Are you planning to wholesale self-storage but don’t know where to start? Stacy Rossetti offers her expertise to guide you to wholesaling self-storage and shares her experience on how she found her facilities to walk you through the process.

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Beginner’s Guide To Wholesaling Self-Storage

I want to go over wholesaling because I haven’t talked about that in a while. In real estate investing, there is a niche where you can be the middle person between the buyer and the seller. This is not being a realtor. A realtor is where you go and get a license from the state and you do that like through a license. Some states do not allow wholesaling, but almost all of them do. Wholesaling is holding equitable trust in a property and then being able to find somebody to buy it. You could be the middle person.

 

I want to get into that because there are a lot of people out there that want to invest in self-storage, but they don’t have a lot of money to do that. If you’re one of those people, let me know. It’s not a big deal. I wholesale self-storage all the time when I first got into real estate investing. I wholesale property because I didn’t have a lot of money. Wholesaling is a great way for you to make money in real estate without having any money to buy a property.

What’s good about wholesaling commercial property is that you can wholesale any type of commercial property. You can wholesale any property at all. You can wholesale residential houses, commercial property like buildings, self-storage, and land. They call it flipping. A lot of times, when you hear of flipping land or flipping commercial property, that’s wholesaling. I want to get into that and give you an idea of what you can do.

The same concepts go for finding facilities. On the acquisition side, there’s no difference between finding a facility as a wholesaler and finding a facility as a buyer. The result is that you find a facility. If you talk to an owner and the owner wants to sell, then essentially you find somebody to buy that property instead of you buying that property. That’s what wholesaling is.

Let’s get into it. Before we get started, let me know if you’re new here and this is your first time. I’d love to meet you. Introduce yourself and then let me know if you own the storage facility. I’d love to know that. My husband, Pete, is my partner, not only in life but also in the storage business. He has been to all of our storage facilities. We own thirteen facilities across Georgia and Florida. We live in Tallahassee.

We just closed on a facility in the fund. It’s a great deal, but it needs a lot of severely mismanaged facilities. We got 171 units, 25,000 square feet for only $375,000. Once that property is fixed up and running, it is valued at over $2 million. On top of that, it’s on six acres. There’s enough room to expand, and it’s in a major city in Georgia. It’s in a city of almost 200,000 people. We essentially bought the ugliest storage facility in the city. The owner was running it to the ground and he told us, “I’m not doing it. I need to get rid of this thing. It’s not a good deal.”

Only certain people will buy something like this. It needs hundreds of thousands of dollars’ worth of work, and no bank is going to finance that at all. You either essentially need to get the owner to finance it or you need to pay cash for it and we paid cash for it. It’s going to cost us $200,000 to fix it up. It’s the perfect facility for our fund. We just closed on that like two weeks ago. Pete has been focusing on trying to get that thing running. It does not have any income at all.

Nothing has been made. He said he makes $1,000 a month and somebody is living there as well too. He called me and said, “They got somebody living here.” She came out of one of the units. She introduced herself to my husband. The guy that owned the place beforehand spent all his money in all the wrong places. He spent it on an amazing security system. The place is secure. I don’t know how somebody lives there, but there are cameras everywhere. There’s a brand-new locking system for storage where you can lock the units.

I don’t know if anybody’s ever heard of this before, but you can lock at the units. If they don’t pay, the computer system will lock the door at the units. This has that on a lot of the units but not all the units. He was trying to do that, but then he ran out of money. Pete’s there trying to figure this whole computer system and security system out and the lady walks out and she was like, “I want to introduce myself.” He was like, “Can I help you?” She’s like, “I want you to know that I live over here in that unit. Morris knew about it, but he let me stay here. I need a place to stay and I don’t have any money.”

They talked for a little while and she told the story of how she used to be into drugs and then she got off drugs. She got like thrown in jail a couple of times. She had this horrible life. She’s just like, “I know I’m going to have to get out of here, but I just want to ask if you could give me time.” She was honest about it which was nice. My husband was like, “This is the deal. Here is a roll of trash bags, and here are some gloves. You can stay here for a while if you need to. You’re going to have to get out but, in the meantime, you have to earn your keep. I want you to go and start picking up all the trash out here.”

