Real Estate Wholesaling: Make Money Without Buying Properties

Quick Summary: Real estate wholesaling allows you to profit from deals without buying properties—you find distressed properties, secure them under contract at below-market prices, then assign the contract to an end buyer (investor/flipper) for an assignment fee of $5,000-$25,000+. This guide covers the complete wholesaling process, how to find and analyze deals, build a buyers list, structure contracts legally, and determine assignment fees that create win-win transactions.

Real estate wholesaling is one of the few ways to make money in real estate with minimal capital—no mortgage, no repairs, no long-term commitment. You're the middleman connecting motivated sellers with cash buyers.

But it's not "easy money." Successful wholesaling requires hustle, market knowledge, and the ability to analyze deals quickly. This guide shows you exactly how it works.

What is Real Estate Wholesaling?

Wholesaling is finding off-market properties at below-market prices, getting them under contract, then assigning that contract to an end buyer for a fee.

The Simple Process

Step 1: Find a distressed property worth $200K
Step 2: Get it under contract for $140K
Step 3: Find a cash buyer willing to pay $155K
Step 4: Assign the contract for a $15K fee

Result: You made $15K without buying the property, getting a loan, or doing any renovations.

The Key Players

1. The Seller (Motivated)

• Needs to sell quickly
• Has a distressed property
• May be facing foreclosure, inheritance, divorce, job relocation
• Willing to accept below-market price for speed/convenience

2. The Wholesaler (You)

• Finds the deal
• Negotiates with seller
• Gets property under contract
• Finds end buyer
• Assigns contract for fee

3. The End Buyer (Cash Buyer/Investor)

• Real estate investor
• House flipper
• Landlord building portfolio
• Has cash or hard money lined up
• Wants below-market deals

Win-Win-Win Transaction

Seller wins:

• Quick sale (often 7-21 days)
• No repairs needed
• No realtor fees
• Cash offer
• Solves their problem

Wholesaler wins:

• Assignment fee ($5K-$25K+)
• No money into deal
• Quick transaction
• Builds investor network

End Buyer wins:

• Below-market acquisition
• Instant equity
• Deal delivered to them
• No marketing/finding costs

How Wholesaling Makes Money

Your profit comes from one of two methods:

Method 1: Assignment of Contract (Most Common)

You assign your rights in the purchase contract to the end buyer.

Example:

• Contract price with seller: $140,000
• Assignment fee: $15,000
• End buyer pays seller: $140,000
• End buyer pays you: $15,000
• Your profit: $15,000

On closing:

• Title company cuts two checks
• One to seller for $140,000
• One to you for $15,000
• End buyer brings $155,000 total

Method 2: Double Closing (A-B, B-C Transaction)

You actually buy and sell the property on the same day—two separate transactions.

Transaction A (You buy from seller):

• You buy for $140,000
• Closing at 9:00 AM

Transaction B (You sell to end buyer):

• You sell for $155,000
• Closing at 11:00 AM

Your profit: $15,000 (minus two sets of closing costs)

When to use double closing:

• Seller doesn't want to see your assignment fee
• End buyer doesn't want seller to know their purchase price
• State laws restrict assignments
• You want to protect your fee

Requires:

• Transactional funding (lender provides temporary funds)
• Or end buyer's funds close your purchase
• Costs $500-$2,500 in fees

The Complete Wholesaling Process

Step 1: Find Motivated Sellers

Wholesaling requires finding off-market deals—properties not listed on MLS.

Marketing methods:

A. Direct Mail

• Buy targeted lists (absentee owners, pre-foreclosures, probates, high-equity owners)
• Send postcards or letters
• Response rate: 0.5-2%
• Cost: $0.50-$1.50 per piece

Sample mail volume:

1,000 mailers sent
1% response rate = 10 calls
3 leads turn into appointments  
1 deal closed = $12K profit

Marketing cost: $800
Profit: $12,000
ROI: 1,400%

B. Driving for Dollars

• Drive target neighborhoods
• Look for distressed properties (overgrown yards, boarded windows, old roofs)
• Note addresses
• Research owner info
• Send mail or knock on door
• Free (except gas and time)

C. Online Marketing

• Facebook ads targeting homeowners
• Google Ads ("Sell My House Fast")
• Craigslist ads
• SEO website ("We Buy Houses [City]")
• Cost: $500-$2,000/month

D. Bandit Signs

• "We Buy Houses" signs at intersections
• Include phone number
• Check local regulations (many cities ban them)
• Cost: $3-$5 per sign

E. Networking

• Real estate agents (pocket listings, expired listings)
• Attorneys (probate, divorce)
• Wholesalers (you can wholesale a wholesale)
• Bird dogs (people who find deals for fee)

F. Online Lead Sources

• Zillow "Make Me Move"
• For Sale By Owner (FSBO) sites
• Facebook Marketplace
• Craigslist "Housing" section
• Expired MLS listings

Step 2: Analyze the Deal

When a seller calls, you need to quickly determine if it's a deal.

