In the Weeds - My first wholesale deal.

27 Replies

My First Wolesale Journey...Wow was it different (more) than anything I had read or heard! Here's what I did soup to nuts!

1. November 2014. Opened a mail box for my business and designed business cards and bright yellow “We Buy Houses” cards.

2. Researched areas. (probably could have done a better job at this but I settled on my little home town and the town next door in CT).

3. Created an account with ListSource and figured out parameters for my mailing list. Decided on Absentee Owners, 2-5 bedrooms, 60-100% equity. This gave me 376 addresses - I told you small towns.

4. Ordered my list from ListSource. (It came as an Excel Doc)

5. Designed a postcard because I was feeling poor and they’re so much cheaper to print and mail. Basically my “We Buy Houses” business cards plus some empathetic copy on back.

6.Uploaded my postcard front and back and my mailing list to Vistaprint. They printed and mailed the piece. Make sure you add your name to your mailing list so that you receive one! Total cost of mailing including buying list – 68¢ a piece. (interesting - this is exactly double what the postage costs for a postcard). You could address and stamp yourself by hand but Vistaprint printed, addressed and mailed it for 15¢ each - in my mind a no brainer.

7. Nothing I could do now but wait for calls!

8. Four days later I received my postcard in the mail. It was horrible! I am a graphic designer by trade so I am picky but by any standards, my postcard was terribly smudged. Looked like printer's rollers were dirty. NO CALLS

9. After Thanksgiving, I picked up the “Undeliverables” from my business mail box – all smudged! I called Vistaprint. They were amazing! Without hesitation, they offered to re-print and re-mail my job.

10. Four days later I received a clean, well printed postcard. Again I waited.

11. A week later at 10 at night I’m at a restaurant with friends and I see my phone light up. I run to the restroom, answer. My first call! The woman says she has a condo and is fed up. She needs it gone. I get the address and tell her I’ll call her tomorrow. I'd like to point out that this was my ONLY CALL OUT OF BOTH MAILINGS!

12. I run home and research all I can on the place – condo in affluent neighborhood, 2 bdr., 2,400 sq ft. biggest unit in complex. Ran comps through Zillow and called a realtor friend who said units have to be very high end or they don't sell. I call the woman back and leave a message that I’d like to see the condo. No reply. I wait until after the holidays.

13. In the mean time I call a friend who is a newbie and wants to flip. He’s excited about the possibility if I can get this woman to set up a meeting.

14. Early January I finally get a text from her that she and her sisters would like to show us the unit. We went in as a "Rehab Team" even though I was technically wholesaling it to him. There were 4 sisters and they had been through the ringer on this place. Mom fell ill moved out, they rented the unit. A month later a pipe bursts and floods the place. Outside wall pipe so HOA's responsible. HOA sits on it for 8 months before doing work leaving sisters with a unit they can't rent. They refuse to pay HOA fees until it's fixed. HOA starts foreclosure proceedings. They need to hire a lawyer to help them out of the mess. They just want OUT. My rehab friend hears the HOA fees are $605 a month and decides he's out. Too much for his first time out.

15. I go home and spin numbers and text the sisters that I’d like to discuss price – NO ANSWER! I text once a week – NOTHING. Then once every few weeks - NOTHING.

16. April 2015 I get a text "What can you offer us on the condo?" I had calculated ARV conservatively at $310K. The place is in good condition but all low end. Kitchen and baths are guts and it needs hardwood throughout. Even high end units are sitting for 90 days. I email her and break down my costs to justify my low offer. I choose to be completely transparent. I show them everything. Rehab breakdown, holding costs, profit. I offer $175K and hold my breath. 2 weeks later I get an email "Can you do better?" I offer $180K and tell them I can't go higher. I stuck to my guns because I was more afraid of being one of those wholesalers that gets a deal that rehabbers don't think is really a deal than I was of them turning me down! They accept – CRAP! NOW WHAT DO I DO??? I start to panic that my generic purchase and sale agreement isn't going to cover me so I call an "investor friendly" attorney I met through the REIA. He says he can draw up an agreement in a day. I send him my needs and my concerns and 3 days later he still hasn't come through. Now the sisters are getting anxious. I'm going to lose this deal before I even get it! Upon probing he admits he's never worked with a wholesaler before. Finally he faxes me the contract which is 8 pages long - 8 PAGES! It's 4:30 and I've promised it to them by 5 pm. No choice but to send it!

17. A week later they agree but don’t want the assignment clause (which I need, after all I'm a stinking wholesaler!) and a 10% down payment - I can’t come up with $16,000! I finally get a sister on the phone and explain it is to her benefit to have the assignment clause because it allows me the freedom to find someone else to close if my guy is tied up on another house (remember, my friend and I originally present ourselves as rehabbers so she doesn't know I'm a wholesaler). She sees the logic and agrees to the assignment clause and also agrees to $2,000 down which is all I have in my bank account.