There was a lot of trash and stuff. She’s like, “I’ll do that.” She’s picking up the trash there and then he’s working there. That’s the type of guy Pete is. He is not just going to kick her out. She doesn’t have a place to go. She’s going to pick up all the trash and earn her keep while she’s staying there. She said that by the end of the month she’ll try to find someplace to get out. He said, “If you pick up all this trash, I’ll help you find a place to live. I’ll help you to move into another place.” She was so thankful and everything.

This is one that we had somebody living there, and then we had another guy in one of our other facilities one time. He wasn’t living in a unit, but he had an RV. He was renting a unit and he was paying monthly basis. He parked his RV right next to the unit. He was staying in the unit and whenever he needs something, he’d just go out to the store, to his unit and grab it or whatever.

We had somebody doing that as well at one of our other facilities. Pete was like, “I’m sorry, but you can’t do that. You can’t live here. You’re scaring everybody off.” The guy was like, “I know. I’m having a hard time right now. I’m trying to figure out what to do. All my stuff is here.” He has this little tiny RV. He was like, “I’ll give you like a couple of days and stuff, but you can’t stay here.” Eventually, he left and found a place to stay. That was another time that we had somebody not living in the facility but doing that.

Pete’s the type of person that knows that people are real, they’re human, and they’re only trying to make it. The truth is, we’re all trying to make it. He’s working with this lady at this facility and we’ll see how it goes. We’ll try to maybe help her find a place to stay. He’s like, “I don’t know what to do, but that’s the only thing we can do because she doesn’t have any place to go.”

People are real; they're human and are only trying to make it. Click To Tweet

What would you guys do in that scenario? Would you guys help them out, kick them out, or call the cops? It doesn’t happen a lot. We’ve had storage facilities for a few years now. There are only two times that’s ever happened. We have maybe 1,500 doors. We have a lot of doors. Instead of freaking out, you help and stuff. Your first reaction is to get those people out there, at least mine is. I’m like, “Get her out.” Pete’s the opposite. Pete’s like, “Let’s try to figure out what we can do for her.”

That’s what Pete’s doing. He’s been trying to get this facility going, up and running, working hard, getting that done. We have four facilities in Atlanta because that’s where we started. One of our facilities is in Fayetteville, Georgia, which is a suburb above Atlanta. In 2021, we got the facility paved. In that facility, we park big rigs. It’s not like a tractor-trailer, not the back end, but like the big rigs and dump trucks. That’s the very first facility that we ever bought.

He was there because, in one section, we have some not paved but it’s gravel. That is where a lot of the dump trucks park because they tear a lot of the area up. We graveled it and stuff. He was there managing that and getting it done because we’re going to be selling those four facilities. We bought all four of those facilities a few years ago and we’re going to sell those as a portfolio.

We’re going to list them in January 2023. That’s the primary market because you have primary which is Atlanta and the suburbs. You have a secondary market, which would be outside of the Atlanta market. It’s not the suburbs of Atlanta, but maybe outside of Atlanta or a small market like Macon or Augusta. You have the tertiary market, which is the country.

We’ve bought in primary, secondary, and tertiary markets. The first ones that we bought were in the suburbs of Atlanta because that’s where we lived. I drove for storage for the first couple of years that we were doing this. I talked to all the owners in the area and we ended up buying four of them. Those have all been stabilized and we’ve owned those for anywhere for a few years now. We are in the process of selling those.

I got private lenders to lend me the money for those, just straight debt, and all those notes are coming due. I could either refi those out and hold onto them or I could sell them. We’re going to sell those, 1031 exchange them into me thing for 2023. I want to have cash. Those were smaller facilities. They’re 60 to 100 units. We’re moving up to 150 to 250 units.

We’re moving into the $1 million to $3 million range. We’re not going big or anything. We’re getting bigger. We’re going to be selling those as a portfolio. He’s trying to get those ready to be listed in January. We were traveling for a year in our RV. Since he’s been back, we’ve been trying to get settled here in Tallahassee. He’s been out working and trying to get ready to sell some of our facilities. We want to get rid of some of those facilities so that he can concentrate on some bigger ones.

