The Big Mistake I Used to Make When Qualifying Wholesaling Leads

The Big Mistake I Used to Make When Qualifying Wholesaling Leads

3 min read
Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. Marcus has been named the “Equity King” for his impressive ability to find real estate opportunities with massive amounts of equity.

Experience
Marcus, a high school dropout, went from G.E.D. to M.B.A. Although his education has a major impact on his investment philosophy, the real impact came from his upbringing.

Marcus thrives on completing successful transactions. As a young kid, his parents and grandparents faced many challenges; as a result, it made him think of ways he could help. His mother and grandmother were avid investors—not in the market but in people. Marcus was a recipient of those investments. And his early years were hard work growing up on a farm.

Marcus was a strategist at an early age. To relieve the burden of his family buying him clothes when it was time to return to school, he decided to make a small investment that paid big dividends. Marcus decided to purchase a small piglet at the beginning of summer, feed it until it became fat, and then sell it to a local farmers’ auction before the school year started. This was one of his first transactions and the beginning of his adventure of finding equity in every opportunity.

Marcus’ hard work continues today: 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. Although wholesaling provides great money, he saw the opportunity to buy some of the deals he found and convert them into cash flowing rentals.

Marcus currently holds seven rentals, two of which are commercial units. He’s also done the unimaginable and purchased a school, which was converted to a daycare center. Again, he turns 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 on numerous podcasts, such as the Louisville Gal Podcast, the Best Real Estate Investing Advice Ever podcast, FlippingJunkie, and many others. He’s currently a featured blogger for BiggerPockets, the largest community of real estate investors in the world.

Along with completing transactions and working to build his portfolio, he provides mentorship to aspiring investors. This is done through one-on-one interactions and through his successful YouTube channel and blog.

Marcus does utilize his M.B.A. for more than real estate. As a consultant for a successful non-profit institution south of Chicago, he uses his expertise in the development of human capital. His philanthropic efforts help existing stakeholders develop in their capacity to serve those in need of assistance.

Education
Marcus completed his M.B.A. in 2011 from Olivet Nazarene University.

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How should you qualify a quality wholesaling lead?

This question can be so elusive to answer. I hear many different responses when this question is asked. Most of all, I hear you never know when a lead is a quality lead until you start vetting the deal.

I beg to differ because when wholesaling, the majority of the time it’s not necessarily about vetting the deal, but about vetting the seller.

So let’s briefly discuss what a quality lead is and how to qualify a lead.

What is a Quality Lead?

I can give you a very basic definition: A quality lead is a lead that has potential when worked to be productive and increase your bottom line.

We all should know that every lead is not a quality lead, but some find it difficult to distinguish between the two. So using the basic definition above, how do we clearly qualify a lead?

wholesaling-newbie

Related: The Hard Question Newbie Wholesalers Should Be Asking Before Jumping In

How Not to Qualify a Lead

If you’re not exactly sure how to qualify a lead, this is a good problem. This means you have leads coming in. In this market cycle, it is not as easy as some make it seem. So if you’re facing this problem, congratulations.

Every lead is valuable initially. Again, in this market it can be challenging to get leads. When you do receive a lead, you have to know how to cultivate it.

If you’re receiving inbound calls, making outbound calls, or door knocking, you have to be objective when cultivating a lead. An issue that I’ve had in the past was overlooking leads. I would disqualify some leads if they would say things like, “If you can’t give me retail price, don’t waste my time.”

I learned from that mistake after seeing a property sell for less that what I offered.

After kicking myself, I called the seller and asked why. They told me that the investor they sold to happened to call when they hit a rough patch and needed to sell immediately. Because I disqualified the lead, I lost thousands, but learned a very valuable lesson. I learned no matter what is said, I have to be consistent and persistent to be successful.

When speaking to sellers, you can’t always take what they say at face value. If you disqualify a lead based on a single conversation, you could be losing a lot of money. So I changed my approach.



Related: 5 Costly Pitfalls That Catch Wholesaling Newbies Off Guard

How I Qualify Leads Now

I make sure I set aside quality time for each lead. I clearly document the conversation with the seller and speak with them multiple times to validate what was said in the prior conversation. Sellers can overlook details sometimes intentionally because they are guarded. Knowing this, I do not rush the conversations. I aim to get as warm and fuzzy as possible to diffuse the tension of the seller/buyer scenario.

Without getting into details, I ask a lot of leading questions. At the end of the conversation, I reiterate what we discussed and quickly review their answers with them. I then schedule an appointment to view the property and further the conversation in person.

During the in-person walk through, I review what I believe I can do for them and what they can expect. I’m a strong believer that no lead should be left unresolved. You must get a firm no or yes before killing the lead or closing the lead. In most cases, we still follow up with the sellers even when we receive a firm no. Remember, things change over time.

Finally, please remember leads are too expensive to go uncultivated. Use an open-ended approach when qualifying any lead. Each seller you speak with has a different story, and that story may evolve.

Don’t do what I did and disqualify a lead because you don’t know the right questions to ask.

Curious what specific questions I ask? What’s on your list of conversation points?

Comment below and we can chat!