Key information to gather:

About the property:

• Address
• Bedrooms/bathrooms
• Square footage
• Condition
• Recent repairs
• Age of roof, HVAC, water heater
• Any major issues (foundation, mold, etc.)

About the situation:

• Why selling?
• Timeline/urgency
• Mortgage balance (if any)
• Price expectations
• Have they listed with agent?

Quick deal analysis:

Step 1: Determine ARV (After-Repair Value)

Look up comps online (Zillow, Realtor.com, recent sales)
Example: 3bed/2bath, 1,500 sq ft in that neighborhood = $210,000 ARV

Step 2: Estimate Rehab

Based on condition described:
- Cosmetic updates: $20-$35/sq ft
- Moderate rehab: $35-$60/sq ft
- Heavy rehab: $60-$100/sq ft

Example: Needs moderate work = 1,500 sq ft × $45 = $67,500 rehab

Step 3: Calculate Maximum Allowable Offer (MAO)

MAO = (ARV × 70%) - Rehab - Your Fee

Example:
ARV: $210,000
Rehab: $67,500
Your Fee: $12,000
MAO = ($210,000 × 0.70) - $67,500 - $12,000
MAO = $147,000 - $67,500 - $12,000
MAO = $67,500

You can offer up to $67,500 and still have room for your $12K fee.

Step 4: Make Your Offer

Start lower than MAO:
First offer: $60,000 (gives negotiation room)

Step 3: Get the Property Under Contract

Once you agree on price, use a real estate purchase agreement.

Key contract clauses for wholesaling:

1. "And/Or Assigns" After Your Name

Buyer: John Smith and/or assigns

This allows you to assign the contract to another buyer.

2. Inspection Contingency

"Buyer reserves the right to conduct inspections and approve property condition 
within 10 days. Buyer may cancel with full refund of deposit if unsatisfied."

This gives you an out if you can't find a buyer.

3. Financing Contingency

"Contract contingent upon buyer obtaining suitable financing within 21 days."

Another protection clause.

4. Extended Closing

Closing date: 30-45 days from contract

Gives you time to find your end buyer.

Earnest Money Deposit:

• Typically $500-$2,000
• Shows good faith
• Refundable if contingencies not met
• Make check out to reputable title company (not seller)

Step 4: Find Your End Buyer

You need a buyer BEFORE you lock up the deal (or very quickly after).

Build a cash buyers list:

1. Local Real Estate Investment Associations (REIA)

• Attend monthly meetings
• Network with active investors
• Collect business cards
• Exchange contact info

2. Wholesaler Facebook Groups

• Join local investor groups
• Post available properties
• Build relationships

3. Courthouse Research

• Find recent cash sales
• Look up buyer info
• Reach out with your deals

4. Craigslist and Online Ads

• Post properties
• "Investment Property Available"
• "Below Market Deal"

5. Real Estate Agents Who Work with Investors

• They have investor clients
• May send deals your way too

Create a simple buyers list spreadsheet:

Marketing your deal to buyers:

Email blast:

Subject: New Deal - 123 Oak St - $67,500

Property: 123 Oak Street
Bedrooms/Baths: 3/2
Square Feet: 1,500
Lot Size: 7,500 sq ft
ARV: $210,000
Rehab Estimate: $67,500
Contract Price: $67,500
Assignment Fee: $12,000
Your All-In: $147,000

Built-in equity: $63,000
Potential profit after rehab and sale: $30K+

Property under contract. Closing in 30 days.
First qualified cash buyer gets it.

Call John at 555-1234

Step 5: Assign the Contract

Once you find a buyer, execute the assignment.

Assignment agreement includes:

• Original purchase contract (between you and seller)
• Assignment of purchase contract document
• Your assignment fee
• End buyer's info
• Closing date

Assignment agreement template (simplified):

ASSIGNMENT OF PURCHASE CONTRACT

Assignor (You): John Smith
Assignee (End Buyer): ABC Investments LLC

Property: 123 Oak Street, [City, State]

Original Contract Price: $67,500
Assignment Fee: $12,000
Total Amount Due from Assignee: $79,500

Assignee agrees to assume all rights and obligations under the original 
purchase contract dated [date] between John Smith and [Seller Name].

