Today in the forums there was a question asked that I thought was so great I want to share it here on the blog for everyone to read. Do you struggle getting started? Have you read the books, conversed in the forums, commented on the blogs, and listened to the Podcasts – only to be stuck? Do you hear the gurus talk about how easy wholesaling is? Do you wonder why you can’t seem to take the first step? This was the issue one BiggerPockets member brought up today. In summary, he said:
“I want to get into wholesaling, at first. Why can’t I begin the process? I keep getting overwhelmed…somethings missing. dont i need an attorney for the forms? shouldnt i just come out and let the investor (buyer) know i am a wholesaler?? where do i get the forms?? sigh. I will keep reading. i will keep posting. but i dont know if ill ever “get it”. I have a feeling I am going to foul up a couple of these before I get it right. Anyone know this feeling??? i want to take cruises and be financially free. i want to get out of my cubicle (yep, im in it right now!) and work smarter! help!”
Does this sound familiar? The following is my answer to that question. If you have any thoughts – please add them to the comments below AND head over to the forum post and leave your comment there as well.
How to Get Started Wholesaling: The True Story
The following is my response, taken directly from the forums:
Hey… I feel for ya! I think the problem is trying to jump into a system that you didn’t grow organically. It’s like trying to instantly have a business with 50 employees and millions in sales when you never ran a business before, or getting a truck-load of materials delivered to build a house when you’ve never done construction before. Sure – there is a pile of materials, the blue print is there, there is plenty of advice, but it wasn’t gained organically so it doesn’t always make a difference.
There are a million guru guides and programs that will give you the exact, step-by-step, process for talking with sellers, what to write on your bandit signs, etc. Yes – this stuff will probably work, but these are just the building materials delivered to your job site. The gurus claim “all you need to do is this simple 10 step process” but in reality – no two deals are the same. If all you do is follow the steps outlined by a guru – you’ll be lost in no time. You have to grow your knowledge, skill, and business techniques organically
So, How Does One Grow Organically?
Well, I think you are starting out right. Being involved in the BiggerPockets Forums is a great way to get connected with guys who know what they are doing. I think it’s important to decide fully what you want to do – which it seems you have. Asking questions in the Forums – answering when you can – and just being a common face helps people to like you and get to know you.
Second – I think it’s vital for a wholesaler to FIRST get connected with some local buyers before worrying about bandit signs, scripts, or anything else. I don’t mean “build your buyers list” (that will come with a good deal) but just get to know some local guys who are buying property. This could be buy-and-hold guys, house flippers, or whatever. They are the ones who are going to buy your deals eventually. They need to become your best friends, your mentors, your partners.
Whatever it takes – you need to become friends with these guys. Offer to work for free to help them out. Provide value to their business. Tell them you want to bring them deals – and you want to learn the business by doing so. If someone earnestly came to me and said that, I would take all the time in the world to explain exactly how to do it, step by step. Funny thing is – no one has ever approached me out here to offer me deals. Maybe wholesaling isn’t alive in my area – or maybe there is no one willing to do the work.
These mentors (or even just one mentor) will tell you what they want and how they get it. They will take you under their wing and help you get started – because both of you will make money. It’s a win-win. Yes, this relationship might be hard to start – but real estate investing is hard work.
Be sure to listen to the first episode of the BiggerPockets Podcast also, cause Marty talks about the best way for a wholesaler to succeed. It’s really amazing.
The Truth About Wholesaling
A final note on wholesaling: I don’t know the numbers, but I would estimate that 90% of people who try to get into real estate investing start with wholesaling because it seems that it’s quick, easy, and cheap to get into. Of those 90% – I would guess only 10% of people actually ever do a single deal. Which means – for every 100 people who want to get into real estate through wholesaling, only 1 person ever actually makes money.
So what am I saying?
Wholesaling is a J.O.B. It’s a job that takes money to start (yellow letters, postcards, bandit signs, direct mail, postage, etc) and a lot of sales ability. The payoff MIGHT be worth it – but it might not. The Gurus make it seem like the end-all best thing ever – but in reality: it’s tough.
So – be sure that wholesaling is the JOB you want.
- If your dream job is to wake up in the morning and be a math teacher: then go be a math teacher.
- If your dream job is to wake up and rescue poor animals: go be a vet.
- If your dream job is to approach hundreds of people in rough places in their life, convince them to sell their property to you for much less than its worth, and find other investors to buy it: Then be a wholesaler. There’s nothing wrong with it – but it is a JOB.
Whatever your JOB is – make your investing separate. Begin with your house. Do you own your own? Can you buy a duplex, triplex, or 4-plex to live in and rent out the other units, gaining experience in landlording? How about finding an extra job delivering Pizza, saving up the 20% needed for a down payment on a small investment property? That is true investing, and that’s going to give you wealth – not a script from a guru.