Wholesaling is often described as the entry point of real estate investing because it requires no money, no credit, and no property ownership. A wholesaler finds a deeply discounted property, gets it under contract, and then sells that contract to a cash buyer (usually a flipper or landlord) for a fee. The wholesaler never buys the property — they buy the right to buy it, and sell that right.
How Wholesaling Works — Step by Step
- Find a motivated seller: Distressed homeowners, pre-foreclosures, probate estates, absentee landlords, tax delinquents
- Analyze the deal: Determine ARV using comparable sales, estimate repairs, calculate your Maximum Allowable Offer (MAO)
- Get the property under contract: Use an assignable purchase contract with an inspection period
- Market to your buyer's list: Send the deal to cash buyers — flippers, landlords, other investors
- Assign the contract: Sell your contract to the buyer for your wholesale fee ($5,000–$30,000)
- Close: The buyer closes with the seller — you collect your assignment fee at closing
The Wholesale MAO Formula
Your Maximum Allowable Offer (MAO) determines the highest you can pay and still leave a profitable deal for your buyer:
MAO = (ARV × 70%) − Estimated Repairs − Your Wholesale Fee
Example: ARV = $250,000. Repairs = $40,000. Your desired fee = $10,000.
MAO = ($250,000 × 0.70) − $40,000 − $10,000 = $175,000 − $40,000 − $10,000 = $125,000
If you can get the property for $125,000 or less, a flipper can buy at $135,000 (after your $10K fee) and still have room to profit after rehab costs.
Know Your ARV: Your wholesale deal lives and dies on your ARV estimate. One bad comp can destroy a deal. Use tools like PropStream to pull accurate comps, find distressed sellers, and verify property data before you make an offer.
Calculate ARV and Flip Profit Instantly
Run your wholesale deal through the Flip Analyzer to verify your buyer can profit — which means your deal is real.
Open Flip Analyzer →Finding Motivated Sellers — Your Marketing Stack
Wholesaling is a marketing business. The investors who do the most deals have the most consistent lead generation systems. Common channels:
- Direct mail: Postcards to pre-foreclosure, probate, and absentee owner lists — still one of the highest-ROI channels
- Driving for dollars: Find vacant, distressed properties by driving neighborhoods and tracking owner info
- Cold calling: Call owners of tax-delinquent properties or absentee landlords with equity
- PPC/SEO: Google ads or organic rankings for "sell my house fast [city]" — expensive but scalable
- Bandit signs: "We buy houses" signs in distressed neighborhoods — still generates calls in many markets
Building Your Buyer's List
A deal is only worth something if you have a buyer. Build your cash buyer list before you need it: attend local REIA meetings, network at foreclosure auctions, connect with flippers on BiggerPockets, and ask title company reps who the active cash buyers are in your market. A list of 20 serious buyers is more valuable than 200 inactive names. Use off-market deal finding strategies to source deals your buyers can't find on MLS.