Closing Date: [30 days from original contract]

Signatures:
___________ Assignor
___________ Assignee

At closing:

• Title company has original purchase contract
• Title company has assignment agreement
• End buyer brings $79,500 ($67,500 to seller + $12,000 to you)
• You show up, sign assignment, collect $12,000 check

You don't need to bring any money to closing (except you might have to forfeit your $500-$2K deposit if that wasn't already transferred).

Step 6: Close and Get Paid

On closing day:

1. End buyer brings funds ($79,500 total)
2. Title company disburses:
   • $67,500 to seller
   • $12,000 to you (minus your earnest deposit if not credited)
3. Property deeds to end buyer
4. Everyone walks away happy

Your net:

Assignment fee: $12,000
Minus earnest deposit: -$1,000 (refunded at closing, doesn't reduce profit)
Minus marketing costs: -$200 (mail that found this seller)
Net profit: $11,800

Time invested: 20-30 hours (finding deal, negotiating, finding buyer)

Hourly rate: $393-$590/hour

How Much Can You Make Wholesaling?

Typical Assignment Fees

Factors affecting fee size:

• Amount of equity in deal - More equity = higher fee potential
• Property value - Higher value = higher fees
• Market competition - Competitive markets = lower fees
• Deal quality - Better deals command higher fees
• Buyer relationship - Repeat buyers may accept higher fees

Fee Guidelines

Conservative approach:

Assignment fee = 10-15% of the equity you're delivering

Example:
ARV: $200,000
Contract price + Rehab + Fee: $155,000
Equity: $45,000
Your fee: $6,750-$11,250 (15-25% of equity seems high, so aim for 10-15% of spread)

Better formula:

Make sure end buyer gets at least $20K-$30K potential profit after your fee

If they're making $50K+ profit, you can take $15-20K
If they're making $30K profit, take $8-12K

Example Fee Calculation

Property:

• ARV: $250,000
• Rehab: $60,000
• Your contract price: $120,000

End buyer's analysis:

ARV: $250,000
Minus rehab: -$60,000
Minus holding costs: -$12,000
Minus selling costs: -$22,000
All-in: $154,000

At your contract price of $120K:
Potential profit: $250,000 - $154,000 - $120,000 = -$24,000 (wait, that's wrong)

Let me recalculate:
Sale price (ARV): $250,000
Minus: Purchase ($120K), Rehab ($60K), Holding ($12K), Selling ($22K)
Profit before assignment fee: $36,000

Your assignment fee:

You could charge up to $15K and they'd still make $21K
Reasonable fee: $12,000-$15,000

Monthly Income Potential

Beginner wholesaler (Year 1):

• 1 deal per month
• Average fee: $8,000
• Monthly: $8,000
• Annual: $96,000

Experienced wholesaler (Year 2-3):

• 2-3 deals per month
• Average fee: $12,000
• Monthly: $24,000-$36,000
• Annual: $288,000-$432,000

Full-time wholesaling operation:

• 4-6 deals per month
• Average fee: $15,000
• Team in place
• Monthly: $60,000-$90,000
• Annual: $720,000-$1,080,000

Reality check: Most wholesalers do 0-2 deals per month consistently. It takes work.

Wholesaling vs. Flipping vs. Rentals

Capital Required

Time to Profit

Profit Per Deal

Complexity

Wholesaling is best for:

• Getting started with limited capital
• Learning deal analysis
• Building investor network
• Generating quick income
• Funding first flip or rental

Transition path:

Year 1: Wholesale 12 deals, make $120K
Year 2: Wholesale 8 deals ($96K), flip 2 deals ($60K), buy 1 rental
Year 3: Wholesale 6 deals ($72K), flip 4 deals ($120K), buy 2 more rentals
Year 4: Focus on flips and rentals, wholesale occasionally for cash flow

Legal Considerations

Wholesaling operates in a legal gray area in some states. Know your local laws.

Is Wholesaling Legal?

Yes, wholesaling is legal in all 50 states, but some states have restrictions.

The concern: Unlicensed real estate activity

States with restrictions:

• Illinois (assignment fees limited)
• Oklahoma (double closing required in some cases)
• Some others require specific disclosures

How to Wholesale Legally

1. Always Use "And/Or Assigns" in Contract

Buyer: Your Name and/or assigns

This clearly shows you may assign the contract.

2. Disclose You're a Wholesaler Don't pretend to be the end buyer. Tell the seller:

"I'm a real estate investor. I find properties for other investors. 
I'll get this under contract and may assign it to one of my investor partners."

3. Equitable Interest When you sign a contract, you have "equitable interest" in the property—a legal right to assign that interest to someone else.

