How to start wholesaling real estate

The honest version of wholesaling

Wholesaling is easy to describe and hard to do. You find a house someone needs to sell under market value, put it under contract at a price a cash buyer will pay, then assign that contract to the buyer for a fee. You never own the house. Your money is the spread between your contract price and the buyer's.

Rocket Mortgage lists eight steps for it and puts the typical fee at "5% - 10% of the property's value," or $5,000 to $20,000 per deal (updated July 19, 2026). Those numbers are real. What almost every step-by-step list skips is the part that decides whether you ever collect one of those fees: finding sellers, and staying on the right side of your state's law. So that is where this guide spends its time. One note before any of it: this is general information, not legal or tax advice, rules differ by state, and you should talk to a real estate attorney before you sign or assign anything.

The "start with zero dollars" myth

Every wholesaling ad promises you can start with nothing. AmeriSave's 2026 guide is more honest and still generous: "You can start with as little as $0-$2,000", which it breaks into a $500 to $1,000 earnest money deposit and $500 to $1,500 in legal fees. Read that again. The floor is zero only if a seller lets you tie up their house with no deposit and you write your own contracts. In the real world you need a deposit and a real assignment agreement.

Then there is the cost nobody puts on the flyer: reaching sellers. A single postcard runs $0.50 to $1.50 all in, and one letter almost never lands a deal. Mail 500 owners and you have spent $250 to $750 before a phone rings. Drive for dollars instead and you trade the cash for weeks of your evenings. The honest starting number is not $0. It is a few hundred dollars a month in marketing plus the deposit you keep ready for the first house worth locking up.

Is it even legal where you are

Here is the claim that gets beginners in trouble: "wholesaling needs no license anywhere." That was roughly true a decade ago. It is wrong now. Oklahoma passed the Predatory Real Estate Wholesaler Prohibition Act, effective November 1, 2021, which requires wholesalers to hold a real estate license and follow the state license code. Do an unlicensed deal there and you are not bending a guideline, you are breaking a statute.

Oklahoma is the clearest case, not the only one. Several states have added rules on how you can market a contract you do not own, and the line between "assigning a contract" and "brokering real estate without a license" is exactly where regulators are pushing. The rule is boring and it will save your first year: before you market a single deal, read your state's real estate license act, and if the answer is not obvious, pay a local attorney for an hour. Our longer piece on whether wholesaling is legal walks the distinctions state by state. Skipping this step is the difference between a business and a fine.

Step 1: Pick a market and learn its rules

Work one market, not five. A market is a metro plus three or four zip codes inside it that you can name the streets of. You want somewhere with enough distressed inventory that deals exist and enough cash buyers that you can move a contract in a week. That is usually a mid-size metro rather than the priciest neighborhoods in it.

Learning the rules means two things. The legal ones from the section above, and the arithmetic of the area: what a fixed-up 3-bed sells for, what a beat-up one trades at, and how fast. You do not need a subscription for this. County recorder sites and recent sold listings tell you both. Pick the market where you can answer "what is this worth" without guessing, because every offer you make rests on that answer.

Step 2: Find sellers worth contacting

This is the step that pays. It is also the step the tutorials rush past in a sentence. Distressed, motivated sellers are a small slice of any market, and the entire game is reaching them before the next investor does, at a price that leaves room for your fee and your buyer's profit. The generic advice, drive random streets and mail the whole zip, spends most of your budget on owners who are not selling this year and never will.

Narrow before you spend. Some owners sell at far higher rates than the average homeowner because something in their life is pushing them, and those situations are a matter of public record. Here is where the deals actually come from.

Pull those lists, skip trace them, and mail or call the short list instead of the phone book. That is the manual path, and it is free if you have the hours. The other path is to pay for the ranking. Farmrix scores every owner in a market on how likely they are to sell in the next 6 to 12 months, ranks them, then prints and mails postcards to the top of that list. Its smallest package is 500 ranked owners and 500 postcards for $1,195, about $2.39 a mailed piece with data, printing and postage in the price. Build the list by hand from county records if your calendar is emptier than your wallet. Buy the ranking when it is the other way around.

