Am I a fool for quitting wholesaling?

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Am I a fool for quitting wholesaling?

Heather M.
Kannapolis, NC · Member since 2016 · 18 posts · 9 votes

Hi Everyone, so 5 months ago I delved into learning about real estate investing. Professionally I've had a successful career as a fundraiser for 501(c)(3) organizations, but I've always known that I wanted to get involved in holding and/or flipping properties someday (my initial thought was in the distant future when I receive some type of inheritance- being that I have young kids we don't exactly have thousands of dollars laying around to invest these days!) But anyways, I found out about wholesaling 5 months ago and jumped right in, literally making offers on properties the week I discovered that wholesaling existed. I thought it would be a great way to make seed money for my first rental property without having to wait for a large sum of money to fall into my lap (I don't exactly want to be looking forward for family members dying and I want to kick *** and make money on my own!) and I started working with a coach who has been trying to help me build my business from the ground up and work with me through closing my first deal (which still hasn't happened yet but I am only able to work on this 8-10 hours a week so I don't know if that's too abnormal). But here's the thing I've realized in the past 5 months. I hate wholesaling. At least some of the methods I've been using with the person I'm working with. Telling people I have money I don't have, making what I feel are insultingly low offers to people on their homes, telling people I have great deals when I really don't know how great they are or aren't, having my phone ring off the hook with prospective buyers when I'm trying to take care of 2 toddlers all day and managing my other business- I just don't feel like this is the niche for me. I have really felt discouraged about it the past few weeks- I KNOW I want to be an investor and I don't have a ton of money to get started in my first rental (about $6,000-$9000 to put down if I bought in the next few months- it'd take me a while longer to come up with more than that), but I really just am uncomfortable with wholesaling. I've invested a few thousand into my education on the topic, and invested a ton of time over the past 5 months- would it be a really bad decision to stop wholesaling and just try to save up for my first rental? What do you think?

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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
10y

Wholesaling is a poor business plan.

Try selling properties as a real estate agent. You will have many more opportunities to earn money that way.

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  • Bishoy Girgis
    Investor · Burlington, Ontario · Member since 2016 · 58 posts · 13 votes
    10y

    @Heather M. That feeling of selling a product that you may or may not feel 100 percent about i feel comes with a lot of the aspects in REI, I think you deff should not invest big money ie.(thousands of dollars) into anymore learning since you hate it. I think you should not do anything you ever feel uncomfortable with that being said i think its a fine line between difficult and uncomfortable if you know what i mean...Perhaps stick through it to make a bit of money just to get you on the right foot (since you are already into a deal) and then stop after?

    Best of luck finding what works for you

    0Reply
  • Aankit Malhotra
    Neshanic Station, NJ · Member since 2016 · 8 posts · 4 votes
    10y

    In this day and age, you can find all the resources online. If you want to learn and save, i think the best approach is to start saving and getting free help. Post on blogs, read articles, and forums online. I think while researching about future rentals and investments you will learn about wholesaling as well. The concept isn't really hard but it is time consuming. In this business capital is key at times.

    Good luck!

    2Reply
  • Charlie John
    Investor · Twin Cities, MN · Member since 2015 · 130 posts · 111 votes
    10y

    @Heather M. you haven't done a deal yet - no wonder you hate it! :-) when the first one comes and you make a great profit while also helping someone in a situation with their house, the feeling is awesome. Are you really giving up now? Seriously?  You are three feet from gold. 

    7Reply
  • Charlie John
    Investor · Twin Cities, MN · Member since 2015 · 130 posts · 111 votes
    10y

    @Heather M. ... Adding on... This is when you put in more energy now than ever. Ok! 

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    10y

    Wholesaling is a poor business plan.

    Try selling properties as a real estate agent. You will have many more opportunities to earn money that way.

