Starting in wholesale the right choice ?

Question

Hello Bigger Pockets members, I’m Jose from the Milwaukee area in Wisconsin. I’m 17, and hungry to get started in real estate. I recently began to listen to the bigger pockets podcasts after gaining interest in wanting to start real estate. I want to start in wholesale because it’s the cheapest way, from what I know, and I’ve already began to look at homes in my area. Is this the best first step to take going into real estate? Also any good books anyone can refer me to, to gain knowledge in wholesale real estate?

John Franczyk · Answer

We are in a tough market for finding deals right now. If you can find deals as a wholesaler, you shouldn't have too many problems finding buyers. The key to your success will be to develop a strategy that finds you the deals. If you go with direct mail to potential sellers that haven't yet listed property, you'll incur marketing expenses for letters and postage, as well as your time to coordinate everything. Unless you develop a magic formula for your letters, you'll likely have a low response rate - maybe 5%. That can be discouraging, but if you stick with it you'll build that rate up.

Bandit signs will put you in competition with other wholesalers that put up lots and lots of bandit signs in their target neighborhoods. You'll also need to watch your back in neighborhoods that aren't too fond of bandit signs on public parkways. You won't want the local authorities fining you for putting up signs where they aren't supposed to be.

There are other deal-finding strategies, including just walking around neighborhoods and picking out houses that are less well-maintained than neighboring properties.

Ultimately the key to your success as a wholesaler is to develop a business model that works for you, and then sticking to that model and revising it to fine tune your strategy as you learn more.

Consider joining the Milwaukee Real Estate Investor Association (Google it) for networking opportunities with other wholesalers.

I wish you the best of success.