Teaching your teenager how to wholesale real estate can be a fantastic way to introduce them to entrepreneurship. It’s a low-risk way to learn valuable skills like negotiation, communication, and market analysis. In this guide, we’ll outline how to start wholesaling real estate with no money, using simple steps that even a first-timer can follow.
What Is Wholesaling in Real Estate?
Wholesaling involves finding a property, getting it under contract, and then selling the contract to an investor for a fee. You’re essentially the middleman. Unlike traditional real estate, wholesaling doesn’t require huge amounts of capital, making it perfect for teenagers looking to get their feet wet.
Starting With “Driving for Dollars”
The first step in wholesaling is finding properties that could be potential deals. One proven method is driving for dollars, which means driving through neighborhoods and identifying distressed properties. These are homes that look worn down or in need of repair.
Signs of distressed properties include:
- Overgrown lawns or landscaping
- Boarded-up windows or visible damage
- Notices posted on doors or windows
- A vacant, abandoned-like appearance
Once you spot such a property, jot down the address. Use a notebook, a note app on your phone, or even take photos to stay organized.
How to Find Property Owners
After you’ve collected several addresses, the next step is figuring out who owns the properties. Research tools such as county tax records and public property data sites can provide this information for free. This step takes diligence, as the process can vary depending on your location.
Patience is key—don’t expect immediate responses from property owners. Sometimes it takes reaching out to 30, 40, or more properties before someone responds positively.
Reaching Out and Securing an Appointment
When you connect with a property owner, your goal is to determine if they’re interested in selling. Be polite and confident when you call or send them communication. If they agree, ask for an appointment to discuss further.
Once you book a meeting, preparation is critical. Showing up unprepared can make you look unprofessional and cost you the deal.
Preparing for the Meeting
Before meeting the property owner, prepare these essentials:
- A State-Certified Real Estate Contract
- Download the official real estate contract for your state.
- Study the contract so you’re familiar with what each section means.
- Pre-fill certain sections, like names and the property address, but leave the price blank for negotiation.
Using a professional-state approved contract builds trust and credibility. Avoid homemade contracts, as they can make you appear inexperienced.
- Practice Negotiation and Filling the Contract
- Role-play scenarios with a parent or friend to learn how to discuss the contract confidently.
- This will help you handle objections or questions during the meeting.
Understanding Repair Costs and Value
To make an offer, you’ll need to estimate repair costs and the after-repair value (ARV). Here’s how:
- Estimate Repair Costs
- Use a guideline of $25–$50 per square foot, depending on the condition.
- High-end areas tend to have higher repair costs, while homes in lower cost neighborhoods will typically require less per square foot.
For example:
- A high-end condo may cost $50 per square foot to renovate.
- A simpler property may only need $25 per square foot.
- Calculate the After-Repair Value (ARV)
- ARV is the estimated market value of the property after repairs are completed.
- To calculate ARV, research similar homes in the area that have recently sold.
Making Offers and Closing Deals
When prepping your offer, use this industry-standard formula:
- Investor’s Price = 70% of ARV – Estimated Repairs
Since you’re wholesaling, you’ll need to negotiate even lower:
- Aim for 60-65% of ARV – Repairs to create a profit margin for yourself.
For example, if the ARV is $200,000 and repairs are $30,000:
- Investor Price = 70% of $200,000 ($140,000) – $30,000 = $110,000
- As a wholesaler, you’d aim to negotiate at $100,000 or lower so you can sell the contract for a profit.
One tool that can simplify property analysis is Propelio. While not free, it’s affordable and highly effective for pulling comparable sales (comps), estimating ARV, and organizing data. Investing in tools like this can save time and reduce reliance on real estate agents for every property evaluation.
Keep Realistic Expectations
Wholesaling requires patience, especially early on. Deals won’t happen overnight, and it may take dozens of attempts before you secure your first contract. Encourage your teenager to stay motivated and view each failed attempt as a learning experience.
Why Wholesaling Works for Teenagers
Wholesaling teaches key skills like:
- Negotiation
- Market analysis
- Financial literacy
It’s also a flexible opportunity with no upfront capital required, making it accessible even for young beginners.
Final Thoughts
Introducing your teenager to wholesaling real estate is an opportunity to provide them with real-world experience and entrepreneurial skills. By following a straightforward process—driving for dollars, researching owners, preparing professional contracts, and using proven formulas—they can secure deals while understanding the fundamentals of investing.
The road may be challenging at first, but persistence and preparation will pay off. Remember, the first deal is always the hardest—don’t give up!