    16Reply
  • Joseph Caracappa
    Investor · Santa Rosa, CA · Member since 2012 · 127 posts · 90 votes
    10y
    Heather Macaulay first off don't be discouraged about anything! You said you don't like wholesaling, not your quitting real estate all together! You are always learning even if it is learning what you don't want to do. Pe patient! This business is built over years, not months! If your long term goal is to buy and hold, then keep saving, keep learning, look for seller financing with lower down payment possibility, try to find private money and look at a fha loan around 3.5% down(that would have to be owner occupied for a little while) etc. I am not saying to quite wholesaling, that you have to figure out for yourself! But I am saying that I am a firm believer that no one should have to do things they hate, life is to short and money is not worth your sanity! Figure out exactly what you want and exactly why you want it, and move for it everyday! You will do great! To your success!
    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    its amazing on BP its pro wholesaling and finally one absolutely out standing individual who actually understands the ethics behind most wholesalers. IE  they could care less that they LIE to people and use underhanded methods to tie up properties..

    Its a stain on the industry frankly. @James Wise

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    8Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    its amazing on BP its pro wholesaling and finally one absolutely out standing individual who actually understands the ethics behind most wholesalers. IE  they could care less that they LIE to people and use underhanded methods to tie up properties..

    Its a stain on the industry frankly. @James Wise

     One could write books on the poor ethics used by wholesalers. Beyond that though, it's just a really poor business plan that Will lead one to failure. The only people making money in the wholesaling industry are those that sell coaching products to those who don't know any better.

    4Reply
  • Phil G.
    Real Estate Broker · MA · Member since 2013 · 361 posts · 297 votes
    10y

    My personal outlook..  Life is too short to spend your time doing something you hate.  Real estate offers lots of different types of opportunities.  If you want to stay involved in real estate, find something that you enjoy.  Personally, I enjoy flipping, so I flip properties when the spirit and a good deal motivates me.  I HATED being a landlord, so I dumped my properties and moved on.  It's OK to decide that real estate investing isn't your cup of tea also.

    2Reply
  • Chris WoodPro Member
    Contractor · Greenwood, IN · Member since 2014 · 200 posts · 33 votes
    10y

    Wholesaling seems to be one of those type of jobs where if done correctly can be very beneficial. However there are plenty of ways to do it unethically. I agree with what you are talking about and had to to switch to a buy and hold investor. I quit wholesaling, but that being said I would be more than happy to sell any property I own to someone else (but i am fine with that being that I own it and give all all the information that I know).  Good luck to you, you will find what you enjoy in real estate and it will click.  This is just part of your learning curve, it will come in handy but maybe just not in this light! Great first steps, now on to what makes you feel more comfortable.

    317-775-8133
    3Reply
  • James Watts
    Investor · Mountain View, CA · Member since 2015 · 85 posts · 27 votes
    10y

    Heather, I heard Danny Johnson interview Tom Kroll today and I got a new respect for Wholesaling. It would be worth an hour of your time. 

    I agree with @Bishoy Girgis. Stick with it until you make some money. Get up and work out tomorrow morning, start reading the first 30 pages of Think and Grow Rich by Napoleon Hill and then go accomplish something concrete and positive for your business.  Snatch victory from this temporary defeat and go on to launch yourself into your next phase of investing, but do it from a place of success.

    You don't realize how close you are to your first deal. If I had to make bets I'd say it'll happen next week. That's the way it works- it's darkest just before the light! 

    4Reply
  • Account Closed
    Everywhere · Member since 2016 · 63 posts · 26 votes
    10y
    James Watts Where did you hear the interview? Was it on the BP podcast? Thanks in advance.
    0Reply
  • James Watts
    Investor · Mountain View, CA · Member since 2015 · 85 posts · 27 votes
    10y

    @Julie DiSparti it was on Danny Johnson's podcast #46. Flipping Junkie

    2Reply
  • Brett Snodgrass
    Investor · Indianapolis, IN · Member since 2014 · 2k+ posts · 601 votes
    10y

    @Heather M.

    Wholesaling can be an effective and durable real estate strategy and can be ethical as well, but that requires a lot of work, ethics, and most likely a real estate license. We bring all of our properties under contract and work with buyers with whom we've developed a mutual trust. No lying needed. A lot of the properties we find are through direct mailing or off of craigslist (though you need to know how to weed through it). I've been at it for years and plan to continue for many more. That said, I tried my hand at flipping early on in my career and quickly realized that it wasn't for me so I stopped doing it and went with a strategy that was more up my alley - wholesaling. So don't feel bad if in the end wholesaling isn't for you. Just don't be quick to give up on REI all together as there might be something that will be the right fit.

