How To Survive Your First Year of Wholesaling

How To Survive Your First Year As A Wholesaler

Though my husband and I had both been fascinated by the idea of owning rental properties someday, it wasn’t until February of 2014 that Stephen and I attended our first training seminar on how to invest in real estate. While we knew nothing about wholesaling, we learned enough about the process in those three days to come to the conclusion that wholesaling could be our method of building capital.

Since BP members are smart cookies, I’m sure you’ve figured out that this so-called “training class” was really a sales pitch to get others to join a real estate club that promised to train us, teach us their systems, and allow us to use their tools. In the end, supposedly we’d become successful investors – all for a membership price of approximately twenty thousand dollars! Fortunately for us, we took what we learned and decided to start our own wholesaling business. We spent the next several months reading, going to REIA meetings, and listening to podcasts on Bigger Pockets.

Our marketing campaign in the beginning could hardly be called a campaign since we took what little money we had and used it for flyers, bandit signs, bandit cards, and posting free ads on Craigslist. (By the way, we know longer post bandit signs, thanks to BP.) Granted, this form of marketing didn’t generate tons of leads for us but it got us started - and what we learned in those first few months helped us to become more comfortable in talking to others about our business and talking to motivated sellers on the phone.

We’ve learned a ton in our first year of wholesaling and we are still learning. Since so many people are interested in using this same technique to build capital, allow me to share some of the essentials needed to survive your first year at this gig.

DETERMINATION

You MUST be determined because trust me, it will take time to build capital. In addition to the time it will take to get where you want to be, the people that call on your ads will yell and call you names from time to time. Try not to take these types of calls personal. Under no circumstance is it OK to name-call and yell obscenities at others; if callers are showing that type of character over a piece of a mail they received or an offer you made, you don’t want to do business with them anyway.

Other callers may try to make you feel guilty for offering them such low prices on what they think is “prime real estate,” but you can’t start purchasing properties based on emotion or guilt. It makes no sense to make a deal with someone out of your willingness to want to help, all so you can be the one to inherit the problem. Don’t lower your standards. You can succeed and if you just keep at it, you will get a motivated seller who will come into agreement with you on your price. It is just numbers game and the numbers have to work for both parties. Don’t lose your enthusiasm all because you sent out four hundred letters, received only 10 calls, and none of the callers were motivated. It will happen.

PATIENCE

We’ve all had those days where everything in life seems to be moving in slooooow motion. In real estate, things are no different - there are good times and bad times. You may have one month where you’ve found 3-4 deals and other times, it may seem like a good deal will never come your way again. Expectations of how long things should take are typically shattered by the reality that things in this business rarely ever go as planned. You will be tempted to just give up if you allow your emotions to control you. Unfortunately, successful businesses do not happen overnight and it really comes down to doing the same things you did during the “good times.” The moment you decide to stop doing the things that were once bringing you deals, that’s the moment the phone stops ringing and the deals really do stop coming.

It’s been said time and time again, this is not a get rich quick business. If you want to be successful, you will have to learn to be patient with your business, with your leads, and most importantly, with yourself. We have found that just by being in business over the long term will start to pay off. A lead may not be motivated this month but in six months they may call you and finally be ready to sell at your price. Success will come in time.

ORGANIZATION

Wholesaling is all about marketing. If you are doing a lot of marketing (as you should be since that’s how you will get your leads) then you will get calls. The more marketing you do, the more likely you will get deals.  As mentioned before, we initially started out by using bandit signs but that proved to be ineffective and a real time killer.  Today we focus mainly on sending out direct mail but we also just recently a website to attract new leads.  

OK, let's be honest, we've done more than that...  we also just started a park bench campaign.  (No laughing!) 

Eventually all the letters, websites, and park bench campaigns (I said no laughing!) will result in lots of data.  Whether you use a CRM (customer relationship management) tool or paper lead sheets to obtain information about the seller and the property, you will need to find a good workflow of how to keep all of this data organized. You will also need a good way to update your direct mail list with information about how many letters have been sent, who should be removed from the list, which callers are “highly motivated” and those that have little to no motivation. Nothing is more frustrating than forgetting what you’ve done, what you offered, and what you need to do next, etc.