4. Never Practice Real Estate Without a License Don't act as a real estate agent:

• Don't list properties on MLS
• Don't represent both parties for a commission
• Don't show properties to buyers like an agent would

5. Consult a Real Estate Attorney Have an attorney in your state review:

• Your purchase contracts
• Assignment agreements
• Marketing materials

Cost: $500-$1,500 for initial review and templates—cheap insurance.

Tax Implications

Assignment fees are ordinary income, not capital gains.

• Taxed at your ordinary income tax rate (24-37%)
• Subject to self-employment tax (15.3%)
• Total tax: 39-52% depending on bracket

Example:

Assignment fee: $12,000
Minus self-employment tax (15.3%): -$1,836
Minus income tax (24%): -$2,880
Net after tax: $7,284

Tax strategies:

• Deduct marketing expenses
• Deduct mileage
• Deduct software/tools
• Consider S-Corp election (reduces self-employment tax)
• Hire a CPA specializing in real estate

Building a Wholesaling Business

Your Marketing Budget

Starting out (Month 1-3):

• Direct mail: $1,000/month (1,000-2,000 pieces)
• Driving for dollars: $100/month (gas)
• Bandit signs: $200/month
• Online ads: $300/month
• Total: $1,600/month

Goal: 1 deal per month = $8,000-$12,000 ROI: 500-700%

Systems and Tools

CRM for lead management:

• Podio (free-$14/month)
• REI BlackBook ($79/month)
• PropStream ($97/month)

Skip tracing (finding owner contact info):

• Skip Genie ($0.07-$0.14/record)
• BeenVerified ($22/month)
• TLO/IRB ($99-$200/month)

Comps and valuation:

• Propstream ($97/month)
• CoreLogic (varies)
• Local MLS access

Marketing:

• Direct mail service (Yellowletters.com, Click2Mail)
• Facebook Ads
• Google Ads
• Website

Total monthly tools: $200-$500/month

Building Your Buyers List

Goal: 100+ buyers

How to build it:

1. REIA Meetings (Month 1-3)

• Attend every local meeting
• Exchange 10-20 cards per meeting
• Follow up with email
• Goal: 30-50 buyers

2. Online Research

• Find recent cash sales in target area
• Look up buyer info
• Call/email introducing yourself
• Goal: 20-30 buyers

3. Wholesaler Networking

• Connect with other wholesalers
• Share buyers lists
• Co-wholesale deals
• Goal: 20-30 buyers

4. Facebook Groups

• Join local investor groups
• Post when you have deals
• Build relationships
• Goal: 20-30 buyers

Maintain your list:

• Send weekly deal blasts (even when you don't have deals—share market info)
• Call top buyers monthly
• Update preferences and criteria
• Remove non-responsive buyers

Sample Weekly Schedule

Monday:

• Review weekend inquiries
• Set appointments for the week
• Send follow-up to pending leads

Tuesday-Thursday:

• Property appointments (view 2-3 properties)
• Negotiate with sellers
• Get contracts signed
• 2-3 hours of marketing (mail prep, calling)

Friday:

• Market new deals to buyers list
• Follow up on offers out
• Update deal pipeline

Saturday:

• Driving for dollars (3-4 hours)
• Research new lists
• Plan next week

Sunday:

• Off (or catch up on admin)

Weekly hours: 30-40

Deal Pipeline Management

Track every lead through your pipeline:

Stage 1: Lead

• Initial inquiry from marketing
• Basic info collected

Stage 2: Qualified

• Property matches criteria
• Seller motivated
• Timeline works

Stage 3: Appointment Set

• Scheduled property visit

Stage 4: Under Contract

• Contract signed
• Earnest deposit paid

Stage 5: Marketed to Buyers

• Deal sent to buyers list
• Showings scheduled

Stage 6: Assigned

• End buyer found
• Assignment agreement signed

Stage 7: Closed

• Property closed
• You got paid

Typical conversion:

100 leads
→ 30 qualified
→ 15 appointments
→ 5 under contract
→ 4 assigned
→ 3-4 closed (one falls through)

To close 3 deals/month, you need ~100 leads/month.

Common Wholesaling Mistakes

1. No Buyers List Before Finding Deals

The mistake: Getting property under contract without knowing who will buy it

Result:

• Scrambling to find buyer
• Accepting lower fee
• Deal falls through
• Lose credibility with seller

Solution: Build buyers list FIRST. Have 20-50 buyers before you put a property under contract.

