How to Wholesale Real Estate in California (2024 Updated)

This article will discuss what you need to know to start wholesaling houses in California.

We’ll review the kinds of contracts you need to use, go over marketing strategies, and provide you with other resources to start wholesaling real estate in California.

Keep reading to learn how to start a real estate wholesaling business in California.

The first question most newbie real estate investors ask is, “Is it legal to wholesale real estate in California?”

The answer is yes. It is legal to wholesale real estate across the United States if you follow the law carefully.

Know the risks of wholesaling real estate and understand California real estate wholesaling laws to ensure your business is above board.

The most significant risk to wholesaling real estate is using improper wording when marketing your contracts to end buyers.

Only licensed California real estate agents or homeowners can market a house. A wholesaler is simply marketing the rights and obligations to a contract.

To better understand California-specific laws, review the following sections of the California Business and Professions Code:

• Section 10016
• Section 10130
• Section 10139

Then have one of the best California real estate attorneys review or draft templates of a purchase agreement and assignment contract for you.

Just like in the other states, in California, two wholesaling methods are used:

1. Contract assignment
2. Double closing

Remember, you don’t need to live in California to wholesale houses in this state.

In today’s digital age, you can run the whole real estate wholesaling process virtually from the comfort of your home.

Contract Assignment

When learning how to wholesale houses in California, most new investors first get informed on the contract assignment strategy. Here is how it works.

First, you need to get a purchase contract signed by your motivated seller and yourself, like if you were the buyer. But in reality, you don’t have to buy the house.

The contract will contain a clause allowing you to assign it to a third party (your end buyer).

After getting the house under contract and finding an end buyer, you have both the seller and end buyer sign an assignment contract.

This means that you will transfer the right to purchase the property to the investor who will actually buy the house.

In exchange for having the contract assigned to them, the investor will pay you an assignment fee, which will be your profit as a real estate wholesaler.

This method allows you not to have the funds necessary to purchase the home.

One or two thousand dollars for a refundable earnest money deposit is most often everything you need to do a wholesale deal by following this strategy.

Double Closing

While the contract assignment strategy is more popular, learning everything you need to know about wholesaling real estate isn’t complete without mastering the double closing method.

A wholesaler typically utilizes this strategy if they are getting a lot of money as their assignment fee, and they don’t want the seller or end buyer to see their profits in the deal.

A double closing involves two separate closings — one with the seller and one with the end buyer.

There are pros and cons of real estate wholesaling via the double closing strategy.

The advantage of double closing is that you don’t have to disclose your profits to either party.

The disadvantage is that you have to obtain transactional funding to close (if you don’t have your own cash). It can be provided by one of the best California hard money lenders.

When building your California real estate wholesaling checklist, you want to put “finding a wholesale-friendly title company” at the top of the list.

Working with a reputable title company that understands double closings and can facilitate them properly is critical.

Virtual Wholesaling

No matter where you live, you can practice virtual wholesaling in California.

Because you won’t have boots on the ground, you will want to ensure you understand wholesaling real estate step by step before attempting managing the process remotely.

Make sure you network extensively before getting your first property under contract.

The two vendors you want to locate before starting the process are:

1. A reliable contractor or home inspector in California who can give you rehab estimates on your under-contract properties to help you analyze real estate deals. Ensure you always have an inspection contingency clause in your contract that allows your contractor to gain entrance to the home and give you a reliable estimate before moving forward.
2. A California wholesale friendly title company that can facilitate your virtual closings.

Teaming up with California investor friendly real estate agents could also help you in handling communication between you, your buyer, and the seller.

You also want to choose electronic signature software like Dotloop or DocuSign to sign documents remotely before and during the closing.

To successfully operate in California, you first need to understand how to find properties to wholesale at the right price that will entice an end buyer.

Owners willing to sell their properties at a discount are called motivated sellers.

Various types of motivated sellers often need quick cash and don’t have the time or money to fix the property or resolve legal issues with it to be able to sell it the traditional way.

We will review three methods you can use to find distressed properties.

#1 Buy California Distressed Seller Leads

The easiest way is to buy leads. There are companies that specialize in advertising and other ways to find motivated home sellers.

There are also real estate wholesaling software tools that offer lead purchase as one of their features.

They collect homeowners’ contact details and information about their properties and situations making them sell their property to California companies that buy houses for cash.

Some examples of leads that these companies specialize in include:

• expired MLS listings
• absentee owners
• pre-foreclosure homes
• probate homes

These companies may charge you either a subscription fee or per lead.

While it’s normal that not all of the leads can be successfully converted, the quality of leads offered by some companies is lower than others.

Ensure the company is reputable and has a good track record of generating leads.

When looking for a provider of lead generation services for real estate investors, consider REB Leads.

It’s a program created by Real Estate Bees which is designed to supply wholesalers with industry’s most affordable and highest quality motivated seller leads. Sign up for it now.

