Where do you gather inspiration from?
What INSPIRES you to keep traveling along your path?
Many people gather inspiration from books written by world renowned authors; others get fired up by a great rags to riches story, or your family may provide that spark you need. There are many ways to get those creative juices flowing and to get you motivated for the task at hand. Outside of your motivation, what sustains you, or better yet — what is your secret sauce?
I ask this question because I have noticed that there are many investors in the industry who do not know what they are good at. It is essential for any entrepreneur to know what sets them apart from the competition. McDonald’s does not make the best burger, but they can produce a burger more affordably than the competition. Jimmy John’s secret sauce is speed; they can give you the same sandwich as Subway, but can give it to you faster.
These are just a few examples of what sets one business apart from another. In the world of real estate wholesaling, there is tons of competition and a low barrier to entry. So not only do you have to face those who are experienced and have the network and capital, but you’re also competing against the newbie beginner who is ambitious and ready to just get going.
Knowing what sets you apart from your competition and developing that skill will help you grab a share of the wholesaling market in your area.
I consider these 4 areas to be the holy grail of wholesaling. If you learn to master one of these areas and learn to outsource the others, you can be successful in real estate wholesaling.
4 Areas That Matter Most to Wholesaling Success
1. Advanced Knowledge of Your Target Market
I found this to be very important because moving to a new state, it was difficult to learn what areas were hot with investor activity and what areas were not. This put me at a complete disadvantage; it was like shooting in the dark. The hardest part was the lack of information regarding particular areas. By having an advanced knowledge of your target market, you begin to learn the trends of the area and how to utilize those trends to your advantage when marketing.
Farming a particular area will make you an expert of the going market rate for houses. This may also provide an additional strategy for houses that may warrant an exit strategy of rental income. There are many investors who are not looking for the norm of 65% of ARV. They may be looking for a passive income property that will give them an above 10% cap rate. Having multiple strategies increases your opportunity for doing deals and more importantly satisfying your customer base, i.e. sellers and buyers.
2. Excellent Communication Skills
As the saying goes, cash is king. Well, in the world of wholesaling, communication is king. Learn to work the craft of communicating effectively. As wholesalers, it’s mandatory for you to have proper phone etiquette and be able to guide a conversation. I believe this quality is more critical than knowledge of your target market.
Being an excellent communicator is essential because the caller will come to a very quick assessment that you (the caller) are either a possible friend or foe. Within the initial conversation, you have less than 10 seconds to persuade a potential seller why they need to hear what you have to say. I discussed handling the initial phone call in a prior post called “Real Estate Newbies: Why You Should Shut Up & Listen.” If you are having difficulties on the phone, some of the suggestions will provide you some additional strategies.
3. Creative Deal Structuring Knowhow
I must say that I am bias to this secret sauce. I enjoy learning new ways to structure deals. Being a one trick pony is the fastest way to stop your deal flow. Deal structuring is critical because more times than not, a seller will not accept an offer at 65% ARV unless two things happen: they are low hanging fruit and have tons of motivation, or you are extremely consistent with your follow up (which happens to be a wholesalers’ best friend — ALWAYS follow up).
I encourage anyone who wants to close more deals to research, study and learn from those who have numerous exit strategies to get deals closed. There are plenty ways to close a deal: traditional wholesale, JV, lease option, seller carry, passive income wholesale, and others. I am learning a few other techniques and strategies to ensure my success and longevity in the industry.
4. Marketing Savvy
Beware! I say this because everyone is caught up in marketing. Yes, I know this drives your lead funnel. I get it. But what I don’t get is that everyone wants to be a master at marketing.Why?
This is just my two cents; there are many outstanding marketers who you can outsource this responsibility to. I again say, do not try to be a jack of all trades and a master of none. If there are master marketers out there, let them generate a marketing strategy for you (with your input, of course). You can focus on honing your other skills while everyone is trying to be the master marketer. You can market like crazy, but if you can’t close a deal, it’s still wasted money. One thing that I have come across is that those who can market really suck on the phone. So if you can get the phone to ring but don’t know how to keep the caller engaged, your efforts are still wasted dollars.
It’s ok to know a little in one area and more in another. As entrepreneurs, we always believe we have to be the Big Chief and can’t humble ourselves at times. In every entrepreneur book (with substance) that I’ve read, the writer almost always addresses how they were not the smartest person in the group. Let your circle of influence teach you, and if you are the smartest person in your circle, guess what? You are not learning anything new.
I’m a strong proponent of marketing because it keeps the lead funnel full, but if you do not know much about marketing, add a master marketer to your circle of influence.
In closing, you have to outline what your secret sauce will be. What will be your company’s focus? Once you have this outlined, study and master your craft and remember to outsource your needs.
I would love to hear what your company’s secret sauce is.
Without spilling the beans, please share!