Step 3: Run the numbers before you offer

A wholesale deal only works if your buyer still profits after they fix and sell. So you price backward from their exit. Estimate the after-repair value from recent comparable sales, subtract repair costs, subtract the buyer's margin, and subtract your fee. What is left is the most you can offer the seller.

Many wholesalers run this with the maximum allowable offer formula: ARV times 0.70, minus repairs, minus your fee. On a house worth $300,000 fixed up, needing $40,000 of work, wanting a $12,000 fee, that is $210,000 minus $40,000 minus $12,000, or a $158,000 maximum offer. Offer more and your buyer walks. The 70% is a starting dial, not a law, and it tightens in hot markets and loosens on higher-priced homes. Get this number wrong and no amount of marketing saves the deal.

Step 4: Write a contract you can assign

Two clauses decide whether you can wholesale a contract at all. First, it has to be assignable, which usually means adding "and/or assigns" after your name as buyer and not signing a form that bars assignment. Second, you want an inspection or due-diligence contingency and a modest earnest money deposit, the $500 to $1,000 from earlier, so you can back out if you cannot place the deal without losing your shirt.

Do not freelance the paperwork. Use a purchase agreement and a separate assignment agreement your attorney has looked at, because this is the document that gets wholesalers sued when a seller feels misled. Our breakdown of the wholesale contract shows what each clause does. A clean, disclosed contract is also the thing that keeps you on the right side of the licensing rules in Step 3.

Step 5: Line up a buyer and assign

You should be building your buyer list before you have a house, not after. The strongest buyers are repeat cash investors, and you find them in the same county records that show cash sales, then reach them by mail or at investor meetups. Our guide to building a cash buyers list from public records covers the how.

With a buyer lined up, you sign an assignment agreement transferring your contract rights for your fee, the buyer closes with a wholesale-friendly title company, and you collect at closing. The deal itself usually closes 30 to 60 days from the day you get it under contract. Line up the buyer first and that window is calm. Scramble for a buyer after you sign and it is the most stressful month of your quarter.

What you will actually make

Now the part the gurus oversell. AmeriSave projects that closing two to three deals a month at a $15,000 average yields "$360,000 to $540,000 annually." Look at that against its own earlier figure: new wholesalers typically do "2-6 deals" in their entire first year. You cannot square a first year of two to six deals with a monthly pace of two to three. The big annual number describes a seasoned operator with a team and a marketing budget, not you in month three. Beginners, by the same guide, make "$3,000 to $7,000 per deal." Do four deals in a hard first year at $5,000 and that is $20,000, not $400,000.

Whatever you make is self-employment income, and the tax on it blindsides first-timers. Assignment fees are ordinary income. Net earnings over $400 owe self-employment tax at 15.3%, made of 12.4% for Social Security and 2.9% for Medicare, and that sits on top of ordinary income tax, so a $10,000 fee is not $10,000 in your pocket. Set aside roughly a quarter to a third of every check the day it clears, in a separate account you do not touch, because the tax bill on a good year has ended more wholesaling careers than any bad deal ever did. Plan for the real figure and the business works. Plan for the flyer number and you are gone by month four.

Your first 90 days

Do this, in order. Read your state's real estate license act this week and settle whether you can wholesale without a license. Pick one metro and three zips you can price from memory. Build a starter buyers list from county cash sales, aiming for ten repeat investors. Then start reaching sellers, either by hand from probate and tax lists or with a ranked, mailed list from Farmrix so your first postcards hit the owners most likely to sell instead of the whole zip. Get one contract under your name with an assignment clause and a small deposit, place it with a buyer, and collect. One clean deal teaches you more than a month of videos, and it is the only thing that turns this from a hobby into income.