Let’s talk about wholesaling. Somebody’s asking, “How do you find them and fund them?” The way that you do wholesaling is you’re going to have to find them. We’ll get into like how I find all my facilities. Wholesaling 101. You have you, the property, the buyer, and the seller. These are the parties in a wholesaling transaction. You are going to go out and look for storage facilities to purchase as if you were going to buy them. Step 1) You find the property. Step 2) You talk to the seller, see if they want to sell, and in the process, you get the information and run the deal analysis. Step 3) You have to sell it, get it under contract, and find a buyer.

We’re going to talk about this step by step for everybody to have an idea of what we’re going to do. You are the middle person between the buyer and the seller. Your job is to find a property that the seller wants to sell and the buyer wants to buy. That’s the job. In this case, the property is going to be a storage facility. For wholesaling, step one is finding them. It’s like finding, funding, and running.

Acquisitions

Now we have to talk about acquisitions. What are all the different ways that you can find storage facilities to buy? One of the things that we’ve been doing is using Crexi to find facilities. We do not use Crexi to go on and look at for sale facilities. You can see a lot of properties for sale on Crexi. I’ve been talking about this every single episode since we started doing this.

Crexi has an investor’s portal where you can pull up the property. If you want to get access to Crexi, email Questions@StacyRossetti.com. That’s our email. Let me know and I’ll introduce you to Grant, who is our representative from Crexi. One day, I’ll get him to come and talk. We’re trying to figure out a good time to do that. He’ll go over Crexi and everything.

We don’t go to the for-sale section. I don’t teach going onto Crexi and looking for facilities to buy, although there’s a ridiculous amount of storage facilities for sale on Crexi. They are way too expensive. There are 650. Every time that I look at this page, there are more facilities that are added to this list. It’s crazy. I’ve never seen this many storage facilities for sale.

We go on to the Comps. Comps are only available to those that have accounts with Crexi. This is the investor side. You’re going to find an area. Tallahassee, Florida is where we’re going to go. Look at all the storage facility comps. Crexi gives you a list of all storage facilities that have been sold in your area since 1960. It will give you a list of all storage facilities in the area and show you their value and what they sold for. You can go here and see if it comes up. You can export your results.

Let’s say I want to be in Monticello, Florida. You can start looking at like all the comps in the area and you can see anything that’s been sold in the area. Let me start contacting all the owners and seeing if they’d be interested in selling. I have a whole team that manages Crexi to find every storage facility in an area and see if anything has ever been sold. It’s the easiest way to find storage facilities now.

 

I have AA storage right here. It’s 116 units. It sold in 2020 for $480,000. What’s cool about Crexi is that it gives you the owner’s information right here. You can click on this then it gives you the phone number. Elaine Sutter is the one that owns this, and it even gives her email, Elaine.Sutter@gmail.com. That’s all here. It gives you all the contact information right at your fingertips.

This is what we’ve been doing. We’re using Crexi to find all the lists. You can export the results. You zoom out, and it exports up to 100. You can pull that list yourself and you can start calling the owners. The owner’s information is right there. It’s that easy. This is what my virtual assistants do. They use Crexi all the time.

Another thing we do is virtually drive for storage. Let’s say we’re in Tallahassee. We do nearby and we type storage. You have all the storage facilities here. Tallahassee is a primary market. CubeSmarts and Prime Storage are all there. You can go and search this area. Here’s Monticello. There are a couple of storage facilities. There’s Metro Self Storage. You can start compiling your list without getting Crexi. It does cost money every single month. It’s like $150 a month.

You don’t have to do that. You can compile your list. Up until a couple of months ago, we were compiling our list. We would add all these facilities to a sheet and then we would keep in contact, call the owners, and see if they want to sell. Remember that there are lots of storage facilities that are not on Google Maps. Here you could say Metro Self Storage. There’s probably a Metro Self Storage in this area but the owner does not know how to claim this.

