Co-wholesaling is a way of wholesaling properties by forming a joint venture with other wholesalers.
The strategy of wholesaling real estate is a great way to start making money fast, while learning about the business, and you can do it without needing any of your own money or credit. However a major problem of many investors, especially starting out, is finding enough inventory to sell to their investors’ database or buyers that are ready and able to purchase their properties. This is where “co-wholesaling” comes into play.
Several wholesalers, new or established, do gladly join in this form of selling practice, for the following reasons:
- Starting wholesaling properties faster as a beginner wholesaler, since he/she can tap into another wholesaler’s buyers list;
- Establishing a larger buyers’ base;
- Using another wholesaler’s property inventory to increase and present to their own buyers’ list.
The concept is fairly simple. You either supply the property or the buyer on a deal with a fellow wholesaler. He/she brings a buyer for your property or a property for your buyer. As far as the compensation, the standard agreement in co-wholesaling is an equal split of the profits between wholesalers (50/50.)
A Co-wholesaling Agreement will specify the terms and compensation of the transaction, including a non circumvention/compete clause, which protects both wholesalers’ interest in the property.
So, how can you use Co-Wholesaling in forming Joint Venture alliances with other wholesalers?
Research all local wholesalers and got onto their investor lists. You can do this by searching:
- “wholesaler ‘your city'” on Google;
- bandit signs, like “we buy houses;”
- internet sites for sale by owner, Craigslist, Backpage.
Once you call up the wholesaler, you simply state: “Hello my name is Laura Al-Amery and I see that you buy and sell houses in and around (name location.) If I bring you a cash buyer, would you be willing to split the profit with me?” If they say yes then stay in touch with them and constantly get their freshest inventory to market to your cash buyers. This way you can focus on just building your own buyers’ list (which should be the first important step for a beginner wholesaler) and not worry about getting properties inventory right away.
Co-wholesaling is a great way to starting out in the business. However the ultimate goal is to not have to depend on other wholesalers for inventory or buyers. Once you start closing on a few co-wholesaling deals, you should have enough money set aside to take your business to the next level, market for your own buyers and properties, therefore minimizing the need for joint ventures, hence splitting profits.
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