Why Today’s Market is Just as Good for Wholesalers as 5 Years Ago
I often hear people say that they should have started years ago because today is just too competitive. They give up very easily, they are intimidated by all the “I buy houses” signs, and they think everyone in their local real estate club is taking action, leaving no room for them. I am writing this to inform you that you are limiting yourself, and today is a better time than ever to jump into real estate. There are more buyers who are willing to pay more to get a deal. The MLS has dried up in most cities, so your service as a wholesaler is needed more than ever. We don’t know how long the economy will be this good. So, why not take advantage of it while we have it?
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Allow me to give you an example. I am doing a lot of direct mail marketing these days. When I used to come across deals during the recession, I would be happy to make $3-7k, and I would have to split that with my partner. Fast forward to today, if I can get deals with the same numbers, I am making $15-20k per wholesale on those deals. As you can see, I can make more money than ever before in this market. Don’t be a negative Nancy and focus on the negative things. If you were to focus on the positive things, you’d reap a more positive outcome. So let’s say you spend $4k in direct mail, but you get one deal and make $11k. You just profited $7k off that mailing campaign. That is a lot better than a job.
A Few Benefits of Wholesaling in Today’s Market
I know some of you are saying, “But in some pockets, it’s just too difficult to find a deal.” Remember, we are wholesaling — and believe it or not, rehabbers have it harder than us in these hot pockets. I am working on a deal that I been talking to the seller about since 2014. I offered $27k, they agreed to it, I sent the contract over, and the seller decided to change his mind and keep it. My potential wholesale profit was $5k. I offered them $60k in 2015, the seller was much happier, then still decided not to sell, and I lost about $8k in potential profit. This year, I offered $77k and can potentially make $20k off wholesaling this thing. Again, in this market, you can make just as much as rehabbers are making with less risk, no contractors involved, and no payments on the house while you are praying the contractors hurry up and complete the job.
Another benefit of the hot market is the ease of finding buyers. You can literally make a post on BP looking for buyers in your area, and you will have a few people step up the plate. Five years ago, I had to work hard to find a buyer. With the conditions today, I have not used Craigslist or any third party site to sell a property since 2013. I have been finding my buyers off market, and it’s not difficult to do. I love working with agents who have a network of cash buyers. I have no problem paying their 3% (some of them require more, which is fine because they have buyers for all kinds of properties that some more traditional investors won’t touch).
Attitude is Everything
In conclusion, I wrote this article to get you guys to look at the upside of being in this market. Get started today and stop putting limits on yourself. The owner from Under Amour sportswear was just broke in the late ’90s. Now he is a direct competitor of Nike and arguably has two of the best, most popular athletes signed to his brand (Cam Newton and Stephen Curry). What if he would have said, “You know I can’t compete in this space because no way can I ever be as big as Nike, Reebok and Adidas.”
I’ve said it many of times before, but it’s good to get into self development to create a can-do attitude. Attitude is everything in life, and adapting a positive outlook is extremely important in being successful. If you ever think about quitting, just think that if Joshua Dorkin would have quit when things got tough, you would never get to read this valuable content. BiggerPockets has existed over 10 years and wasn’t just built last year. Just let that marinate.
Wholesalers: What are you seeing in today’s market?
Let me know with a comment!