Vienna, VA · Member since 2016 · 10 posts · 2 votes
hey guys, i've been reading on these forums for over a year but never really posted. I figure its time to come out of the shadow. In parallel I've been learning about the general REI strategies out there.
I have two rentals that i bought a few years ago but knowing what I know now, i prob wouldn't have bought them due to using traditional buying methods. They cash flow so I'm just going to leave them be as of now.
I was dead set on marketing for deals for wholesale flips by reassigning. I have purchased and read various training programs (sean terry being one of them) and realized they are all spouting the same strategies with their own flare so i figure I'm ready to go.. Recently I have had some what of a paradigm shift after talking to a local investor. They jive with some things i've thought about also.
I couldn't help but notice majority of the people looking into wholesaling come from a lower income pool of population, and all have aspirations to "work up to" rehabs. I understand we all have different backgrounds and situations, but i had an investor suggest I should just focus on buying wholesale deals and doing rehabs because A. i have a bit of capital that can be combined with a hard lender, and B. I have a day job that pays some what more than most people and wont have time chatting with hundreds of sellers.
Without actually have done it, its hard to assess whether I can handle call volume while focusing on my day job. Does Sean Terry downplay the work load when he says something like "just do it when you're off work and on weekends"?
Perhaps touchy subject? I hope we can look past that, and we can share experiences that put us all in the right direction.
"I couldn't help but notice majority of the people looking into wholesaling come from a lower income pool of population..."
Not a good way to introduce yourself to BP, @Silas Lee. Not only is that an unflattering generalization that you couldn't possibly support with any facts (how many wholesalers' income do you personally have knowledge of?), but it's just not true. Lots of people earn plenty of money and spend plenty of money and therefore have little to invest. Others from the "lower income pool" spend wisely and have lots of money to invest. Either can choose to wholesale. Then there are the established, master wholesalers who do business in such volume that they have no desire to take on the responsibility of managing rehabs. Wholesaling is something that many people do because they choose to do it, not because they can't afford to do anything else.
Wholesaling is a great way to learn the business. Everything in real estate begins with a deal. Wholesalers (the good ones) spend all day, every day finding and/or creating those deals. To be a successful wholesaler, you must be able to analyze deals, negotiate, be a great marketer, be a problem solver, be a great communicator (listener), and so much more. You have to be good at a lot of different things to be a good wholesaler. Plenty of people take on the challenge of wholesaling so that they can learn those skills and carry them forward to other investing methods and still continue to wholesale. Wanting to learn the business from the ground up has nothing to do with someone's income level. There are a lot of really high earners on Bigger Pockets, as well as in DC, MD, and Northern VA, so don't beat your chest too hard about your day job that "pays somewhat more than most people." You're sending the wrong tone. I'm telling you this because I'd like to see you have success on BP and that kind of condescension, particularly given that it's misguided, will turn off people whose advice you seek.
Wholesaling is hard, Silas. The only people who tell you it isn't are the ones selling courses/mentoring. There are plenty of links on BP that give the truth about the challenge that wholesaling is. If you choose to be a wholesaler, dealing with hundreds of sellers is not something you're going to have to worry about. Assuming you target a specific market (one, two, three zip codes or neighborhoods, for example), and define some buying criteria (property type, condition, square footage, etc), there will not be enough people for you to market to to generate a crazy call volume. You could market to two dozen zip codes to generate a large call volume, but that means you are not an expert in those zip codes, which is what you have to be as a wholesaler or as a rehabber. Or you could hang bandit signs all over the place. Those generate a high volume of calls, but they're not legal in many places AND the majority of those calls are a waste of time.
Regardless of what marketing methods you choose, as a new wholesaler, you'll be dealing with too few calls, not too many. And you could always use a call service to take the calls and only send you the hot leads, meaning a motivated seller with equity. So call volume won't be an issue, one way or the other.
Wholesaling is something that you really have to want to do because it. is. a. grind. And it does cost money. It's not a good way for most people to start in real estate because you can end up giving up on real estate because wholesaling didn't work out for you. And it's definitely not an after work and on weekends deal. No seller who calls you is calling only you. They're getting marketed to by a dozen other investors and if they call you and have to leave a message and they call me and I answer the phone, who gets that deal?
I'd say if you don't actually "want" to be a wholesaler, don't do it. Learn how to evaluate deals like a wholesaler (70% rule, etc) so you know what a true deal looks like and then build your team / process for rehabbing. You would then only be taking calls from your agent and any wholesalers you work with. Still gotta manage those rehabs, though. They will require your time and attention.
Hey Silas Lee it's great to have you on BP.
I think with any prospecting, it is a full time job. That doesn't mean you can't do it with a gull time job, but how can you leverage your capital against your time to do the deals you want to do? Perhaps you hire a prospector, or a real estate agent to help send you deals.
Most of the investors we work with at my firm have full-time jobs so it is definitely manageable. It just depends on what you want to do with your time.
Welcome to BP @Silas Lee. If you have a well paying day job, then I think your goal should be how to deploy your capital to get a return. (Flipping, buy and hold). Wholesalers are trying to make a living from doing that and to build capital to actually invest themselves at some point.
Welcome! Glad you're here. There are lots of ways to learn more and get involved in the local real estate investor community in NOVA. Bigger Pockets is great. I'd also recommend joining a local group or two... I'm a member of Capital REI, which is run by @Roger Lin, @Justin Pierce, and @John Rubino. This is a great group that meets in Fairfax City each month. Nice group with lots of good people in it. I can provide more details if you're curious. You can
Also, I'd be happy to point you in the right direction for things to think about and consider as you make a decision regarding your next steps.
