With the internet, and especially with smartphones, it is possible to do many things virtually that 15 years ago would have been impossible, including buying and selling vacant land and real estate investment properties. Gone are the days where real estate investors dominate in their own zip code. With the right technology tools, basic communication tools, and endless amounts of data on your screen to calculate and analyze, you can invest in real estate from anywhere.
Using a property management company, you can collect rents on a rental property from thousands of miles away. You don’t have to go to a real estate office, a title company, the post office, or the bank anymore.
The New Normal: Real Estate Transactions Post-COVID Benefit Virtual Investors
The COVID-19 pandemic made virtual real estate investing even easier, giving all buyers access to tools like 3-D mapping, drone footage, and virtual walkthroughs. ZOOM showings and Facebook Live open houses established new ways of showing real estate, as sellers became more willing to accept “sight unseen” offers, and buyers were more willing to make them. For the virtual investment buyer, these shifts offered even more access to far-away properties.
Success in real estate has very little to do with your physical presence at a property, and much more to do with property values, rental income, and expenses. Remember that even with doing things virtually, opportunities to make or lose money exist in every decision you make. Choosing the wrong property, the wrong tenant, or the wrong contractor can all shift an investment from a good one to a bad one. You should also not take risky shortcuts, like skipping a physical inspection. If the seller suggests you skip the inspection, consider that a red flag.
Your Virtual Real Estate Toolbox
If you are new to virtual real estate investing, spend time learning and researching. Forum websites like BiggerPockets.com and other real estate investment groups on Facebook and Linkedin offer a wealth of information, tools, and resources to learn and network. You may even be able to find some off-market deals. Staying connected also helps you to keep a pulse on market activity, as well as stay in touch with industry trends, new tools, and changing laws. Other tools you may regularly use:
Becoming Comfortable with Remote Investing
Buying a property you’ve never actually seen before is an unfamiliar process, especially your first time. If you’re new to the process, an experienced mentor or coach can help you maximize resources and avoid fraudsters:
- Using research tools like Zillow, County recorder websites, Google Earth, AgentPro247, GIS Systems, to gather and analyze data.
- Using collaboration and tech tools like Trello, Google Sheets, Dropbox, DocuSign, and RocketLawyer can give you tools to draft, send and sign contracts, store files, and stay organized.
- Avoiding fraud and scams by being a diligent, educated, and active investor, aware of mortgage closing scams and wire transfer fraud. According to an FBI report, 11,300 people were victimized in online real estate schemes in 2018, which was a 17 percent jump from the previous year.
Jumping In With Your First Transaction
Analysis paralysis is a very real thing and can stop a new investor from jumping in and getting started. It’s easy to become so overwhelmed by options and choices that you put off your first investment. Some people spend months or years researching investing, only to never jump in. You may feel like you just don’t know enough. Focus on good investment decisions, not perfect ones.
What is Virtual Wholesaling?
A real estate wholesaler buys and sells real estate quickly without doing repairs. They make their money by securing properties for below fair market value, and then immediately finding buyers. Homes may be severely distressed, with flood damage, no electrical, no plumbing, etc. They may not qualify for traditional financing.
If you ever see “Cash Paid for Real Estate” advertising signs, these are wholesalers looking for properties. They are either cash buyers or have access to hard money funds. If you can find properties that need to be sold, and you can get a good price, you can then turn around and quickly sell it for profit. The process is simple: You find a property and get it under contract (with you as the buyer). Then you find another buyer who will buy the property for a little bit (or a lot) more.
Wholesaling can work two ways:
- You match a buyer and a seller and assign (sell) the contract for a fee. You never own the property. The buyer performs on the contract you negotiated.
- You take possession of the property, and then you sell it (double closing). This option prevents the investor buyer from knowing how much you originally secured the property for.
How to Start Wholesaling Virtually
For you to be successful in virtual wholesaling, you need to get properties at a good price point. The whole process can be broken down into several steps:
- Finding a market
- Finding investor buyers
- Determining how you will finance properties (cash, hard money loan, investor, etc.)
- Finding distressed properties
- Deciding whether to sell the contract or work on a double closing.
Before you get started, find an investor-friendly title company and make sure they are willing to handle transactions as you desire.
Where to Find Properties to Wholesale
You can find distressed properties everywhere. Typical markets for wholesale real estate acquisitions include:
- Abandoned homes
- Condemned homes
- Damaged homes needing major repairs
- Fire/Water/Mold damaged homes
- Hoarding houses
- Probate (Inherited) homes
- Relocation sales.
If someone inherits a house on the other side of the country and just wants it sold as-is, where-is, this could be a wholesale acquisition. The seller wants cash fast, and is not interested in appraisals, renovations, repairs, or credit.
Land wholesaling is different from property wholesaling, as you will own the property and take title to it. There are generally no improvements to the land. You can buy acreage in some parts of the country for under $1,000, which can make it easy to pick up a portfolio of properties. If you pay cash, and offer seller financing that is high interest but affordable payments, you can make money on both the interest from the financing and the sales price. Wholesale land can be sold on eBay, in Facebook Groups, and on wholesale land websites. Successful land wholesalers will use email newsletters, social media, Facebook groups, and other means to buy and sell land.
Do You Need a Real Estate License?
If you are the principal buyer on a property transaction, you do not need a real estate license. However, having a real estate license can allow you to access MLS data, and allow you to represent yourself in transactions, and to represent others. If you have friends or acquaintances who see your success and want you to represent them in real estate deals, having a real estate license can be beneficial as it can potentially create another stream of income.
How to Be Successful as a Virtual Real Estate Wholesaler
Wholesalers are hustlers and networkers, working both sides of a deal and negotiating a seller’s price down and a buyer’s price up. As a wholesaler, you should be comfortable chasing down deals all day long. If you are not comfortable networking and using aggressive marketing strategies, you may find you prefer other ways of generating income from real estate, like buying and holding rental properties.