 

They have not claimed this business so there’s no information about Metro Self Storage. Somehow it got onto Google Maps, and the person that is owning this does not know how to claim it properly. The truth is that in order to get verified to be on Google Maps, it’s super hard. It is not easy. In fact, for the one that we bought a few months ago, we’re still trying to get that one claimed on Google Business listings, Google My Business, or Google Business Profile.

There was a lot of fraud so Google was very strict. You have to be there, be on the phone, walk around, and show them it’s your business. There has to be a sign. You have to be able to get stuff in the mail. They’ll send you a card in the mail with the code and verify you. Who wants to do that? Unless you have a manager, you can delegate that. Nobody wants to do that. Pete’s been doing that up until now. He’s the one that does that and he’s annoyed with the whole process.

There are a lot of storage facilities that are not on Google Maps. They’re not on any maps because they have not gone through the whole process of claim. I call those the hidden market. Of all the storage facilities out there, those are going to be the best types of storage facilities to buy, find, and wholesale. Remember that tertiary equals country. In tertiary markets, there are a lot of hidden storage facilities. If you can’t afford a lot, wholesaling storage facilities in tertiary markets is going to be a lot easier than wholesaling a storage facility in a secondary or primary market.

If you do want to wholesale self-storage, then you want to focus on smaller towns with a population of 25,000 or less. When you start getting into secondary markets, which would be 25,000 to 150,000 cities, you get into bigger players and facilities. It’s hard to wholesale a self-storage facility that’s $2 million. Instead, you would syndicate that. If you find something like that, let me know. I can help you syndicate it if it’s a good deal. $1 million or less facilities and tertiary markets are good for wholesaling.

You can also use Google Maps to drive for storage. I get out and drive for storage personally because I like to drive. That’s my thing. My Vas, who are all in the Philippines, do virtual driving for storage. That’s how they find their facilities. All the facilities that we buy are virtually driving for storage, especially in tertiary markets around $1 million or less.

Talk To Owners

When you talk to owners, these types of owners are like mom-and-pops. They’re like you and me, regular people. When you’re talking to them, you want to ask them. Be honest, be truthful, and say, “I’m trying to find a storage facility to buy and this is my first one. I’m calling all the owners in the area and I wanted to know if you’d be interested in getting an offer on your storage facility.”

Always lead with, “Do you want an offer?” Never ask anybody if they want to sell because nobody wants to sell. I’d love to get an offer. I would love to get offers on my facilities, and nobody ever asks me for offers. We get a lot of people that say, “Do you want to sell your facility?” We get letters in the mail. I always throw all those away. I had one email the other day and I told our manager, Bonnie, “If anybody contacts our facilities and asks us if we want to sell our property, please make sure that you send them to me.”

You never ask anybody if they want to sell because nobody wants to sell. Click To Tweet

We’ve got 13 facilities. I’ve gotten one in the last few months that’s tried to contact us and she’s good about that. People are not calling and they used to call all the time. In 2021, they stopped calling. I’m not sure. We’re ramping up right now and calling owners. You want to call and talk to the owner directly. This person is leaving a message. Bonnie will say, “I can’t answer any questions because I’m not the owner. Would you like me to leave a voicemail and give me your information and I’ll forward them?

She does forward that message to me which is the opposite of most managers. They’re going to say no. They don’t want to sell. For us, we get it. If I get it, I’ll talk to them. I’ve never had anybody say, “Would you be interested in getting an offer on your property?” They always say, “Would you be interested in selling your property?” I’m like, “I don’t want to sell. I would never want to sell my storage facilities. They’re cash cows. Why would I want to sell them?” “Would you like to get an offer, at least outline what I feel your facility is valued at?” “I would love to know what you think my facility is valued at.”

Will I sell? Probably not but I would love to get an offer of what you think the value is. That’s why our virtual assistants are doing that. It works. We’re putting in 10 to 15 offers a week. That’s crazy how many offers we’re putting in. You want to talk to the owner directly, not the managers. You want to ask the owner for an offer, not to sell. Do they want an offer? This is how you’re going to find storage facilities. This is how we’re finding them. We use Crexi and Google Maps, and we drive for storage virtually. We call and talk to owners only. In Crexi, you can find the information of the owner. You can bypass the managers. That is how we’re getting all of our deals.

