How to Wholesale Real Estate in Philadelphia: 2023 Guide
Learning how to wholesale real estate in Philadelphia PA just got harder. Starting in January 2021, you legally need a Residential Property Wholesaler License in Philly if your business buys residential properties solely to resell them. These are uncharted waters for real estate professionals trying to wholesale houses in the City of Brotherly Love. Although these new barriers exist, it’s still possible to successfully wholesale a property here.
In this 2023 guide, we review how to wholesale real estate in Philadelphia PA through assignment contracts.
Wholesaling Real Estate
Wholesaling real estate is the act of buying and selling a property within the same transaction. Many call wholesaling properties “house flipping”. Online real estate gurus popularized this real estate strategy because there’s a low barrier to entry.
“You can wholesale real estate in Philadelphia with no money down!”
How many times have you heard that shouted down the sidewalks of Broad Street? The strategy became very popular in Philly because of the large amount of cheap, vacant properties and lots. Sellers needed quick ways to get rid of their properties that were either underwater from unpaid water bills or occupied by squatters. People who wholesale real estate in Philly fill a need.
There are two different ways to wholesale a house in Philadelphia PA:
1. Wholesale Assignment
A wholesale assignment is when you sign an agreement of sale with the seller that is assignable. Then, you find a cash buyer in Philly that you assign the contract to. This is executed by signing an assignment contract with the cash buyer. Ideally, you sign the initial agreement of sale for a lower amount than what the end buyer is willing to pay for it.
You are assigning the contract in this circumstance. The monetary difference between the two contracts is your ‘spread’, or wholesale fee. When trying to wholesale a house through an assignment in Philadelphia, your name is not on the title of the property. This wholesaling strategy is why it gets advertised as “no money down”, since you don’t pay anything out of pocket at closing.
2. Double Close
The double close in wholesaling is when you actually purchase the property yourself for a short time period. In this instance, you would be on the title (deed) of the property. Double closing on a house in Philly makes sense depending on the situation. You’ll need legitimate money to wholesale real estate in Philadelphia through this strategy.
You Need a License to Wholesale Real Estate in Philadelphia
To legally wholesale real estate in Philadelphia PA, you need a license. If you don’t get a license and try to wholesale a property in Philly, someone could report you. Wholesalers want to avoid this. You could get slapped with fines and end up with big issues.
How to Get a Property Wholesaler License in Philly
Business Income and Receipts Tax ID (BIRT)
There are two things you’ll need before applying for a residential property wholesaler license in Philadelphia. This first item is a Business Income and Receipts Tax ID (BIRT). This is so that the City of Brotherly Love can collect their taxes when you wholesale a property.
Commercial Activity License
Next is your commercial activity license. Once you have one of those, along with your BIRT, you can apply for a wholesale real estate license.
Other Requirements for Wholesale License Application
The city asks for a few other items for you to supply when applying. Yes, it’s frustrating to jump through all of these hoops. However, getting your property wholesaler license in Philadelphia will keep you out of trouble moving forward.
The city of Philadelphia will also ask for:
- Certificate of Insurance ($1,000,000 general liability insurance)
- Criminal background check
- Become compliant with all City of Philadelphia taxes
From here, you’re ready to submit your application! You can apply for your Philadelphia wholesaler license on eClipse. The cost is $200. Wholesale Real Estate in Philadelphia: 4-Step Process
Now that we’ve explained the two wholesaling strategies (assignment and double close) and also walked you through how to apply for your wholesaler license, it’s time to start your business.
1. Create a Buyers List
You can’t wholesale a house in Philly without an end buyer. Creating a buyers list is the key to successfully assigning a contract to an investor. Before you have a deal under contract, you should build a list of cash buyers who are hungry for deals.
If you’re new to real estate, you’re probably wondering how to build a buyers list. Here are several reliable ways to create a buyers list for wholesaling in Philly:
Wholesaling Facebook Groups – Philadelphia has droves of Facebook groups about real estate. Join them! You’ll see groups that mention off-market deals and wholesaling in their names. Add yourself to those groups and begin to network. Not all real estate Facebook groups in Philly are active. Interact with members of the groups in threads and start connecting with cash buyers. If the group is really active, you even see people assigning contracts directly in the group.
Scrape MLS for Cash Buyers – If you are a real estate agent in Philly and have access to the Multiple Listing Service (MLS), use it! You can search for all cash transactions in specific areas of the city that you’re targeting and within a certain time period.
- Example: all-cash transactions within a 1-mile radius of Temple University in North Philly that bought a house for cash on the MLS within the past 3 years.
You can then look up the current owners’ name, and skip-trace them. The MLS also provides information for the real estate agent that helped the buyer purchase that property. Consider networking with these agents. If they give you permission, add them to your buyers list too.
