Did a $38K wholesale deal!!!
Woo hoo! Well, have been busy and haven't had time to share this great success story, but back in May I was able to flip a wholesale deal to a Hedge Fund and netted $38K! I wanted to share in hopes it will keep people motivated, as I know I was starting to get a little discouraged and questioning if I was going to have success in all this. I just started last Oct and prior to this deal, had a $5K wholesale deal last Nov (a property I actually planned to rehab/flip but just got too close to my budget). I honestly don't want to wholesale, but it's a great way to make some cash flow. I am really interested in creative deals, but I'm still learning how to generate those and it definitely hasn't been easy as a newbie. Anyway, here's some of the things I learned from the big wholesale deal:
- yellow letters work! I had probably sent 1000+ before I finally got this. Was getting tired of writing them. It's all about the #s...it's a timing thing that we have to understand and I just need to keep my butt in gear to resend letters to the same people over again...I still have yet to do that! And btw, my letters are extremely simple and I just get lists online. Now I pay someone $.50/letter to write them and that is sooooo much better!
- having a mentor is key! When I first started going to REIA meetings, I did as much networking as possible and was able to find a great guy w/ mounds of experience to "mentor" me. He's busy, so it's not the easiest but being able to bounce things off him was a huge plus. And I know if you don't have a mentor per se, that this website is an EXCELLENT resource w/ hundreds or thousands of knowledgeable and helpful people that can serve as your mentor! For me, the hardest thing was trying to do comps. I was a realtor before but not in this area and really didn't know the area too well, so it was a challenge. I still find that to be one of the hardest and most time consuming things - tax records and zillow are not enough to get good comps and you really need access to the mls or an agent that will help you out and even then, comping SFHs takes time.
- Network! Once under contract I decided to pitch it at a REIA meeting I attend regularly. I remember 2-3 weeks prior, my good buddy that I've known for a long time and who started doing this right before me, said he has never found a buyer from a REIA meeting (other than one guy we know that knows a lot of cash buyers). So, I almost didn't even pitch it! Well, crazy enough that night a realtor that I had met before but didn't know too well came to the meeting. This is a great meeting where everyone pitches properties, says needs/wants, etc and there are 40 or more people there a week. Anyway, she said she had a hedge fund that was looking for nice homes and longer story short, they ended up writing an offer 2 days later. Unfortunately, the hedge funds have mostly pulled out of this area in the last few weeks but it was a good time to wholesale since they were paying close to retail and w/ cash.
- Use your properties (and letters I must add) to find cash buyers! I have found since that big deal that having a list of motivated cash buyers is a great way to generate cash flow. When you have a property, you'll get calls from many cash buyers - talk to them about future deals and get their email! And for letters, my lists don't discriminate on when someone bought a house (and they are sent to people w/ 80%+ equity) so many of the calls I get back are from people that just bought and with all cash. Well, switch the conversation after you learn that and get your list of cash buyers going! When you network w/ wholesalers and learn of their deals, you'll be able to co-wholesale w/ them or just assign to a cash buyer and make $2-5K and it won't take any work...you probably won't ever even see the place! Just be careful and know what your doing to do it legally. Again, having a great mentor has helped in that area so I don't do anything that could get me in trouble.
I hope this is helpful and not too long. I'm not someone that likes to talk about myself but I do hope that this will help inspire some people. I got lucky but I guess when you stay w/ it and keep sending out those letters or do other types of marketing, then it's not all luck :) It will eventually happen and this is proof! I'll add that I am by noooooo means an expert and there are thousands on here that know much more than I do, but if you have any questions or need inspiration, don't hesitate to hit me up!
Josh