate markets for wholesaling and commercial real estate. Its size and population attract job seekers and businesses, meaning many are looking for properties.
And Texas also has zero income tax, making it an ideal market for wholesalers and investors who want to make good profits. Austin is an ideal city to establish your wholesale real estate business due to its growing tech industry and reasonable cost of living.
As the third most populous state in the US, Florida offers one of the best real estate markets for residential and commercial properties. People flock to Florida because of their great weather, global business giants, and tourist destinations.
And it’s another zero-income tax state, making it an attractive location for real estate investments. You can find the hottest markets in Tampa, Orlando, Miami, Cape Coral, and Jacksonville.
Many sellers and investors conduct wholesale real estate businesses in Arizona since the state has no taxes, resulting in low property prices. The state also has high domestic migration, giving you a large market of cash buyers.
Arizona’s homeownership rate in 2022 was 68.1%, and some of the hottest markets to target your virtual wholesaling strategy include Phoenix, Scottsdale, Tucson, and Prescott.
According to the 2020 census, Washington gained over a million people in the last decade, which increased the number of potential sellers, buyers, and cash flow in real estate.
Currently, it’s an ideal time for buyers to purchase a home in Washington due to the decreasing home values. And wholesalers must develop a solid real estate strategy to tap into this opportunity and make a decent profit.
Target real estate markets in Seattle, Tacoma, and Bellevue for a successful real estate investment strategy in this state.
Pennsylvania is experiencing job growth, population increase, and rising housing values, which makes for smart investments and opportunities for sellers.
So if you want to wholesale real estate, you should target and invest in Pittsburgh, Philadelphia, Allentown, Bethlehem, and West Chester. And remember to check the legal requirements for wholesaling in the state to avoid violating laws.
What is the Average Virtual Wholesaling Real Estate Salary?
According to Glassdoor, a virtual wholesaler earns an average salary of $83,366 yearly in the United States.
However, remember that your actual salary for virtual wholesaling depends on your wholesale fees and closed deals.
Also, when setting your fees, consider your buyers’ budget and return on investment. Charging a hefty wholesaling fee can turn off potential clients, while going too low may disadvantage you.
How to Do Digital Wholesaling
Before starting your real estate wholesaling business, you must learn and understand the buying process. You should also know about the target market and how to approach them to improve your chances of finding sellers and buyers and closing deals.
How to Do Virtual Wholesale Real Estate With No Money
Follow these steps to start digital wholesaling with little to no funds:
Step 1: Select a Profitable Market
Search for cities best for wholesale, learn about their property laws, and choose one that best benefits your business.
When looking at a market’s profitability, consider if investors are interested in an area, if there are plenty of properties for sale, if there’s a growing population, and if it takes too long to sell a property on the market. These factors affect a market’s profitability.
Step 2: Find and Market the Properties
After choosing your market, you must look for active sellers and properties worth selling. Consider setting up software solutions to streamline communications, contract signings, and marketing campaigns.
You may need to pay for tools and software to maximize these platforms, but it’s worth the investment, especially in the long run. Otherwise, opt for the free versions until you can afford premium tools.
Step 3: Create a Potential Buyers List
Before getting inquiries from buyers, consider creating a potential cash buyers list by identifying cash-ready investors in your location.
Try sourcing for buyers on ListSource, Craigslist, Google, real estate events, newspaper listings, and real estate groups on social media. You can also list and approach hard money lenders, people with easy access to cash for real estate deals.
You can also build a mailing list from these contacts to keep them updated with the latest listings if they opt to be an email subscriber.
Step 4: Partner With Others
If you don’t have enough time and resources to look for sellers, market properties, and deal with buyers, consider collaborating with others.
You may partner with a real estate agent or another wholesaler to help find sellers and buyers.
You can also try hiring a virtual assistant to manage contracts and communications. Or you can form a marketing team to update property listings, manage ads, and promote your services online.
However, consider this option when you can afford to hire or partner with people.
Step 5: Close Deals
In digital wholesaling, there are three ways to close deals: assigning the wholesale contract, double closing, and entity assignment.
With an assignment of contract, you, who have the property under contract, transfer the property’s rights and obligations to the buyer.
Double closings, also called simultaneous closings, refer to a wholesaler buying the property and immediately selling it to the buyer at an increased price.
And an entity assignment happens when a wholesaler establishes a legal entity, owns a property and transfers it to the buyer.
How to Set Up Virtual Wholesale Contracts
One challenging step to digital wholesaling is getting a property under contract. Drafting a real estate contract can be difficult, especially if it’s your first time. However, you can look for templates online and use them as a guide.
When creating the contract, remember that it should contain an inspection contingency, allowing you to renegotiate or cancel it if you find discrepancies during your due diligence.
More importantly, it should include a clause giving you the right to transfer the contract to another party.
After drafting the contract, enable others to attach their e-signatures since the contract signing happens virtually.
The Best Virtual Wholesale Real Estate Course for Free
Plenty of free online courses discuss digital wholesaling, especially on YouTube. For example, one of the best real estate channels to watch is Flip With Rick.
Flip With Rick is a YouTube channel providing insights on real estate investing. Their virtual wholesaling playlist discusses various aspects of virtual wholesaling, from getting started with digital wholesaling to knowing the top markets.
Digital wholesaling is a low-cost and flexible way to get into real estate and make significant returns. But as with any venture, thoroughly study the industry and market before diving into it.
Did this guide give you the lowdown on virtual wholesaling? Let us know in the comments, and feel free to share it with others interested in real estate.