    3Reply
  • Mark Freeman
    Real Estate Investor · Clovis, CA · Member since 2014 · 195 posts · 194 votes
    10y

    @Heather M. I hate to see you quit wholesaling with all of your recent success.  Yes, others will pick up the slack and take over your zero deals per every 5 months, but it won't be the same.  Wholesaling probably isn't for most people, including you my friend.  Find another angle/plan and get the ball rolling!

    0Reply
  • Aaron Mazzrillo
    Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
    10y

    Congratulations! You learned the first lesson about being a wholesaler - It isn't for broke ***, uneducated (in the real estate world), non-marketing, unskilled negotiators just starting out. 

    Wholesaling is where you go when you have more leads coming in than you can deal with. So, you start tying them up and pawning them off onto your best buddies you want to see stress out while they go through yet another miserable rehab. 

    I'm in "too expensive" and "so difficult" southern California. I have 29 leads I haven't even called back yet and 42 that I've made offers to, but am still following up on.

    So, you can keep struggling with your pretend wholesaling business or you can do a rehab... or 20 and make some money and then get into wholesaling when you have a marketing budget, negotiation skills, contract knowledge, estimating skills and finally appraisal skills. You put all that to work and maybe someday you too can make a nice living assigning contracts.

    8Reply
  • James DeRoest
    Investor · Century, FL · Member since 2015 · 950 posts · 603 votes
    10y
    Originally posted by @James Wise:
    Originally posted by @Jay Hinrichs:

    its amazing on BP its pro wholesaling and finally one absolutely out standing individual who actually understands the ethics behind most wholesalers. IE  they could care less that they LIE to people and use underhanded methods to tie up properties..

    Its a stain on the industry frankly. @James Wise

     One could write books on the poor ethics used by wholesalers. Beyond that though, it's just a really poor business plan that Will lead one to failure. The only people making money in the wholesaling industry are those that sell coaching products to those who don't know any better.

     It's not just that, but the rewards really are no different from being a realtor.

    I know locally of a successful wholesaler, and a guy who started as a realtor about 4-5 years ago. They both make the same amount of money, but one doesn't have to lie and pretend to be an investor and wander round during the middle of the night putting up bandit boards. 

    So whilst the wholesaler brags about making a 6 figure income, the realtor is quietly sitting there with 6-9 listings at anyone time.

    As for the OP - get your license and be a realtor.

    2Reply
  • Karen O.
    NYC, NY · Member since 2016 · 619 posts · 456 votes
    10y
    Originally posted by @Aaron Mazzrillo:

    Congratulations! You learned the first lesson about being a wholesaler - It isn't for broke ***, uneducated (in the real estate world), non-marketing, unskilled negotiators just starting out. 

    Wholesaling is where you go when you have more leads coming in than you can deal with. So, you start tying them up and pawning them off onto your best buddies you want to see stress out while they go through yet another miserable rehab. 

    I'm in "too expensive" and "so difficult" southern California. I have 29 leads I haven't even called back yet and 42 that I've made offers to, but am still following up on.

    So, you can keep struggling with your pretend wholesaling business or you can do a rehab... or 20 and make some money and then get into wholesaling when you have a marketing budget, negotiation skills, contract knowledge, estimating skills and finally appraisal skills. You put all that to work and maybe someday you too can make a nice living assigning contracts.

    Wow. I thought everyone had to start somewhere. I find myself wondering if you were a broke ***, uneducated, non marketing, unskilled negotiator when you started out. 

    0Reply
  • Edgar U.
    Real Estate Agent · VA · Member since 2008 · 420 posts · 175 votes
    10y

    @Heather M. if it were easy everyone would be doing it. Wholesaling isn't for the faint of heart, but if you keep at it, the deals will start rolling along. My advice is to find something that'll make you want to do it day in and day out.

    2Reply
  • Karen O.
    NYC, NY · Member since 2016 · 619 posts · 456 votes
    10y

    Heather there are lots of ways to invest in RE. Maybe you have to consider alternatives. Are you attending REIA mtgs and getting to know others working in your area?

    I agree with those who say life is too short to do things you don't like. So either you aren't doing it right, where you get satisfaction from helping someone out of a bind, or you haven't found your niche yet. Maybe a different mentor is needed or maybe getting your RE license or getting a job with a RE company should be considerations.  