Do you have any questions about finding facilities? There’s a question on, “How are you finding good virtual assistants?” I hired one virtual assistant in January 2022. I found her on Upwork, and she was task-oriented. I gave her a couple of little tasks here and there. She started doing these tasks amazing. She has good spreadsheets and stuff. I would like to have her on my team. I asked her if she’d work full-time for me, and she said yes.

She’s the one that started doing the acquisition stuff. I started teaching her how to do that. That’s when I started getting the idea of doing turnkey acquisitions. We launched that in May 2022, and that’s when I took my first group of students. We started building up this team of virtual assistants. They all came from referrals. She referred somebody else and they referred somebody. Now, I have twelve virtual assistants that do nothing but call owners, talk to them, and find deals for my students. That’s how it started. It was Upwork. Crexi is where you can go and get the owner’s information you can utilize that software on the back end.

If you’re interested in that, email us at Questions@StacyRossetti.com, and we will introduce you to Grant. Grant will do a demo. You want to go through us because if you don’t, you’re going to be paying more money. Use me as your discount and say, “I got your information from Stacy, you can get my discount as well too.” That is finding them.

We’re going to get out there and start talking to owners. This is key. When you talk to the owners, you’re going to ask them if they want to get an offer on their property. I’ve done countless sessions on putting offers in. You can go back and watch all my sessions. I’ve got a whole section of my course on this. I don’t send out replays of my sessions. These are all live. You can go to my YouTube page if you want and listen to videos or you can get the course.

Commercial Deal Analysis

The next step in finding them is the Deal Analysis. You want to have some deal analyzer to run your numbers, and you need to learn how to run commercial deals. As the wholesaler or as the person that is talking to the owner, you have to know whether or not it’s a good deal. Your next step is learning how to run commercial deal analysis. You can learn how to do this, and you can have my deal analyzer only if you are a student. I offer this to you. There’s a Deal Analyzer in the course that you’ll learn how to do. if you can’t afford to buy the course or join the coaching program, check out ROI-Muse, email us, and let us know if you’re interested in getting in contact with Joe.

Joe James is the one that developed the Deal Analyzer. It’s a commercial real estate deal analyzer. This is not specifically for storage. If you got my deal analyzer, then it would be for storage, boat, RV, and all this stuff. Joe is an awesome person in the industry and he’s a multifamily guy. He does a lot of multi-syndications. I met him along the path somewhere and he created ROI-Muse. You can go to the website if you want. You don’t want to buy it unless you have my link because I get 50% off. This is a website where you get access to his deal analyzer.

He has a whole bunch of deal analyzers you can imagine. If you want to learn all types of real estate investing, he’s got the BRRRR Method, rehabbing, commercial real estate, and everything that you need. The Commercial Real Estate Deal Analyzer is one where it’s generic for everybody and for all types of commercial real estate. It looks like an Excel spreadsheet.

You have to train yourself on how to put numbers. You have to learn how to run commercial deal analysis. If you want access to his deal analyzer, which is 50% off using my link, then just email Questions@StacyRossetti.com and say, “I want to get access to ROI-Muse. Give me your link so that I can get 50% off,” and then we’ll send it to you.

He doesn’t go into storage, honestly. He’s a multifamily guy. He’s going to be teaching you how to utilize his deal analyzer for multifamily. You can run commercial deal analysis. You can run any type of deal from his deal analyzer. You have to learn how to do it, put the numbers in, and it will give you projections and all stuff.

You want to learn how to run numbers. You want to understand what the cash-on-cash return is. What’s the DSCR? The Debt Service Coverage Ratio. What’s the IRR? You’re going to be learning all of the terms. You need to learn how to run deal analysis. When you talk to the owner, there are a few things that you have to get from the owner. You’re going to get the unit mix, the vacancy percentage, the total square footage, the number of units, and the annual income. This is what you get.

You need to learn how to run deal analysis. So when you talk to the owner, there are a few things that you have to get from the owner. Click To Tweet

“What’s T 12?” I’m not sure what T 12 is. I have no idea. You have the unit mix, vacancy percentage, total square footage, number of units, annual income, and then expenses. The truth is that expenses are biased. Your expenses on how you run a facility could be different from the way that I run my expenses. That’s what I was bringing up. Annual income is revenue and expenses. Under expenses, you’re going to want to know the property taxes, insurance costs, and utilities.