Assuming you have a direct mail campaign, come up with a system to track the number of letters you have sent, who you’ve mailed to, and the type of letter mailed. This may be as simple as creating columns in your list sheet (typically in the form of an excel file) with a number and letter. We have templates we use for each piece of mail we send. The first letter has different wording than used in letter two. Sometimes, even letter one is different than the first letter sent in other campaigns. Tracking the number of pieces you’ve mailed along with the type of letter is important when trying to determine which letters work best. If you have experimented with handwritten versus typed letters, come up with a system to track these differences so you can make adjustments when you find people respond better to a certain template. If letter one was handwritten, maybe your labeling for this letter type would simply be 1H, and a typed letter could be 1T. Some people argue that tracking this level of detail is a waste of time but in my opinion, sending out letters with low response rates is more of a waste. After all, analyzing response rates at the end of the week is a relatively painless task and worth the effort.

When people call, have a good way to track these leads down the road. You will find the people who aren’t interested in selling today may be interested in selling in three months. This is where a CRM tool can really help. If you talk to someone who isn’t highly motivated, you can mark that lead’s motivation as low and then set a follow up call in three months to see if they’ve changed their mind. If the lead showed a little more motivation, then maybe mark their motivation level as medium and follow up in three months. A good CRM tool will allow you to assign follow up dates for these leads. If you want to do follow ups outside of a CRM, simply create a folders for each month and label them as “Follow Up January, Follow Up Feb, etc.” and put the leads into the appropriate folder. This will take up a lot of space, but this is one alternative to a CRM.

To stay organized you should also have a ‘to do’ bin on your desk. Although this is a given for anyone who has worked in an office, sometimes this simple bin gets overlooked when working at home. It works! If you have things you need to get done this week, it goes in the bin. You have to make a conscious effort at not only putting to do items in the bin, but actually completing the tasks! If necessary, mark time on your calendar focused solely on this task. If Friday afternoons are a slow time for you, allot the hours from 2-4pm as “Clear My To-Do Bin.” Since handling things as they come up isn’t always an option, having a system in place to eventually get things done is a good practice.

SELF ASSURANCE

On any given day, as you start to share what your business is about with friends and family, you will encounter someone who thinks you’re taking advantage of others. Even worse, you will find someone who scoffs at this notion that you’ve “started your own business.” Sadly, there are people who don’t ever want to believe you have a chance at being more successful than they are or worse, they just don’t want to succeed. As much as we want our friends and family to be supportive of our dreams the truth is, not everyone is and that’s OK. Just don’t listen to them.

For those who might say you prey on the weak and “rob” people by buying their homes for much less than what they’re worth – start by asking them this simple question: “Will you personally help and take the properties off these peoples’ hands?” Usually the people making claims that wholesalers take advantage of others have no idea that the majority of homeowners we market to are landlords (real estate investors) who no longer want to deal with tenants. Others might be looking to sell for less because they have to sell fast for whatever reason. At the end of the day, regardless of what others might say, you have to know that you are helping people solve their real estate problems. If you’re so called “friends” aren’t willing to buy the distressed properties wholesalers often encounter, then pay no attention to them.

As for those who may give you strange looks at this idea of starting your own business: use their doubt as a means to add to your determination. Make it a point to prove them wrong and don’t let anyone stifle your dreams. Surround yourself with other business owners and other investors - allow the words and advice of successful entrepreneurs to drown out the negativity that others may try to plant into your psyche. If you don’t believe you can win in real estate, you won’t. You are going to need some faith to carry you through this journey.

INTEGRITY

With this business comes the temptation to be greedy. Since so many people who have invested in real estate have done so well, it’s easy to get caught up in the dream of being “like them” someday. Through your desire of being successful, you will be put in situations where your integrity will really be tested. It’s simple: keep your word, always. Do what you say you’re going to do and don’t make promises you can’t keep. Don’t judge those who have put themselves in terrible living conditions and don’t stop caring. If you are just looking to make lots of money, in the long-term you won’t succeed. While it’s great to have ambition and motivation, it’s more important to remain humble, teachable, and caring. This business has little tolerance for the arrogant and greedy so if you see yourself going down that path, wise up to it quickly. Recall often the times when you were not so wise with money, when you didn’t know as much as you know now, and when you could really use the help of someone who cared. Be the person who cares.