Top 3 Newbie Wholesaling FAQs—Answered!

Top 3 Newbie Wholesaling FAQs—Answered!

4 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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Does wholesaling make you feel stupid at times? If you answered yes to this question, you’re not alone.

Many people are confused and feel lost when it comes to beginning a career as a wholesaler. The purpose of this writing is not to delve into the intricacies of wholesaling—because I (and many others) have done this already. Instead, I will answer the three questions I’m asked most often.

Wholesaling Frequently Asked Questions

1. What is the best way to get started?

FYI: You’ve started already, but most people stop without taking consistent action. Yes, by reading this article, you’ve shown interest in wholesaling, and that is the first step.

But stop believing everything will happen overnight. You have to start with education.

Education is essential to becoming a successful wholesaler—like it is to becoming many things. And I am not talking about the quick crash course to $5,000 in 30 days.

I’m referring to the education you need about your specific market, trends, and marketing. There are many times I see people buy a course or read a book and try to get started, but they know nothing about their market. These courses try to incorporate a one-size-fits-all approach, but the fact is every market is different.

newbie wholesale deals

2. What should I educate myself about first?

Your Market

What areas are in high demand? Do you know the average days on market?

What is the estimated rehab cost per square foot? What are the buying criteria for a certain area?

What are investors in the area looking for—to buy fix and flips, rentals, single family units, or multifamily units?

Educating yourself and being able to answer these questions is step one in truly being able to get started. So, if you’re trying to find deals and you cannot answer these questions, you’re going to have a problem.

It’s OK to be a newbie, but it’s not OK to not have done your homework.

Related: A 60-Day Action Guide to Wholesaling Your First Property

Motivated Sellers

First, do you know what a motivated seller is? Honestly, this sounds like a very stupid question, but I have to inform newbies repeatedly that all sellers who respond to a marketing piece are not motivated.

For example, if the seller is fixing the property up and they say they will be ready to sell when they are done, this is not a motivated seller.

In addition, a seller looking to sell $5,000 below market is not motivated. This isn’t meant to sound condescending; I’m just trying to prevent you from learning the hard way.

Identifying motivation is an art; it’s like digging for gold. Not every stone you see will be a gem, but by continuing to dig, you will encounter that rare find.

So, what if you feel uncomfortable asking the seller how much they owe on their mortgage? The art is asking open-ended questions without being intrusive.

Perfecting this technique is done through repetition. If you need to make mock calls with a friend, partner, or spouse, then do that!

The key to finding motivated sellers is for you to identify the problem and have them acknowledge it.

Some sellers will clearly have a problem but are not willing to admit it. These people may need some coercing before they are ready to be forthcoming.

Marketing

There are many forms of marketing. You will need to be specific about who you will target and how you will target them. I will not go into depth here because marketing is a blog post in itself. However, I will inform you that whichever method you use, consistency is the key.

The number of times you reach out to a seller must be a minimum of six touches. Others may suggest more, but six should be the minimum.

Here are some potential marketing tools:

  • Online: YouTube videos, targeted social media ads, web page, blogs
  • Offline: Direct mail, TV ads, radio ads, newspaper ads, door knocking, cold calling, bandit signs

Once you’ve identified your marketing strategy, you will need to identify your target population. This will be a direct result of knowing your market, like I spoke about above.

You will flat out waste money if you do not identify these metrics before starting. Marketing will be expensive, and I’m sure in the beginning most newbies don’t have extra money to waste by doing things incorrectly.

home appraisal

Related: 5 Ways to Lose Your Wholesale Deal (After Signing the Contract)

3. What resources do I need?

This is a very valid question. Besides money, the most important resource will be cooperative relationships that help you progress. You will look completely incompetent if you’re trying to do a deal and you don’t have these resources and relations at least initiated.

Here are just a few people to work toward incorporating into your circle: real estate agent, buyers, title agent, attorney, and wholesalers. Also, work on your conversational skills and have a positive attitude.

You will not know everything, and each deal can present different challenges. Having solid resources and relationships will help you a lot.

I’ve needed attorneys on some deals, and I’ve needed title agents on all deals. Real estate agents are very useful, as well as other wholesalers to bounce questions off of.

I am very appreciative of my resources and relationships and work very hard not to damage or neglect them.

I want you to be brutally honest with yourself. Does wholesaling make you feel stupid at times?

I can truly say yes. Even though I’ve been doing this for numerous years, I still find myself dumbfounded by some of the deals I’m working on.

[Editor’s Note: We are republishing this article to help out our newer readers.]

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If you’re a seasoned investor or a newbie and wholesaling, have you felt stupid at one point?

Please share.