18. It's important to point out that during all this craziness, they have been trying to track down the HOA docs which I have to read before signing. Finally I do my own research and get them myself. No clauses about "No Flipping" and all non-owner occupant clauses are about "Renting" so I'm in the clear.

19. I HAVE A DEAL UNDER CONTRACT, NOW WHAT??! Luckily, I have been attending 2 different BP meet-ups monthly and have been telling people all about this deal. One BP member has been very generous not only with advice but with his time. He made me an analyzer that I LOVE. I tell him about the deal and we go over the numbers. He says it's a better deal than I thought. New comps show ARV at $340K and that I should be selling the contract for more than I was thinking. He said he'd buy it for $15,000 leaving him plenty of profit.

20. We tour the unit twice and he gets me an assignment contract from another wholesaler and we’re now under contract! Time to celebrate right? WRONG!

21. HOA's HAVE ALL THE POWER! You've heard it on the podcasts and in the blogs and it's true. HOA's can really suck! It is the seller's responsibility to supply the buyer with the HOA's resale documents and in the state of CT, HOA's have the right of first refusal. These documents can cost upwards of $500. I wasn't going to burden these sellers with this since they're already burned out, so I did the research through the management company myself. I asked the managing agent what else we needed to close. Luckily this complex didn't need the right of first refusal so we were all set. I bought the resale docs and forwarded them to the buyer. Done right? Ahhh, it's never that easy!

22. The night before closing, I get a call from the buyer saying that the HOA won't sell to us because we're not owner occupant. But I say the the bylaws stated not allowed to "RENT" more than 20% of units and the management co said we were fine. NOPE. In 1990 there was an addendum that stated "No owner occupants over 20%" Closing is put off and we wait – the whole deal hangs on the HOA's decision to let this go through. I contact one of the sisters and ask if she has any pull with the HOA given what they put her through (erroneously starting foreclosure proceedings, not doing work etc.) – 4 days later the HOA approves!

23. AUGUST 3RD 2015 WE CLOSE! It’s also interesting to point out that as a wholesaler you are by definition an outsider. The buyers attorney doesn’t want anything to do with you. Everyone in their office doesn't understand why I'm not a realtor. Many attorneys have no idea what a wholesaler is so getting info on anything from either side for me was pulling teeth. After the walk through on the day of the closing, I still didn’t know when and where the closing was taking place. Come to find out with four sellers the sellers attorney ended up getting signitures over the last week and sent everything to the buyers attorney so there really wastn't a physical closing. I figured out that it’s the buyers attorney who pays me so I called them. It took the paralegal a while to figure out who I was until she found the assignment contract. Closing was 3 days ago and I am due to receive my check today. No check. I called the buyers paralegal and she says she "Spaced" and sent it regular mail instead of overnighting it like I had asked. With any luck, I'll receive it today.

My first mailing went out November 16, 2014 and we closed August 3, 2015! I could have had a baby in the same amount of time! That said, I figure I put in about 30 active hours into the process. $500 an hour is better than I have ever made in my day job and I learned more than any book could ever teach.

Whoever said “Fake it until you make it.” was brilliant and right! I realized that I wasn’t really faking it, I was pulling from many things I do in other parts of my life. It’s really just creative problem solving on an intense level. If you’re starting out, just get out there and do it! To quote Brandon “Don’t just learn, TAKE ACTION!”

Good luck to all. I hope my journey helps!

I guess you already know this, but you could have simplified the process slightly if you had not lied to the sellers and told them you were going to rehab.  There is really no need to do that, and if they know what you are doing, they are much less likely to get worried at various points.

Great job! It takes a lot of determination to chase a deal for that long but you did it and got the fat payoff! 

Awesome note @Kim Handelman . Definitely inspiring me to jump into my first wholesale. Or at least get started. 

Great job!  You got out there and did your first deal, used the resources at your disposal and got it done. Thanks for the inspiration,  as a newbee, I still haven't done my first deal. This gives me hope though. 

Congratulations @Kim Handelman that is awesome that you persevered and made it happen. Have you sent out any more mailings since those first two?? Gotta get that next deal going.... Let me know if you come across anything in the Lower Fairfield County area, I would be more than happy to help with comps and rehab numbers. Congrats and good luck for the next one!!

