I have made a fortune wholesaling houses over the last 15 years and it remains to this day my favorite exit strategy. I can not even think of another strategy that provides the level of monthly cash flow – literally tens of thousands of dollars a month with limited time involvement and essentially no risk. The beauty of wholesaling is that you never purchase the property and you get paid on the front end of the transaction! These are quick transactions that take 30-45 days to close and get paid without putting any money or credit at risk. It’s fantastic!

Some would challenge whether this is still a viable strategy in this economy. It absolutely is. We are experiencing an unprecedented time in real estate: prices have tumbled; sellers are not just motivated – they are desperate to sell; the media brainwashes sellers to believe that they will never get a good price for their house; and we’re at the bottom of the market dip with values poised to appreciate again soon. Investor buyers are looking for all the deals they can acquire to take advantage of this incredible opportunity. Hence, the need for wholesalers.

Can this still be done today?
Absolutely. But what about all the nay-sayers that regurgitate the mantra that you can’t find a good deal and that no one is buying? First of all, these “victims” puke up that same garbage in any economy. It’s their defense mechanism: an excuse for not performing at a higher level. There are deals everywhere. Motivated sellers are desperate to get out from under their current house situation. And no, they are not all over-leveraged. The investor buyers are buying good deals. They’re not looking for garbage. Not in a market like this where there are good deals everywhere.

Still thinking in can’t be done in this economy?
One of our students just told us that he is doing 3-4 deals every month averaging $14,000 profit on each one. That’s over a half million dollars a year in a “bad” market. And this guy is just 26 years old!

One problem for many would-be investors is that they focus completely on the pre-foreclosure market and become discouraged when the majority of sellers owe more than the house is worth. The only solution for those situations is a short sale. If you’re like me and don’t like the time and effort required for short sales, then simply look elsewhere for deals.

There are numerous different factors that motivate homeowners to sell quickly – well below value. Impending foreclosure is just one of them. But in any economy – good or bad – homeowners face divorce; deaths in the family; bad tenants; run down properties that they never maintained over 20 years of ownership; dual mortgages, and a host of others. My point is to not focus all your efforts on pre-foreclosure, but instead look to find the truly motivated homeowners who are not actively looking for solutions themselves.

These homeowners are overwhelmed by their situation. They have been fighting the situation and simply don’t know what else to do and are too tired to do more. They throw up their hands in defeat and just wait for whatever eventuality occurs. You have to understand their mindset in order to understand how to create a win-win situation.

Think back to a time in your life when whatever problem you were facing loomed so large over your head that you were almost paralyzed. It could be anything, not just a house issue or a financial issue. It could be a health issue. Or a love issue. Or some other problem that had taken all the fight out of you. Do you remember how you felt? What you really wanted was for someone to rescue you. Someone to scoop you up in their hands and make the problem go away. That’s the mindset of the sellers you want to deal with.

When you resolve the problem for these homeowners, they will literally beg you to work with them, and these will become your huge profit margin deals. And I am not suggesting that you need to take every crumb off the table. Deals work best when everyone – including the seller – prospers. Always leave something in the deal for the homeowner.

The key to successful wholesaling is to start with the right deal in the first place. Be picky and choosy about which ones you pursue. There’s a plethora of them available so select the best properties. The mistake that many new wholesalers make is that they look in all of the wrong places, generate just a few leads and still expect to find a killer deal. Just advertise your service to generate a flow of leads. Then simply spend a few minutes pre-qualifying each lead to zero in on the cash cow. The rest is text book easy

This article has been contributed by Lou Castillo.