    Whatever you decide, best of luck.

    1Reply
  • Scot Howat
    Investor · Hoffman Estates, IL · Member since 2014 · 434 posts · 185 votes
    10y

    Quit wholesaling.  You're doing things backwards, most people do (including myself).  Trying to wholesale to become a buy & hold investor is like going to law school to become a doctor. 

    If you want to be a buy and hold investor, then FOCUS ON BUY & HOLD.  You don't have to have a bunch of money to get started (it makes it much easier though). 

    Figure out another way to acquire the property through low and no money down strategies.  Hmmm....that reminds me of a book I've read. 

    Buy the Book on Real Estate Investing with No (and low) Money Down by @Brandon Turner

    @Brandon Turner

    http://get.biggerpockets.com/nomoneydown/

    2Reply
  • Heather M.
    OP
    Kannapolis, NC · Member since 2016 · 18 posts · 9 votes
    10y
    Originally posted by @Charlie John:

    @Heather M. you haven't done a deal yet - no wonder you hate it! :-) when the first one comes and you make a great profit while also helping someone in a situation with their house, the feeling is awesome. Are you really giving up now? Seriously?  You are three feet from gold. 

    Thanks Charlie! I needed that. I decided I will at least follow through with my commitment to closing a deal before throwing in the towel on this niche. Then I'll regroup and decide from there.

    1Reply
  • Heather M.
    OP
    Kannapolis, NC · Member since 2016 · 18 posts · 9 votes
    10y
    Originally posted by @Aaron Mazzrillo:

    Congratulations! You learned the first lesson about being a wholesaler - It isn't for broke ***, uneducated (in the real estate world), non-marketing, unskilled negotiators just starting out. 

    Wholesaling is where you go when you have more leads coming in than you can deal with. So, you start tying them up and pawning them off onto your best buddies you want to see stress out while they go through yet another miserable rehab. 

    I'm in "too expensive" and "so difficult" southern California. I have 29 leads I haven't even called back yet and 42 that I've made offers to, but am still following up on.

    So, you can keep struggling with your pretend wholesaling business or you can do a rehab... or 20 and make some money and then get into wholesaling when you have a marketing budget, negotiation skills, contract knowledge, estimating skills and finally appraisal skills. You put all that to work and maybe someday you too can make a nice living assigning contracts.

    So I totally get what you are saying and it makes a lot of sense. It's that exact lack of education that makes me feel like an unethical jackass doing this- I mean I've "faked it til I made it" in other industries and excelled over time but it feels different when you are dealing with people making major life decisions and who are looking to me as a solution provider. I've gotten a lot of mixed messages, however, on the best way to get educated. I can't tell you how many times I've read how the gurus are trying to screw me, how I need to just dive in and not fall victim to "analysis paralysis," etc. And your suggestion- to start out flipping- isn't that a lot more riskier thing to do while I'm still a "broke *** uneducated" rookie? I actually was born and raised in Southern California myself- moved to NC a year ago and got interested in this when I realized how cheap housing is out here. I've been in a hurry to get started as soon as I can but I realize I might be shooting myself in the foot by getting in over my head.

    0Reply
  • Matthew Maggy
    Rental Property Investor · Richmond, VA · Member since 2015 · 128 posts · 25 votes
    10y

    That sounds terrible. I hate sales and wouldn't want to do it. Here in my market, $12k down plus a couple grand in closing costs will put you in a rental property. My opinion is that if you were to do some part time job for that 8 to 10 hours, or take on more clients in your regular business and save a couple grand more to buy a rental that cash flows well, you'll be able to build the wealth you want, albeit probably much slower.

    Also, one of the head honchos here at Bigger Pockets has a book called "How to Invest in Real Estate with Low and No Money Down" which gives a ton of ideas on what you could do. I think I paid like $30 w/ the Audio Book and physical copy. 

    I haven't read through other responses, so if I'm repeating something that's already been said, I'm sorry.

    1Reply
  • Joe Baker
    Asheboro, NC · Member since 2016 · 31 posts · 16 votes
    10y

    Do what you like to do. If your heart isn't in it you are not going to be happy

    2Reply
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