You’re going to do the maintenance, software, and marketing. This is expenses, marketing, property taxes, insurance, utilities, and maintenance software. Software is your software plus your credit card fees. Maintenance is going to be your boots-on-the-ground person, then anything you need to fix the place. You want to hire a phone person if you’re not going to be the one that answers the phones. I have somebody that is a student that’s buying a facility. It’s 116 units that are small. It’s a good size. I got a great price for it. He wants to hire a virtual assistant to do stuff.

I’m thinking that 116 units are not going to be that difficult to handle. In the first week that you own the facility, it’s busy with a lot of phone calls and stuff. The 2nd, 3rd, and 4th weeks are not that busy. The first couple of months that you buy in a facility is busy because you’re getting it up and running but I don’t think that you need to spend on 116 units. You don’t have to spend much money having somebody run it. You could have a boots-on-the-ground person that’s there, cleaning the place up, picking up trash, and overlocking, and a part-time phone person that answers the phone.

You don’t want to spend a lot of money on this. You want to figure out what your expenses are going to be. You’re looking at their expenses. The truth is, every owner that I’ve ever had sent me over their P&L and their balance sheet. They’re running all expenses through it. It just brings the value of the property down if you’re looking at their expenses.

You don’t want to do that. You want to have your deal analysis, especially as a wholesaler. This is what you’re going to get from the owner. Now, you’ve found them and you’re doing your deal analysis. I’m not getting how to run deal analysis but you need to learn how to run deal analysis. I gave you ROI-Muse, you can buy my course, you can watch my videos on YouTube, or can join the coaching program.

We’re going to make our offer to our owner. We’ve done the deal analysis. You have the seller and you. This is the contract. You make your offer. You use the magic letter. You make several different offers. I talk about the magic letter a lot. You make several different offers and you get it under contract. You have this storage facility under contract and you’re like, “I put a $500,000 facility under contract and I have no money to buy this thing. What should I do? I could wholesale this thing.”

That’s your exit strategy. Your exit strategy is to wholesale it, which means finding a buyer that will buy this property from you. By law, you cannot market anybody’s property unless you have it under contract unless you paid earnest money. That is what’s called equitable interest. You cannot market anybody’s property unless you have an equitable interest in that property. By paying the earnest money, you have equitable interest and market that property.

You cannot market anybody's property unless you have an equitable interest. Click To Tweet

You want to make sure that your contract is an assignable contract of wholesaling. These are the two most important things. You have an equitable interest in the deal By paying the earnest money from the contract and you have an assignable contract. That assignable contract allows you to assign that contract to sell to somebody else. You have this contract. You’re going to be able to market this facility and you’ve seen it in Facebook groups.

Make sure you join our Facebook group. If you’re in Super Simple Self-Storage, there are people selling facilities all the time. These are all wholesalers. That contract gives you the right to go out and market that facility in all the Facebook groups and see if anybody is interested. As the wholesaler, your job is to build your list of people that would be interested in buying properties that you find.

As a wholesaler, your most-priced possession is your VIP buyer’s list. I’ve seen Facebook ads. You don’t get these or not. I get them on my stream where there are people that are coming in and trying to get you to download their checklists. They’re putting you onto their buyer’s list. As a wholesaler, that’s your most profitable thing. You have this buyer’s list that you can wholesale your properties to. You have this contract. You can go out and post it all over Facebook and start building this list up by networking and talking to people interested in buying storage.

Everybody wants to buy storage, but not a lot of people buy storage. That’s the key. You want to at least have that list because you never know if somebody on that list may be interested in buying one of your properties. The key is to find them. You run a deal analysis, put it under contract, go out, market that property, and find a buyer to buy it. When you find a buyer that is going to buy that facility, you’re doing the same thing again. You’re putting it under contract for sale. Because you have an equitable interest in that property, you as the seller are selling that property to a buyer. The contract that you fill out will be you as the seller and them as the buyer.

