Starting out as a real estate wholesaler is not as easy as everyone tries to portray it to be. You will have ups and downs, peaks and valleys, and you will be on the pinnacle at one moment and in the gutter the next. In this investment niche, it’s about controlling your emotions. There are five infallible truths about wholesaling that will keep you upright and on your feet.
I remember during the time when I first started, it was a roller coaster ride every month. I would try and read BP articles and listen to the BP Podcast, but it was difficult because others were discussing their success, and only thing I had to show was my failures.
It was a challenging time, but I kept a phrase close to my heart that helped me get through the rough times: “Enjoy the journey.” I used this phrase because I had to remind myself that this is my journey. I cannot compare my path to success to anyone else’s because I am uniquely different, just as those who were having measurable success were. This really helped to ground me.
I wrote that quick preface to encourage those of you who are struggling to close your first deal or to do consistent deals to welcome every turn that is in your journey.
Here’s what I’ve learned on my journey thus far. If you can master these five truths, you will have measurable success. It’s not difficult to do each, but it is challenging because it takes consistency.
The 5 Inarguable Truths About Succeeding in Wholesaling
1. You have to utilize the power of connections.
Your connections can get you something money cannot buy — and that is influence. You have to focus on networking and meeting new people, especially people that are doing what you want to do. There is a time when you have to set aside your fears and your emotions and step out to find a team of influencers that will steer you in the right direction.
This is not easy the majority of the time — your emotions can challenge you, making you think that you’re inferior or you have nothing to offer. You have to remember that there’s only one you ever created, and you can offer something distinctly different that anyone else.
2. You need to study your market.
You have to know your market, what is happening, where it’s happening, and who is making it happen. You have to be informed about trends. Once you understand what is going on, you will be able to navigate your way through volatility.
Real estate is volatile, so you have to understand where the flippers are looking to buy and what areas are over-priced and over-saturated. Yes, if you get a great deal someone will buy it; however, this could increase your cost per lead. If everyone is marketing in a certain area, it is more challenging to pull a deal in that area. You have to know your market to be ahead of the curve.
Here’s a great example of how to know your market: You must be aware of historical districts that are highly desirable, areas that have larger lot sizes, and areas that are going through gentrification. There may not be solid comps in the area because the area is in the midst of a transition, but if you are aware of what is transpiring, you can get plenty of deals before that area becomes saturated.
3. You must market wisely to your targets.
To expound on the previous “study your market,” you must streamline your marketing efforts. You have to strategically develop a marketing plan. Especially when starting out, most don’t have the luxury of spending $20,000 a month on marketing like the big boys, so every effort must be calculated.
You have to know where to place bandit signs, who to send letters to, what type of letters to send, and how to drive traffic to your website. All of these things are essential when starting out. Don’t get me wrong; you don’t need know everything before starting, but you need to know the basics. As long as you continue to learn from your connections and implement what you’re learning, you will have a measure of success.
4. You have to know your numbers.
The easiest mistake and the most common mistake that I’ve seen (I’m guilty also) happens in the beginning when you are so eager to get a deal that when someone finally says yes to selling their house, your ambition makes you overlook the numbers.
It is very thrilling to finally have a house under contract, but there is a difference between having a house under contract and having a deal. Knowing the numbers makes it easier to close that first deal. I struggled with this; I had a house under contract, and I underestimated the repair cost, overestimated the property value, and made the inspection period too short. Yes, I did everything wrong — poor negotiations, terrible math, and too much ambitious. In the end, guess what? I did NOT close the transaction because it was not a deal.
A deal looks different in every market; in some markets the 70 percent rule is effective, and in others you can push it to 75-80 percent. It’s relative to your area. This again goes back to leveraging your connections.
5. You must close the transaction.
This is the part that everyone wants to get to: CLOSING! I can guarantee if you follow the the first four steps, you will be at step five more often than not. Let me stop here for a second and let you know that this does not come easy. A lot of evaluating, marketing, networking and “no”s will come first. Please do not think that this process is very simple because it takes a thick skin and tons of dedication to get to this part of the transaction.
Closing the transaction encompasses all the other four truths, plus negotiating. There are numerous ways to structure a deal and close a transaction. I will not dive into every step, but I will say, learn about assignments, double closings, seller financing, and lease options. If you cannot learn about each in-depth, pick one and find someone who is well-versed with the others, and you will be cashing checks. Cha-ching!
Enjoy your journey. There will be highs and lows, but never measure yourself against another because your journey will look different from theirs. The easiest way to become distracted is by trying to be a carbon copy of an original. Be your own original masterpiece and cherish every moment of your journey. You will look back soon and understand why you had to go through certain failures and why you had to be challenged by certain people. Enjoy the ride, and remember, sometimes you have to go at things alone until you find the right connections.
If this was something you needed to hear, let me know. We bloggers need to know that we are providing the content that will help you along the process.
I look forward to your comments. Remember, enjoy the journey!