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BlogArrowReal Estate WholesalingArrow4 Common Myths About Wholesaling—Debunked
Real Estate Wholesaling Oct 08, 2020

4 Common Myths About Wholesaling—Debunked

Marcus Maloney
Expertise: Personal Development, Real Estate Wholesaling, Real Estate Investing Basics
100 Articles Written
Dislike! Young dissatisfied businessman in green t-shirt sitting, working on laptop, looking at camera and showing thumbs down. business and freelancing concept. indoor shot near big window at daytime

I want to talk specifically to my fellow wholesalers. This post is for you, and I’m confident it will help save you tens of thousands of dollars when you’re in the infancy stage of your business.

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As a wholesaler, it’s imperative to develop a solid business model. Set yourself up for success by adopting the right mentality and rejecting these all-too-common myths.

Here are several key things to keep in mind.

Myth #1: Wholesaling Is ONLY for No Money Investors

This is so far from the truth. Although there is a very low barrier to entry, there is a high barrier to sustainability.

How many people have you seen get started as a wholesaler who did not find any level of success? Many people I talk to haven't closed a single deal. But a common mistaken belief is wholesaling is an investment strategy for beginners and therefore very easy to do.

Related: How to Find Your First Real Estate Wholesale Deal

I’m a little ashamed to say this, but I used to be embarrassed to let people know I was wholesaler. There’s a misconception we are the weasels of the real estate industry. This makes me chuckle now, because so many flippers and rental investors wish they could do what I do: find deals.

young woman against a light blue background wearing a brightly colored striped sweater shrugging her shoulders with arms bent and palms facing ceiling expressing confusion

Myth #2: Wholesaling Is a Side Hustle

This mindset will not serve you well as a beginner wholesaler. Many start out thinking, “I’m going to make this a side hustle to help me reach my goal of being a ‘real’ real estate investor.” Good luck with that!

Related: The Top No-Cost Lead Generator for Real Estate Wholesalers

If you’re going to treat wholesaling as a side chick, she will definitely play you all the way to the bank. Wholesaling will give you tons of bumps, bruises, and even a black eye or two, but those who are dedicated and married to the strategy will see a high level of success. There are many investors wholesaling hundreds of transactions a year.

What I am saying is: what you put into it is what you will get out of it. Put in part-time effort, and you will get part-time results.

Myth #3: Wholesaling Is Inferior to Flipping

After many years of supplying flippers deals, I am starting to see a trend of flippers converting to wholesalers. I asked a friend of mine who used buy deals from me why he started wholesaling. His answer was simple, “Little risk with good upside.”

I thought to myself: Oh, now you get it.

Other flippers are trying to convert to wholesaling to find their own deals. I can literally hear the echoes of the flippers saying, “Wholesalers take all the profit.”

dictionary entry of the word lie highlighted in pink

They are converting because they believe it’s easy to secure deals. They soon realize the many challenges we face in finding those deals.

There are some, though, that do make a successful transition. And once they close a few $30,000, $40,000, or even $100,000 deals and see the profit potential, its a no-brainer to them. I say, “Welcome to my world.”

Related: 6 Non-Negotiable Habits of Highly Successful Real Estate Wholesalers

Myth #4: Solely Focus on ‘Easy Button Buyers’

This is the mistake every wholesaler makes—especially in the very beginning. The “easy button buyer” mistake is when you finally find a buyer that is willing to close on one of your deals, so you repeatedly send them future deals without offering them to other buyers.

We are trained to make this mistake—everyone talks about finding a buyer who is willing to mentor you in the beginning. Well, say this mentor happens to be a cash buyer. They tell you exactly what they are looking for in a specific area, and you find that for them. And after you do it once and make $5,000, the best thing to do is rinse and repeat, right? That is what we’re taught, after all.

WRONG!!!

This is what I suggest: After closing that first deal, you know what a deal looks like. You now understand (or should understand) the numbers. You’re familiar with the area at this point, so use that to your advantage.

We make the mistake of going back to the initial buyer, offering them the deal, and asking, “What would you buy this for?”

That’s reverse wholesaling. What happens is you cut yourself short. Remember, one of the key rules in business is supply and demand. You have the supply, and in many markets, there is high demand. Your initial buyer may offer you another $5,000 assignment fee, but if you opened the deal up to other investors, you could possibly get $8,000.

This mistake is common. I’ve made it, and tons of others have made it. You are doing yourself a disservice by not positioning the opportunity to all potential buyers.

These are just a few fallacies many beginner wholesalers believe that can derail their business. Don’t let it happen to you!

Are there other myths you’d add to this list?

Let’s discuss in the comment section below.

By Marcus Maloney
Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who ...
Read more
Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.
Read Less
2 Replies
    Dustin Singer Flipper/Rehabber from Pittsburgh, PA
    Replied 3 months ago
    I personally rarely wholesale unless the deal truly doesn't fall into my buy criteria, although I've done a handful. The one thing that many people take for granted in my market, and you touched on this, is how much work goes into finding deals. It's a full time job on top of running construction projects, and property management. However, I am still shocked by how many flippers and rental property buyers don't source their own deals. Marketing has always been first and foremost for us, because without that we have no business. I've bought one property from the MLS, and one from a wholesaler in the past two years. Everything else was sourced in house. Excellent advice though and totally agree, most new wholesalers fail because they think it's easy, don't educate themselves enough, or don't treat wholesaling as a real business.

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    Luke Thomson
    Replied 3 months ago
    Hey Marcus this was a great read. I just listened to your podcast episode today and it was very motivating! If you got started at 35 and became successful I am confident I can do the same at 20. I really appreciate your positive attitude. I don't know much about wholesaling but I think one myth you didn't touch on is some people hear the word and instantly think it is a scam or the person is untrustworthy. Probably due to the plethora of dishonest gurus and what not on the internet. If you found a good deal that makes the seller and buyer happy, I don't see any problem

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