Real Estate Forums – BiggerPockets is another great place online to explore when trying to build a buyers list. As of 2023, this is arguably the most active real estate forum online. You’ll find investors, house flippers, and other wholesalers to network with here. Get active and add value to other real estate investors in the forums. You can direct message cash buyers and ask if they’d like to be on your list. Let them know you have a solid wholesale real estate business and want to send them off-market deals.
2. Choose a Marketing Strategy
Now that your wholesaling buyers list is built, you can choose a marketing strategy. You can find wholesale real estate deals in a variety of ways. How do you choose a wholesaling marketing strategy? Find what fits best for your sales style and personality. Although a marketing channel may ‘work well’, it might not be the best fit for you. Avoid marketing strategies that leave you drained after the work day. Double down on marketing strategies that give you energy and help you thrive.
Here’s an example of several wholesaling marketing strategies:
- Direct Mail
- Cold Calling
- Cold Emailing
- Text Blasting
- Door Knocking
- Driving for Dollars
- Billboard Ads
Certain marketing strategies are considered ‘outbound’, meaning you must take the initiative and market directly to the home seller. Wholesaling strategies like direct mail can be extremely expensive. If you’re trying to wholesale houses in Philly on a budget, stick with door-knocking. It’s free!
Other wholesaling marketing channels are inbound. You place an advertisement out in the world and wait for motivated sellers to come to you. TV ads are an effective way to wholesale real estate in Philadelphia because people watch television all the time. Sadly, TV ads are extremely costly. Choose a marketing channel that fits your budget and personality before slinging real estate deals. You can wholesale properties in Pennsylvania more easily by casting a wide net of marketing through something like TV ads.
3. Build Systems and Work Motivated Seller Leads
Your real estate marketing campaigns are off to the races! Now it’s time to build the systems within your business to manage the motivated seller leads as they come in.
Subscribe to a customer relationship management (CRM) tool to help you manage your leads. These tools help you stay on track with follow-up and progress of each motivated seller. To successfully wholesale real estate in Philadelphia at scale, get a CRM. It’s nearly impossible to grow a business without being organized.
There are free CRM tools and paid ones. Google Drive – while not technically a CRM – can help you start things off without any cost. Once your wholesaling business in Philly grows, you’ll want to upgrade to a tool like Salesforce or Podio. These CRMs are both commonly used to wholesale properties by others in Philadelphia PA.
4. Assign Contract to Cash Buyers
You’ve made it to the finish line! It’s time to assign the contract to a cash buyer and complete the real estate transaction. Depending on your preference, you’ll either be assigning the contract or double closing on the property.
Find a wholesaler-friendly title company in Philadelphia that you can rope in to help you close the deal. A solid escrow company is essential when attempting to wholesale properties in Philly. Efficient title companies can help you quickly sell a home without much stress. Once you have a go-to title company, you can continue to use them for all of your wholesale transactions moving forward. Realtors Can Wholesale Property in Philadelphia
Realtors can wholesale property in Philadelphia PA once they acquire a wholesaler license. It’s a myth that real estate agents are not allowed to also be wholesalers. However, there are extra steps that you need to take in order to enter this niche as a realtor.
Disclosures – Make sure that you always disclose that you have your real estate license when marketing, talking to, and working with homeowners. Additionally, you should disclose your wholesaling license number on your materials as well to let homeowners know you have that. This is not legal advice. Please consult a real estate attorney to know exactly how to go about disclosures for both real estate agent licenses and wholesaler licenses.
Virtual Wholesaling in Philadelphia
Virtual wholesaling in Philly is extremely difficult. Why? Comping properties without walking through them is tough in this market. Most neighborhoods are not ‘cookie-cutter’. It oftentimes takes a physical walk-through to get an accurate valuation of a property unless you’re getting it under contract at a very low number. Plus, properties in Philadelphia are very old and usually require more repairs than you’d think. This also makes trying to wholesale real estate virtually here a pain.
Wholesale Real Estate in Pennsylvania
Philadelphia doesn’t make it easy to wholesale houses. Especially after the new law that makes it illegal unless you have a wholesaling license, the city is getting more strict in protecting homeowners. There are others cities in PA that aren’t as intense.
You can wholesale real estate in Pennsylvania using similar tactics listed in this guide. Many of the same strategies work just as well (or better) in other cities in PA. Wholesale properties in PA with confidence by building a systematized business that you can continue to grow.
Try to Wholesale Real Estate in Philadelphia Today
You’re finally ready to begin your wholesaling journey! You can learn how to wholesale real estate in Philadelphia after getting licensed and making a game plan. Brotherly Love Real Estate buys houses in Philly from multiple sources. If you’re struggling to sell a Philly property, contact us. We offer a joint venture (JV) program that can help you sell a tough home.
None of this was legal advice. Please consult with a real estate attorney in Philadelphia and review the wholesaling laws to know exactly how to navigate this strategy. Our guide on how to wholesale real estate in Philadelphia PA is meant for educational purposes only.