#2 Hire an Agency to Do Marketing for You

You can also outsource wholesale real estate lead generation and other tasks to an agency experienced in real estate investor marketing.

Digital marketing agencies will work with you to build a plan that fits your budget and manage your campaigns so you can focus on other aspects of the business.

Digital marketing agencies provide such services as:

• Content development
• Website design
• Real estate investing SEO (search engine optimization)
• Social media marketing
• Digital advertising

Depending on the strategy, it may take a while to get leads coming in. This is the case with search engine optimization and content development, for example.

Digital advertising gives almost immediate results, even though it’s more costly.

Most agencies will charge wholesalers a monthly retainer to run different marketing campaigns.

While there are many high quality companies, unfortunately, excellent marketing skills of some agencies are limited to marketing their own services.

If you are leaning towards hiring an agency, you have to be able to sift through an overwhelming sea of bad companies to find one that will serve you as advertised.

But since you are our reader, our team has already done all the heavy lifting for you. We’ve polled and surveyed thousands of our real estate wholesaler members and the overwhelming majority recommended Magnyfi, run by Jacob Hicks.

The service provided by Magnyfi is not cheap. But it is definitely worth it if you are serious about growing your real estate wholesaling business.

Go ahead and watch Jacob’s video presentation on the Magnyfi profile page discussing their methodical process they have been successfully helping other investors grow their businesses.

#3 Do Your Own Marketing by Yourself

If your marketing budget is small, you must put your head down and do the work yourself.

A professional real estate investor website built for motivated seller lead generation is the first thing you will need.

A website is a versatile resource that can be used to attract leads from online search or through other channels such as social media ads.

It’s important to select a website solution that will allow you to create a user- and search-friendly resource.

Choose one from the best website templates and builders for real estate investors currently available on the market.

But your marketing strategies shouldn’t be limited to it. You can find motivated sellers via offline methods too:

• bandit signs
• driving for dollars
• direct mail
• looking through public records
• networking with other real estate professionals, and more.

The best way to find real estate investors to market California wholesale properties to is owning or having access to a list of cash buyers.

Different types of cash buyers may be interested in your under-contract properties, such as:

1. hedge funds
2. real estate investing companies
3. individual investors

Different types of real estate investors will have different buying criteria, and having lists for each type of investor is a great way to cover all bases.

To access these cash buyers, you can utilize the following marketing strategies for wholesaling real estate.

Build Your Own Cash Buyers List

If you don’t have a lot of money in your disposition, you can build your own list of California cash house buyers through networking.

You will want to join as many virtual real estate networking groups as possible. These groups are often active on Facebook and have virtual meetings you can attend.

You can also speak to reputable California real estate vendors who specialize in investing, such as contractors who work on flips or California lenders who work with California real estate investors.

Building a cash buyers list doesn’t happen overnight. It’s a continuous process. Fortunately, it can be significantly sped up by Real Estate Bees’ revolutionary invention — Property Marketplace Widget for Wholesalers.

It basically allows you to build your own cash buyers list on autopilot, and it’s the only online tool of this kind on the market.

What’s even more powerful is that this tool lets you syndicate your contracted properties directly to Real Estate Bees’ massive marketplace of wholesale deals for sale in California and instantly reach thousands of potential buyers!

Leverage Other People’s Cash Buyers Lists

If you lack time for building your own list of companies that buy houses in California, you can take a different approach and leverage other people’s cash buyers list.

Many successful California real estate wholesalers and other real estate professionals have spent years building relationships with investors.

While going this route can help you fast-track your business, list owners will often want up to 50% of your assignment fee.

If you want to keep more money in your pocket, you can use a robust property syndication tool provided exclusively by Real Estate Bees.

The tool allows you to blast out your properties to California cash home buyers for free.

Take advantage of this cutting-edge functionality by creating a free account and listing your contracted properties.

Contract Assignment

When wholesaling houses in California, you will want to have two different contracts signed:

• contract to purchase real estate
• assignment contract

You and the seller sign the initial purchase contract, which lays out the purchase price, the address, and the seller’s information.

Then, once you find your end buyer, you will have both the seller and the buyer sign an assignment contract.

This contract shows that you are being above board with both the seller and end buyer and letting them know you are not purchasing the property yourself.

The title company will need copies of both contracts to close.

Double Closing

As previously discussed, wholesalers use double closings when they don’t want the seller or end buyer to know their exact profit in the deal.

In California, you must wait at least one day between closing with your seller before turning around and closing with your end buyer.

You will need to show two contracts to the title company to close:

• Contract to purchase real estate (by the wholesaler from the seller)
• Contract to purchase real estate (by the end buyer from the wholesaler)

You will also need to obtain transactional funding if you don’t have your own cash in the amount sufficient to cover the full price of the house.

