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What Kind of Wholesaling Business Do You Want To Create?

by Sharon Vornholt on January 29, 2013 · 6 comments

  
Wholesaling

The kind that makes money! That’s probably the first thing that comes to your mind.

That is the ultimate goal not only for wholesalers but real estate investors in general. But there are other things to consider besides profit when designing your ideal business. Creating an ethical business should be a given. But if you going to create a wholesaling business that is not only profitable but one that is in alignment with your other goals both in business and your life, you will have to give this topic some serious thought right from the beginning. So what kind of wholesaling business do you want to create?

Setting Up Your Ideal Business

There are some key questions that you need to ask yourself when you are setting up your ideal business.

1. What type of property have I decided to focus on?  You have to drill this down until you are clear on this question. Is your choice:

  • Low Income Neighborhoods
  • Bread and butter neighborhoods
  • Properties for “move up” buyers
  • Luxury Properties
  • Multi-family or commercial properties

These types of properties can overlap to some degree, but it’s better to be known as the “go to person” for a particular niche especially in those early years of your business. Remember when we talked about creating your “expert status”?

2. Does this decision reflect the types of property my current cash buyers on my buyer’s list want to buy?  If you don’t know the answer to this question, then call them up and ask them.

You need to be able to answer these questions:
“Do I need to build a different type of buyer’s list that will have my ideal cash buyers on it?”
If the answer is yes then ask yourself the question,
“What do I need to do today to begin this process?”  What are the top 3 ways I can start immediately to build or expand my buyer’s list?

Be aware that this answer will be likely to change for at least some people on your list over time. It’s a really good idea to have some system for keeping in touch with your buyers on your buyers’ list from time to time.

As A Wholesaler, What do I want my ideal life to look like?

The answer for a single person may likely be a lot different than it would for a man or woman that has small children.  Being a wholesaler is not a passive income strategy. If you are not careful, you will find yourself in a very demanding job, quite possibly like the one you worked so hard to leave behind (if you have managed to escape the 9 to 5 already).

Different folks will have different goals so it’s important once again to nail down exactly what you want and then go about creating that. It’s all too easy to just start marketing, taking calls and find that you are “letting life happen to you”. Once you understand that you can control how your business works and how it will affect your life on a day to day basis, you have taken the first steps toward creating a real business.

This is one reason it is so important to decide right from the beginning what your niche within wholesaling will be, and what you want your business to look like.

A Wholesaling Case Study

Here is an example for you. I have a friend up north that has built a great business wholesaling low-end properties. It’s not unusual for her to close multiple deals every month. These would typically be deals that would net her $3,000-$4,000 each. I would say that she is a “volume wholesaler of low cost properties” rather than one that wholesales more expensive properties (that would net her a higher wholesale fee on fewer properties).

She is known as the go to person for these types of properties in her area. She has built herself a buyer’s list of nothing but real estate investors that are looking for these types of cheap, good “cash cow” types of properties. She coaches other folks on how to do the same exact thing that she does. So that is one way that she finds her deals; through her coaching students.

Direct mail marketing and bandit signs are two of the main marketing strategies she uses, and she gets a ton of calls; calls which were taking up almost all of her time. The high volume of calls meant she was always working in her business, rather than on her business.

In her niche, she was able to find a VA in another country and train her take those calls, and also to do the initial screening. Her callers/motivated sellers are expecting a less sophisticated person on the end of that phone than someone that was looking to sell a high end property. She understands her business model and what she needs to be successful.

My Wholesaling Business: Learning to Outsource

Beginning the process of outsourcing some of your duties is a very big part of setting up your ideal business. Being the “type A” personality that I am, I will be the first one to tell you it was hard for me to outsource things in the beginning.

I like to compare it to the first time you hire a babysitter for your new baby. You fret and worry incessantly that “they won’t do things as well as you do”; “that something terrible will happen” in your absence.  When you finally muster up the nerve to hire that first babysitter you quickly find out that everyone is safe and things went just fine. You will almost immediately think about scheduling your next “date night”. It works exactly the same with outsourcing. There are many affordable options for outsourcing too.

