From $10 Earnest Money to a $25,000 Payday

From $10 Earnest Money to a $25,000 Payday

5 min max read

In this blog, we will dive into Charles Hernadez journey into real estate. He is a real estate investor and wholesaler based in San Antonio, Texas. In his career so far, he has completed over 1000 wholesale deals, but it all started with just one deal that netted him a $25,000 payday.

Let's take you back to his wholesaling origin story and share how he was able to land that first deal.

Trying to Crack the Wholesaling Code

It was back in 2011-2012 when Charles first started hearing about this mysterious thing called "wholesaling" in the real estate investing world. At the time, his business partner Michael and he had a realty company where they were primarily doing traditional real estate agent work and flipping houses.

They started to hear whispers in their real estate market about investors making big money doing wholesale real estate deals, but no one would explain how it worked! It was like a secret code that no one wanted to crack.

Charles remembers there was one huge wholesaling company in San Antonio that was doing a ton of deals, but they refused to explain the model to them. So what did they do? They started studying their deals and reverse engineering what they were doing!

Here's what they pieced together:

  • They would somehow get a property under contract at a big discount
  • Then they would "assign" that contract and sell it to another investor for a profit
  • Charles and Michael realized wholesaling uses a special assignment contract to transfer deals

But some key details were still a mystery to them as beginners:

  • What type of purchase contract do you use?
  • How do you find discounted properties?
  • How much earnest money do you put down?

They were determined to crack the wholesaling code and land their first deal.

Hunting for Deals in a Historic Neighborhood

During this time, Michael and Charles were canvassing a neighborhood in San Antonio called Beacon Hill looking for deals. This area was historic but not officially designated as a historic district yet.

They got to know the properties and owners there since they were constantly knocking on doors, mailing out letters, and looking for deals.

Their pitch to sellers went something like this:

"Hello Mr. Smith, I'm Charles with Home Buying Home Selling here in San Antonio. I wanted to let you know your property is on a list with the county for unpaid taxes and they may try to auction it. We help homeowners in situations like this avoid foreclosure all the time, so if you have a few minutes, I'd love to explain some options we may have for you."

This softer approach seemed to work well - most sellers were willing to hear them out. Little did Charles and Michael know, this neighborhood canvassing would lead them to their first wholesale deal.

A Property Tax Problem Equals a $25,000 Payday

One day, a lady reached out to Charles and Michael who owned a property in Beacon Hill. She explained she owed almost $25,000 in back taxes and the county was threatening foreclosure.

Bingo! They now had a motivated seller with a clear problem they could solve.

Charles and Michael offered her $25,000 on the spot for her property and she accepted. They only had to put down $10 in earnest money to secure the contract!

This house happened to be a unique property where the famous poet Robert Frost had lived for 6 months back in the 1940s while his daughter attended school nearby. Even though it wasn't a designated historic home yet, the city wanted to preserve its original character.

While Charles and Michael briefly considered fixing it up and flipping it themselves, they decided to just wholesale it off to another investor instead. Ironically, they ended up selling it to that other big wholesaling company in town that had refused to tell them their secrets!

Thanks to the other company's hunger for off-market deals, Charles and Michael earned a smooth $25,000 assignment fee on their first-ever wholesale deal! All it took was $10 in earnest money to lock it up.

Getting Addicted to the Thrill of Wholesaling

After that first taste of wholesaling profits, Michael and Charles were hooked! It was like discovering a cheat code to make quick cash in real estate.

They realized wholesaling was the perfect business model for Charles because:

  • He didn't need a real estate license to do it
  • It allowed them to act fast on discounted deals
  • They could make profits even without doing renovations

Real estate wholesaling leveled the playing field and let anyone get into real estate investing, regardless of credit score, background, experience, or having cash on hand to fix and flip properties.

The ability to create life-changing wealth through wholesaling real estate deals was extremely appealing and made Charles want to quit the traditional agent work.

Michael and Charles dove headfirst into wholesaling and never looked back. Over the next decade, they did over 1000 more deals!

Key Takeaways for Wholesaling Beginners

Here are some key lessons Charles learned from his first wholesaling payday:

  • Find motivated sellers. Look for people with problems - back taxes, inherited unwanted properties, vacant homes, etc.
  • Make a cash offer. Motivated sellers will often take a low all-cash offer to get relief. Make sure your numbers work!
  • Act fast. The quicker you can get a property under contract, the better - use low earnest money deposits ($10-$100 typically).
  • Find ready buyers. Market the deal to cash investors who can close quickly. Use your network or sites like DealMachine!
  • Rinse and repeat! Don't overcomplicate the steps. With the right systems, you can wholesale deals every single month.

Key Tools for Wholesaling Success

In the early days, Michael and Charles wasted tons of time driving for dollars, knocking on doors, and trying to figure out how to find discounted properties.

Today there are amazing technology tools that make wholesaling SO much easier. If Charles and Michael had access to sites like DealMachine back then, they could have scaled much faster.

Charles highly recommends DealMachine to new wholesalers because it helps you:

  • Pull lists of motivated sellers in any area
  • Skip driving and knock doors virtually from anywhere
  • Mail customized letters to sellers instantly
  • Track all your leads in one CRM

Game-changing tools like this can shave years off your learning curve. They let you wholesale deals from home and skip the unproductive grunt work Charles and Michael had to slog through.

The Wholesaling Journey Continues...

As for Charles, he's still addicted to the wholesaling game over a decade later! There's such a thrill each time you can find a deal and pass the baton to make a quick profit.

Charles has gotten more sophisticated in his methods, building a team and doing more creative marketing like bandit signs, social media, and event wholesaling.

However, he'll never forget the magical feeling he had when he earned his first $25k payday with just $10 down! It gave him unshakeable faith in the power of wholesaling to change your finances fast.

Let's connect and continue the wholesaling journey together. Your breakthrough is waiting!

Samantha Ankney

About Samantha Ankney

Samantha has been a media specialist for DealMachine for 2.5 years. She produces, edits, writes, and publishes all media that is distributed to the DealMachine and Real Estate Investing community.