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Investor Explains How to Make Money Doing Real Estate Wholesaling

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  • Real estate investor Todd Baldwin earned more than $ 1.5 million in 2021 from a variety of sources of income.
  • He recently started wholesale, he says, which is one of the most efficient ways to make money.
  • In his last deal, the seller wanted $ 800,000 for his home. Baldwin sold it for $ 900,000 and kept the difference.

Time is the most valuable asset for Todd Baldwin.

“I’m passionate about my freedom of time,” a 29-year-old Seattle-based investor told insiders. “And we live in a market economy and need money to do almost everything, so it makes sense to work for a much larger amount of time in much less time.”

That’s why he recently started wholesale real estate. He said it was one of the most efficient ways for him to make money.Baldwin has a variety of sources of revenue, all of which Earned him over $ 1.5 million in 2021..

The way it works is for someone acting as a wholesaler to find a buyer (usually a real estate investor) who is willing to sign a contract on a part of the house or land and buy it at a higher price, then Putting the price difference in your pocket once the transaction is complete.

For example, in the last transaction Baldwin made in May 2022, the seller wanted $ 800,000 in his property. He didn’t want to post it on Redfin or Zillow, deal with open houses or realtors, or lose money by selling agency fees. Instead, he wanted to make a so-called off-market transaction — and he reached out to Baldwin to do that.

“If it sells for $ 800,000 or more, I’ve agreed to make it whatever Delta is, so if I sell it for $ 825,000, I’ll have 25 grands,” Baldwin explained. The house is $ 900,000 and the profit is $ 100,000. The insider confirmed the sale by looking at the seller’s statement.

“I wanted to calculate the hourly wage, so I kept track of the time,” he added. “It took just 47 hours.”

If you earn $ 100,000 in 47 hours, your hourly wage will be $ 2,128.

He said he would have to pay taxes on his income.

Tax bracket

Your income is 40%, so in theory you would have to pay $ 40,000 in taxes. He secures $ 40,000 in taxes, but is looking at ways to reduce his tax obligations. He has an electric truck (Ford F-150 Lightning or Rivian), eg “51% time, 100% bonus depreciation as long as you use it for business purposes. The truck is about $ 100,000, so if you buy it , My tax obligations on this transaction will be removed. “That is, he can buy a $ 100,000” business truck “and not pay tax, or he can pay $ 40,000 tax on wholesale transactions. There is a remaining $ 60,0o00 to invest.

The 47 hours he worked on the deal involved the process from start to finish, including marketing properties, telephone conversations with potential buyers, performing walkthroughs, going to and from walkthroughs, and putting. Everything was included. Contract together. Wholesale also includes procuring sellers, in which case the seller contacted Baldwin.

To market the property, he recorded a video of the space and emailed it to a network of approximately 15,000 real estate investors in the Pacific Northwest.

“For efficiency, we use email templates that include links and photos,” he said. “I could just rename the destination and send it to the entire list. Using system and automation, I was able to limit it to 47 hours.”

Of the thousands he contacted about the property, about 100 followed up. “Of the 100 people who were looking for more information, 3 actually wanted to go on a tour of the property, so I’m 3 people. To be as efficient as possible, we’ve lined up the tours in a single day. rice field.”

One of those three will make an offer accepted by Baldwin.

When it comes to creating contracts, Baldwin created it himself using Legal Zoom, a site where you can create legal documents without having to hire a lawyer. “I found exactly the template I needed in Legal Zoom. It probably took me 12 minutes to write the contract,” he said. “And I didn’t even pay for it. I used the free trial version and then canceled it.”

Then he executed the contract using the free version of DocuSign. “I created a free contract with Legal Zoom and had the buyer sign it for free using DocuSign, so except for the gas I spent driving to the facility for the screening. , All costs were zero. “

How to start wholesale

If you start from scratch, you first need to understand exactly how wholesale works, says Baldwin. Learn about this topic by reading a book, taking an online course, or watching a YouTube video.

Next, you need to start building a list of potential buyers. After all, when you connect with someone who wants to sell their property, you need to find someone to buy it.

“Join a real estate investment group on social media in your area,” said Baldwin, a member of Facebook’s Seattle-specific investment group. “Who is interested in buying real estate off-market within these groups?” And a legitimate buyer list of about 15,000 investors over the last three years or so. Has increased. “

Run a Google search to find the community by zip code and start attending local real estate meetings. It will help you build your network and meet some of the active buyers in your area. In addition, you can connect with other wholesalers and people who are already doing what you want to do and ask where they got there.

When you’re ready to try your first transaction, you need to find a seller with a cold call. That’s what Baldwin had to do for his first deal — and probably any beginner.

Cold calls can be unpleasant at first. Baldwin had experience from his first paid job. After dropping out of college, he said he had to start working in insurance sales and make “100 cold calls a day.” “So I’m very used to picking up the phone and calling a completely stranger.”

In this scenario, he was calling the landowner, especially the landowner listing the “Sale by Owner” (FSBO) property. He said a list of FSBOs can be found on Craigslist and Zillow.

“I picked up the phone and started making calls,” he recalled his first wholesale contract in October 2021. .. “

He said the seller wanted $ 750,000 for the property, and Baldwin found a buyer who bought it for $ 800,000 and earned $ 50,000 in about four hours of work.

Todd Baldwin

Baldwin began wholesale in October 2021.

Courtesy of Todd Baldwin

Wholesale is probably the most efficient way to make money when compared to his other sources of income (rental income, consulting calls, online real estate courses and income from YouTube channels). Earn tens of thousands of dollars with skill sets, my network, and fairly minimal work. “

He added that it can be done by anyone with the right knowledge and network. I’m doing my own thing. It’s an amazing use of my time, what I enjoy and diversify my income. “

Baldwin will spend more time on wholesale in the near future. He believes that if he keeps doing it himself without hiring a team, he can actually trade once a month or 12 times a year.

“I will keep doing that as much as I can,” he said. “It’s a great way to make extra money — even really big money — and for a very minimal job. It’s about a lot of money in a short amount of time for me.”

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