 

You’ll have you as the buyer, and the seller as the seller. You’ll have you as the seller and the buyer. You are the person in the middle that’s flipping a contract. That’s what wholesaling is. It is flipping contracts. You put this facility under contract from the seller for $500,000. You went out, marketed on Facebook, built your list up, and found a buyer that’s going to buy it for $550,000. You have that $50,000 in the middle. That $50,000 goes to you as the wholesaler. You made $50,000. I have made $50,000 to $100,000 on wholesale deals quite often, and you can do it as well too.

All you do is find a seller that wants to sell and find a buyer that wants to buy. You just put it under contract for both of those transactions. In the middle, whatever it is, if it’s $5,000, $10,000, $20,000, $50,000, $100,000, or $150,000, you make that money. You make the difference between the buy side and the sell side. That is what wholesaling is. It’s lucrative.

The truth is that there are not a lot of wholesalers out there. Many people want to buy storage, but there are not a lot of wholesalers out there. Remember that it is good because that means there’s hardly any competition. Also remember, if you do want the wholesale, you have to put it under contract for a price where you can add money and sell the contract.

If it’s worth $500,000, put it under contract for $450,000 so you can sell it for $500,000. I see many wholesalers putting it under contract for the $500,000. It’s worth $500,000 and they tried to sell it for $550,000 and then, the numbers get too tight. As the wholesaler, it’s your job to create a win-win situation for all parties. That means a win-win situation for the seller, yourself, and the buyer.

Everybody in this scenario needs to make money. If you’re coming across a seller that wants too much for their property and you can’t sell it for the price that you’re trying to sell it for, that means that you put it under contract at the wrong price. It’s your job as a wholesaler to understand that you should be discounting those properties so that you can make money on the back end and also the buyer can make money on the back end.

It's your job as a wholesaler to understand that you should discount those properties so you can make money on the back end. Click To Tweet

For properties that are $1 million or less, remember it’s this area and size that you’re going to be in because it’s harder to make a lot of money on a $350,000 facility. You can’t put it under contract for $350,000 when it’s only worth $325,000 and try to sell it for $375,000. I see that all the time. Make sure that you discount that price enough. Whatever you want to make on that deal, discount it so you can make it. You don’t want to push those numbers and you don’t want to be greedy. That’s the one rule that I have that I’ve learned over the past several years that I’ve been doing real estate investing.

The truth is, there are so many deals out there. If you know what you’re doing, you’re going to find it. Believe me. You want to make enough money to create a win-win situation for you, for the seller, and for the buyer, and then pass it on to the next one. When you close on a wholesale deal, it’s an assignable contract, so you have one closing. If you don’t want the owner to know how much you’re making, if you’re going to make $50,000 and you don’t want that $50,000 on your contract, then you’ll have to do a double closing. You have to close it and re-close it.

A lot of buyers are like me. I don’t care what you make as long as on the back-end, we all make money. I don’t care if you’re making $50,000 or $100,000. I have one student that bought a deal and he paid the wholesaler $150,000. He bought that property on the back-end for $1.5 million and it’s worth $3 million. For him, $150,000 is worth it. Sometimes the sellers and the buyers are like, “I had to pay this stuff,” then you’ll have to do a double close. You’ll have to close one facility and then close another.

I’ve never had to do a double close. I only make an assignable contract and I let everybody know, “I’m going to be making money on this deal. You’re going to make money and I’m going to make money. I hope that’s okay because I don’t want to pay for two closings.” Everybody is typically okay with that. Every once in a while, you’ll get a seller or buyer that’s like, “What?” You’ll have to do a double closing then. That is wholesaling in a nutshell. I’ll go over that again a couple more times because I know it’s tricky.

I also want to point out that in my course, there’s a whole section on wholesaling. This is a high-level how-to wholesale, and I’m doing it in 45 minutes. If you want to learn how to wholesale, I highly recommend that you get my course. I’m going to jump off and go to my fund. If anybody wants to be a passive investor, go to the StacyRossetti.com/Fund and do the pitch, and I’ll be there. I will see you in the next episode. Take care.

 

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