Transactional funding is a short-term loan, typically for 24-48 hours, that will allow you to close with the seller before turning around and closing with the end buyer.

While you do not need an active California real estate license to practice wholesaling, wholesaling with a real estate license can help protect you and your business.

Having a license means you can market a property as a real estate agent additionally to marketing it as a wholesaler.

However, to become a licensed real estate agent, you will need to join a California real estate brokerage.

Many brokers do not want their agents wholesaling, so make sure you have interviews with different brokerages and pick a wholesaler-friendly one.

To learn more about getting licensed, read our guide on how to get a real estate license in California.

While there is no age requirement for wholesaling real estate in California, you must be 18 to enter into any binding contract in the United States.

Therefore, sellers and title companies will not work with you if you are under 18.

If you are younger than that, you can partner with someone else to sign contracts for you.

You do not need to have an LLC to wholesale legally in California.

However, keep in mind that establishing the right business entity can add an extra layer of protection to your business.

Operating under an LLC gives you tax benefits you won’t be able to receive if using your own name, which is particularly beneficial in California.

Creating an LLC or another corporation type is also an important part of any of the real estate asset protection strategies.

You will qualify for business loans as an LLC, unlike when wholesaling as an individual.

Your business will also appear more professional and give you more clout in the California real estate investing community.

Wholesaling is the most inexpensive real estate investing strategy, which is why so many investors start with it.

While you will need to have some marketing dollars to find distressed sellers and end buyers, there are plenty of ways we discussed earlier to mitigate these costs.

However, you will need $1k-2k for an earnest money deposit. You will also need transactional funding if you want to double close (unless you have cash).

Because transactional funding is a short-term loan, you do not need to have a high credit score, history of employment, etc., to qualify.

To find the best transactional funding in California, use the Real Estate Bees’ “request financing” form. It will allow you to compare rates from multiple lenders with a few single clicks.

The amount of profit possible through wholesaling real estate in California directly corresponds to the amount of work you are willing to do.

To give you an idea, an average assignment fee is between $10 and $15 thousand dollars for a house costing $150,000 and being a typical property in its community.

The rest depends on how fast you can grow your business.

How good a market is for wholesaling real estate in California depends mostly on the city or even a neighborhood where you plan to operate.

However, it won’t hurt to get a general idea of the common California real estate investing market trends.

In most states, wholesalers target large metropolitan areas. However, in California, areas such as Los Angeles and San Francisco are difficult places to wholesale.

The market in these cities is highly competitive and oversaturated with investors and residents alike.

Distressed sellers often overestimate the value of their real estate and refuse to sell at a discount.

Therefore, it’s best to target lesser-known cities that still have growing infrastructure, such as:

1. Sacramento CA
2. Oakland CA
3. San Jose CA
4. Corning CA
5. Thermal CA
6. Thousand Palms CA
7. Avenal CA
8. Alturas CA
9. Santa Maria CA
10. Spring Valley CA

While we have discussed the basics of wholesaling real estate for beginners in California, you will want to pick up more knowledge before jumping in feet first.

Below are the most effective ways to learn about it so you can start your wholesaling real estate business as soon as possible.

Courses

Many successful wholesalers are passionate about educating and helping others obtain financial freedom. They have enough knowledge to develop entire educational programs.

However, there are also a lot of scammers who want to prey on new and naive wholesalers.

To find the most effective courses, check out Real Estate Bees’ list of the best real estate wholesaling courses that are the real deal.

Real Estate Wholesaling Mentors

We highly recommend you hiring a real estate wholesaling mentor to get step-by-step guidance.

Working under the supervision of an expert can ensure you don’t make costly mistakes and keep you on track and focused.

One of the best California real estate investment mentors or coaches will work with you to lay out a business plan, set realistic goals, and help you choose your marketing strategies.

Books

Reading books on wholesaling real estate is a great and inexpensive way to learn about the business.

Below are two great books for getting started:

1. The Real Estate Wholesaling Bible by Than Merrill
2. The Art of Wholesaling Properties by Robert Shemin

Be sure to look through this list of the best real estate wholesaling books. It will suggest more options.

Investor Clubs

There are many local investor clubs throughout California that you can join to learn from active members who have first-hand experience.

Many seasoned investors are passionate about helping others, and you may find someone who can help you streamline your business and make it profitable quickly.

Besides that, attending clubs is a good way to find cash buyers for wholesaling real estate.

To find reputable clubs to join, check out Real Estate Bees’ list of real estate investor clubs in California.

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About the Author

With over 20+ years of experience in real estate investment and renovation, Brian Robbins brings extensive knowledge and innovative solutions to the HouseCashin team. Over the years Brian has been involved in over 300 transactions of income producing properties across the US. Along with his passion for real estate, Brian brings with him a deep understanding of real estate risks and financing.