Before we jump into the content for today’s post, I just want to give you a little background on who I am so you can get a general feel for what I’m about and ultimately what kind of content you can expect to come from me.
I’m from the Indianapolis area and I am married with three incredible children whom I always try to put before my business. I have been a full-time real estate investor for 8 years and I specialize as a wholesaler, which is simply “matchmaking” experienced investors with properties that turn a profit for them.
I can’t even begin to tell you how much I love what I do! In essence, every day I make money simply helping other people make money. It’s so awesome, and it’s ultimately what I want to do for you, the reader (though I won’t be getting paid this time ’round)!
My heart in becoming a contributor to the BiggerPockets blog is to simply give back. I became successful in this business through a lot of trial and error, and if I can help other inspiring investors reach success with a lot less heartache and hassle than I had, then I’ll feel like my goal has been reached.
So with that, let’s get into today’s post!
What Is Wholesaling Exactly?
Like I said earlier, wholesaling is in essence “matchmaking” investors with properties that those investors can either hold as income property or fix-and-flip for a profit.
The wholesaler finds a steeply discounted property (meaning it’s selling significantly under market value due typically to a distress situation, like a foreclosure, divorce, probate etc.), and they get it under contract and either assign the contract or sell the property to another investor for slightly more than what they purchased it for.
For example, let’s say I got an offer accepted on a property for $20,000, but I know a flipper could purchase this same property at $25,000 and still make a great return after they rehabbed it.
So I go through with it and get it under contract for $20,000 and then assign the contract to an investor at $25,000, thus profiting the additional $5,000.
Make sense? Great!
The Only Two Principles You’ll Ever Need to Know in Wholesaling
In this type of investing, there are pretty much only two things you need to focus on in order to make it work. If you do these two things and you do them well, it’s only a matter of time before success will be knocking at your door.
1. Find Deals to Buy
So obviously, in order to purchase a good deal, you actually need to find one!
But how do you do it exactly?
Well, there are a number of different approaches, but the one that I have found to be the most consistent and the most profitable has been using direct mail campaigns. Here’s an awesome step-by-step system in getting started with direct mail.
Second to that, the biggest return on investment honestly has come out of relationships. Networking, getting yourself out there, shaking hands, and providing value to other people has been an incredible source of deals for my business.
I’ve made it a habit to help a lot of “newbies” learn how to be successful in this business, and in turn, a lot of them end up bringing me deals that they want to partner on. My intention is never to “give-to-get,” but it’s funny how it turns out that way a lot of the time.
2. Find Investors to Buy Your Deals
So once you have a deal, how do you actually find someone to sell it to? Now, a lot of people talk about establishing a “buyer’s list,” but practically, how do you go about doing that?
For starters, people want to work with a wholesaler who is trustworthy as a viable source of consistent, good deals. Investors don’t want to deal with people who are so greedy that they don’t leave any “meat on the bone.”
What that means is you need to be known as someone who has properties that are priced low enough with your fee included that your investor buyers have enough margin to still make money. If you try to make it a great profit for yourself at their expense, very quickly people will stop wanting to work with you. But if instead you set out to genuinely want to help people and you intentionally take a profit that leaves them plenty of room to make money, word will get out, and people will begin to start thinking of you as a wholesaler who really gets what they and their business needs.
Second to being a trustworthy person, another way to meet buyers is by going to meetups and networking events, and actually being a wholesaler who gives a whole lot rather than receives. People in real estate have a really strong gauge in sensing if someone has an ulterior motive. When you go to a networking event, be authentically interested in what other people have going on and jump at any opportunity to help them out. If you have any means to support or aid them in their life or business, it’s that genuineness of simply wanting to help others that will stir seasoned investors to want to work with you over others.
Also, if you get any business cards from conversations at a networking event, actually follow up with them either by phone or email and intentionally set reminders for yourself to periodically touch base continually. Real estate at its heart is a relationship game, and in order to play it right, you actually need to be real and come from the heart.
Are you just starting out in wholesaling? What has your experience been in finding deals and buyers?
Be sure to let me know with a comment!