2. Overestimating ARV

The mistake: Thinking property is worth $250K when it's really $220K

Impact: Your $15K fee kills the deal for buyers

Example:

Your analysis:
ARV: $250K (wrong - it's $220K)
Your contract: $140K
Your fee: $15K
Buyer's all-in: $155K
Buyer's projected profit: $40K (but really $10K)

Buyer walks away—deal dies

Solution: Use conservative comps. Be honest about condition. Under-promise, over-deliver.

3. Charging Too Much

The mistake: Taking $20K fee on a deal with only $35K profit potential

Buyer's perspective:

"Why would I do all the work for $15K when you made $20K for finding it?"

Solution: Leave enough meat on the bone. Charge 25-40% of total equity at most. Repeat buyers are worth more than one big fee.

4. Not Following Up with Leads

The mistake: Calling lead once, no answer, moving on

Reality: Average deal requires 5-8 touches

Follow-up schedule:

• Day 1: First call
• Day 3: Second call
• Day 7: Text message
• Day 14: Email
• Day 30: Postcard
• Day 60: Call again

Many deals happen months after first contact.

5. Giving Up Too Soon

The mistake: "I sent 500 mailers and got no deals. Wholesaling doesn't work."

Reality:

• 500 mailers = 5-10 responses typically
• 10 responses = 2-3 appointments
• 3 appointments = 0-1 deals (as beginner)

You need volume:

• 2,000-3,000 mailers for first deal (typically)
• OR 100+ properties viewed driving for dollars
• OR 50+ networking connections

This is a numbers game. The ones who succeed are the ones who don't quit after their first 1,000 marketing pieces.

6. Terrible Phone Skills

The mistake: Interrogating sellers like a detective

Bad approach:

"How much do you owe?"
"Why are you selling?"
"Will you take $100K?"

Better approach:

"Thanks for calling. Tell me about your situation..."
(Listen)
"Sounds like you need to sell quickly. I may be able to help..."

Practice:

• Empathy and listening
• Building rapport
• Asking open-ended questions
• Never pushing hard

Getting Started: Your 30-Day Plan

Week 1: Education and Setup

• Read books (Wholesaling Real Estate by Alex Virelles)
• Join BiggerPockets
• Find local REIA
• Create LLC (optional but recommended)
• Open business bank account
• Get contracts reviewed by attorney

Week 2: Build Buyers List

• Attend REIA meeting
• Join Facebook groups
• Research cash buyers in your market
• Create buyers list spreadsheet
• Goal: 20-30 buyers minimum

Week 3: Start Marketing

• Create mailing list (500-1,000 names)
• Send first mailer batch
• Create Facebook ads
• Put up bandit signs (if legal)
• Start driving for dollars

Week 4: Follow Up and Analyze

• Return inquiry calls
• Set appointments
• View properties
• Make offers
• Keep marketing

By Day 30: You should have 2-5 properties under contract or in negotiation.

By Day 60: Your first deal should close.

The Bottom Line

Real estate wholesaling is a legitimate way to make money in real estate without capital, credit, or buying properties. It requires hustle, marketing, and consistent effort—but can generate $50,000-$200,000+ in your first year.

Key Success Factors:

• Build buyers list before finding deals (20+ cash buyers minimum)
• Master deal analysis (conservative ARV, accurate rehab estimates)
• Consistent marketing (500-2,000 pieces monthly)
• Follow up relentlessly (5-8 touches per lead)
• Under-promise and over-deliver on deals
• Leave profit for your buyers (they'll come back)
• Track your pipeline (leads, contracts, assignments, closings)

Target Numbers:

• Marketing spend: 10-20% of assignment fees
• Average fee: $8,000-$15,000 per deal
• Deals per month: 1-3 (after 3-6 months)
• Annual income: $96,000-$432,000 (1-3 deals/month)

Wholesaling works best as:

• Entry point into real estate investing
• Way to build capital for flips/rentals
• Method to learn markets and deal analysis
• Income source while building portfolio

Many successful investors started by wholesaling, then transitioned to keeping deals for themselves as flips or rentals.

Next Steps:

1. Attend local REIA meeting and network
2. Research cash buyers in your market
3. Create your first mailing list (start with probates or absentee owners)
4. Send 500-1,000 mailers
5. Answer calls, set appointments, make offers
6. Get your first deal under contract
7. Market to your buyers list
8. Close and collect your first assignment fee

Wholesaling isn't passive—it's an active business that rewards hustle and consistency. But if you're willing to work, it can generate significant income with minimal capital and create opportunities to transition into other real estate strategies.

The Rental Property Calculator can help you analyze deals for your buyers and determine if properties make better wholesale deals or keeper properties for your own portfolio.

Start small, stay consistent, and build from there. Your first deal is the hardest—after that, you'll have proof of concept and momentum on your side.