Daniel Raposo, Real Estate Agent in Connecticut (#0783769)

Thank you @Kim Handelman! Lots of valuable info for a newb like me and entertaining to read :)

@Richard C. I didn't lie to them. I went in with my a collegue who was rehabbing. We had intended to do the deal together and learn together. I did the marketing and found the deal and he was going to buy it and rehab it with both of us learning along the way. He got spooked by the $650 a month HOA fee and chose o buy a condo much cheaper in SC. Since they chose texting as their comfortable form of communication it was a bit difficult to text an explanation. I did however finally have a great conversation with one of the sisters who understood the idea of assigning. Her attorney had told her that assignments could delay closing weeks or even months. I explained that my partner was rehabbing in SC and that the assignment clause gave me the best chance of getting someone to the table quickly. She just wanted out so she allowed the clause to stay in.

@Daniel Raposo I have not done another mailing. I don't believe my area is optimal for wholesaling and I really want to get into buy and hold. I started an internship in march that didn't work out so that took my eye off the ball. Now I'm gearing up to do some more mailings in a new town. I'm going to target LLC's so that I can find multi-families to buy and hold and use wholesaling as a back-up if the deal is not right for me. We'll see how it goes!

Awesome story! The next one should be a piece of cake!

Great job Kim!! 

You were so detailed in your original post.  Thank you for that!  I've got to say though that you had an extraordinarily difficult 1st deal and not all wholesale deals with be like that.

And I recommend that you try "Click2Mail" instead of Vista Print.  If you use "Click2Mail" and you use their postcard with your copy on it, then you will save money.  A typical postcard will cost about .47 each.  No fancy photos, glossy, etc...just a plain black ink on white or green card stock....they may have yellow too??

Meanwhile, by putting the "assignment" clause in your contract, that covered you.  That attorney friend was a good move for you.  My attorney makes me use something like that too....and in my state of Texas, all contracts are assignable.

Since you only mailed out postcards twice and the first batch was ruined but you rec'd a deal out of the second batch of 376, then you are doing great.  My mail outs are in the 1000 - 1500 range each time and if I'm lucky I'll get 1 - 2% calls.  And then out of that 2 - 3 deals.  So if I were you, I'd keep on doing what you are doing with a few changes to your original plan.

Great post.  

What an awesome story, Kim!  Thank you for sharing it!  It takes a lot of perseverance to make it in this field, and you seem to have that in spades!  Congrats! 

Congratulations, @Kim Handelman ! What a great story about perseverance, plus it also takes some guts to share the ugly details like you did. And I've got to imagine your next deal is going to go a lot smoother!

Great job @Kim Handelman...I LOVED reading about your journey! Real Estate can be a wild roller coaster ride! You did AMAZING! And I agree with what you said at the end..."Don't Just Learn...Take Action!" This is truly the ONLY way to do it! All the books, blogs, and podcasts could have never prepared you for this experience. YOU GO GIRL!!

When I became a Real Estate Agent in Manhattan my boss said to me that I will only succeed if I know how to "think outside the box." That couldn't have been MORE TRUE!! You have to be creative, you have to be determined, and you can NEVER GIVE UP!! If you want it bad enough...YOU'LL MAKE IT HAPPEN!! I'm proud of you and I wish you the best of luck on your next real estate adventure!

Thanks for sharing Kim.

Very informative, good luck on more deals!

This is a great post it both motivates me to get into the wholesaling game and shows me the sheer amount of work it is going to be. I love it though! great job!

Great job @Kim Handelman . I'm just getting started in the wholesaling area myself and its cool to see your story unfold. Now that you're planning to do buy and holds, how are you planning to pay for the houses? Are you using private money? Portfolio lender? I've hit my max for regular bank lending so I'm trying to get "creative" with my financing.

@Kim Handelman Great job and way to tell your story...and yes most deals take on avg. 3 months or even longer for some... so it's always good to have deals in your pipeline and you will soon get there!

Sometimes you may get lucky...and get a 2fer or a 3fer as I like to call them. That's when they not only want to sell you the house you are wanting to buy from your postcard or mailer, however they may have another 1 or 2 houses they want to sell as well that you didn't even know about!

Congratulations again!

Celebrate...and on to the next deal!


Thanks to all of you for your encouragement and tips. On to the next!

@Stacie Meeker thanks for sharing your call rate and info on Click2mail. Does Click2mail also give you your lists? that 68¢ price included my list from ListSource. 

@Kweku Ako-adjei My big hurdle in buy and hold is the down payment and rehab money. This deal will help but I'll need more. I'm hoping to wholesale a few more and also find a partner.

Good luck @Kim Handelman . Make sure you post your next deal. Love reading more detailed info on how people go about getting and completing their deals.

congrats! the first one is the hardest.

i remind myself that if i dont make offers noone else will make them for me.

Very inspiring you had a vision and went after it , and it "eventually" paid off. Thanks for sharing it gives me motivation to start my first deal. I'm so glad I found BP it's so inspiring and educational for a newbie. Keep up the hard work and I hope everything goes well for you!

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