Most real estate investors and entrepreneurs quickly discover that the real estate investing industry, while big on a national level, can actually be quite small on the local level. Most regions and cities have local REIA’s (Real Estate Investor Associations) where local investors come together to swap deals and gain education. However, even those investors who skip their local REIA’s find that it’s quite common to bump into many of the same investors that are active in a particular area.
In my market, I’m constantly bumping into many of the same investors …. through bandit signs, Craigslist ads, email blasts, referrals, networking, etc. Even in a city of 6 million people, I know many of the local investors who are buying and selling investment properties in my market. As a wholesaler, this kind of networking is the name of the game. Building a list of buyers and making connections is the lifeblood of any wholesale business.
Credibility is Essential
As any wholesaler will tell you, building a list of buyers is probably the most important component to being successful (in addition to having inventory to sell). However, having property to sell and having a list of buyers to sell to is no guarantee that your business will do well. I would argue that having credibility with your buyers list is just as important as the list itself.
One of the quickest ways to develop a bad reputation and to lose legitimate buyers is through an inability to perform as a wholesaler. What do I mean by that? To put it simply, if you market a property, you should have the ability to sell the property …. if you put a property under contract, you should be able to honor that contract … if you set a closing date, you should be able to close on that date.
I’ve found that many self-proclaimed wholesalers are nothing more than marketing hustlers with a computer and a free MailChimp account. A true wholesaler is someone who finds and controls a property and has the ability to assign interest or sell that property to somebody else. I’ve found that many (not all) individuals who re-market other wholesale deals rarely perform and almost always lose credibility in the process.
Do Not Do This!!
Case in point: I put a property under contract with a wholesaler last week. I had received an email blast with the details of the property and decided it was something I was interested in. I scheduled a time to view the property and decided to move forward at his advertised price. The wholesaler sent over contract that I signed and sent back and we began lining up funding and rehab crews. Two days after the contract had been signed, I receive an email from the wholesaler informing me that the property went under contract to somebody else for $2,000 higher than the contract I had signed. I immediately picked up the phone to find out what had happened only to be informed that this deal “wasn’t his deal” and his “associate” sold it to somebody else without telling him.
Do you think I have any interest in doing business with this wholesaler again? Absolutely not. This is perhaps a text book example of how to lose credibility and develop a bad reputation in a local market. Do I think this wholesaler is a bad guy or did this maliciously? No, he actually seemed like a nice enough guy. The problem is he was not actually wholesaling a property … but rather marketing something he didn’t control.
I can’t stress enough the importance of controlling the property as well as the sales process as a wholesaler. If you are going to market a property to your list, you darn well better have the ability to sell that property and communicate the true situation with your prospective buyers. It doesn’t take long at all to develop a reputation in your local market … whether good or bad. For the sake of your business, be careful, be honest, be ethical and always strive to take care of your buyers. In the end, this is what will dictate whether or not you are successful.
How are you killing your wholesaling game? Tell me your story in the comments..