Once you manage to let go and outsource that first task, you will feel a sense of freedom that is indescribable. Slowly that feeling of being in a constant state of overwhelm will begin to subside. Then and only then will you be able to work “on your business” rather than “in your business” every hour of every day. This doesn’t happen overnight. But the sooner you begin to take baby steps to make this happen, the faster your business will grow.

Deciding on which things you want to ultimately outsource in your wholesaling business and creating plan for accomplishing this should be part of creating your ideal business right from the start. It is an important step for building a successful business rather than ending up with a painful, time consuming hobby.

Give Yourself This Gift

Whether you are brand new, a seasoned business owner, or you are one of those people that still has “a dream living in their mind that hasn’t yet fully taken shape”, set aside some time today to work on your business. Begin to create a plan that will give you back the gift of time through outsourcing.
Photo: extranoise

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{ 6 comments… read them below or add one }

Brian Gibbons January 29, 2013 at 11:44 am

Sharon I love this so much.

“Begin with the end in mind. Sharpen the Saw” from the late Stephen Covey comes to mind from your valuable article.

Although I assign lease option contracts and sandwich lease option from sellers, all of what you said is soooo valuable. Working ON your business, Emyth, will propel you to a real breathing child – teenager business. Not a baby in the ICU.

Outsourcing penny nickel activities to VA’s to get your numbers up. So you can focus on critical tasks. I have discovered but not used http://www.724care.com/outbound-services/724care-client-acquisition.html (Philippines based)

Your example volume wholesaler at low cost is awesome. She makes income from wholesaling and coaching others.

And picking a type of property is important. I only work with no equity pretty houses above the median with no work and in great school districts. That’s it. And I do it nationally.

Did I always do that? Heck no. I used to take anything. Now I hate the lower end because you are dealing with people with little money (net disposable income), buyers AND sellers.

Thank you so much for this article, I hope all BPs read this.

“Sharpen the Saw, Begin with the End In Mind, Work on Your Business, not In Your Business.”

Reply

Sharon Vornholt January 29, 2013 at 1:42 pm

Brian –

I love your response especially, “Working ON your business, …. will propel you to a real breathing child – teenager business. Not a baby in the ICU.” That’s what so many of us feel like at times without proper planning and systems; just like we are in the ICU struggling each day to survive. And that is what usually prompts us to change; the pain of being in that state.

Learning to really have a well defined niche is so important in this business, and I think you get better with that over time. Most of us were “all over the place” for longer than we would like to admit. Whenever I deviate from any of my criteria, I almost always regret it.

You have a well defined niche. I don’t think there is a right or a wrong place necessarily to be; it just has to work for you. I hate working in really low income areas. I’m not happy in that place. But I know folks that are successful and don’t have a problem with it.

That’s the great thing about real estate; you GET TO CHOOSE!

Thanks for your comments.
Sharon

Reply

Mike Carr January 29, 2013 at 11:58 am

Sharon, another great article. When I started off I never realized how many different ways there were to approaching the wholesale business. My buyers list was all over the place in terms of markets and types of properties. I have now focused on one are and really worked it hard. Making a plan before you start off is key to success. Thanks for another great article. Keep up the good work!

Reply

Sharon Vornholt January 29, 2013 at 1:45 pm

Mike -

Your power is in the plan. It doesn’t have to be elaborate, but you do have to have one. Many times I have scrapped a part of the plan, only to create something that was better for me in the end. As I said to Brian; we get to choose and that is the beauty of what we do.

Thanks
Sharon

Reply

dwight February 12, 2014 at 9:11 am

Should i form an llc?

Reply

Sharon Vornholt February 12, 2014 at 10:04 am

Dwight – Most do form an LLC.

Sharon

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