Please check out my profile and reach out if you think I might be able to help you. I have lots of clients in the same boat- just getting started and trying to make the best possible choices as they move forward. It's great that you're reaching out for advice. That's a VERY smart first step. :)
"I couldn't help but notice majority of the people looking into wholesaling come from a lower income pool of population..."
Not a good way to introduce yourself to BP, @Silas Lee. Not only is that an unflattering generalization that you couldn't possibly support with any facts (how many wholesalers' income do you personally have knowledge of?), but it's just not true. Lots of people earn plenty of money and spend plenty of money and therefore have little to invest. Others from the "lower income pool" spend wisely and have lots of money to invest. Either can choose to wholesale. Then there are the established, master wholesalers who do business in such volume that they have no desire to take on the responsibility of managing rehabs. Wholesaling is something that many people do because they choose to do it, not because they can't afford to do anything else.
Wholesaling is a great way to learn the business. Everything in real estate begins with a deal. Wholesalers (the good ones) spend all day, every day finding and/or creating those deals. To be a successful wholesaler, you must be able to analyze deals, negotiate, be a great marketer, be a problem solver, be a great communicator (listener), and so much more. You have to be good at a lot of different things to be a good wholesaler. Plenty of people take on the challenge of wholesaling so that they can learn those skills and carry them forward to other investing methods and still continue to wholesale. Wanting to learn the business from the ground up has nothing to do with someone's income level. There are a lot of really high earners on Bigger Pockets, as well as in DC, MD, and Northern VA, so don't beat your chest too hard about your day job that "pays somewhat more than most people." You're sending the wrong tone. I'm telling you this because I'd like to see you have success on BP and that kind of condescension, particularly given that it's misguided, will turn off people whose advice you seek.
Wholesaling is hard, Silas. The only people who tell you it isn't are the ones selling courses/mentoring. There are plenty of links on BP that give the truth about the challenge that wholesaling is. If you choose to be a wholesaler, dealing with hundreds of sellers is not something you're going to have to worry about. Assuming you target a specific market (one, two, three zip codes or neighborhoods, for example), and define some buying criteria (property type, condition, square footage, etc), there will not be enough people for you to market to to generate a crazy call volume. You could market to two dozen zip codes to generate a large call volume, but that means you are not an expert in those zip codes, which is what you have to be as a wholesaler or as a rehabber. Or you could hang bandit signs all over the place. Those generate a high volume of calls, but they're not legal in many places AND the majority of those calls are a waste of time.
Regardless of what marketing methods you choose, as a new wholesaler, you'll be dealing with too few calls, not too many. And you could always use a call service to take the calls and only send you the hot leads, meaning a motivated seller with equity. So call volume won't be an issue, one way or the other.
Wholesaling is something that you really have to want to do because it. is. a. grind. And it does cost money. It's not a good way for most people to start in real estate because you can end up giving up on real estate because wholesaling didn't work out for you. And it's definitely not an after work and on weekends deal. No seller who calls you is calling only you. They're getting marketed to by a dozen other investors and if they call you and have to leave a message and they call me and I answer the phone, who gets that deal?
I'd say if you don't actually "want" to be a wholesaler, don't do it. Learn how to evaluate deals like a wholesaler (70% rule, etc) so you know what a true deal looks like and then build your team / process for rehabbing. You would then only be taking calls from your agent and any wholesalers you work with. Still gotta manage those rehabs, though. They will require your time and attention.
@Lenzy Ruffin thanks a lot for that insight. So you think its not feasible to wholesale after work hours or on weekends only, like what many of the programs advertise? Including commuting, I'm spending about 9-10 hours deticated to my day job M-F. Factoring in self maintenance (eating/showering/gym/shower/caring for dog/ect), thats another 3-4 hours
I went to a local REI networking event recently and marketing for properties was talked about. Some people mentioned trying direct mail for several months without any success. I know the response rate in our area is somewhere between 0.2 to 1% depending on the list, and lead to deal conversion rate is around 3% of those leads. I can see how someone can easily blow through a $10k campaign without getting any deals. I'm wondering, has anyone gone broke over trying to market their first deal?
Wholesaling is hard enough to be successful at on a full-time basis. The people selling those programs make wholesaling sound like the easiest thing ever and you'll be closing deals in thirty days, etc. The only people who tell you that kind of thing are people who are selling a program/system.
It's possible to wholesale while working nights and weekends, but with all that has to get done in order to wholesale a property, it's probably not feasible. You have to drive/walk your neighborhoods to get familiar with them. To be competitive, you have to take calls from sellers as they come in because someone else is. For houses that you're actually going to inspect, you have to go inspect them and make your offers right away because someone else is.
Remember, as a wholesaler, you're targeting motivated sellers with equity who will sell their property at a discount. And so is everybody else. You are competing with people who can take a call at 10am and go out and inspect the property immediately, if the homeowner is available, and make an offer on the spot. How do you compete with that working at night and on weekends? I'm not saying it can't be done, I'm saying you have to figure out how you could do that before you invest money trying to do it. Anybody who calls you is calling other people, too. And some of those other guys know their neighborhoods well enough that they can make an offer without seeing the house. You have to compete against that. If you can be competitive by working just nights and weekends, go for it.
Here's a couple of links that will give a more realistic view of wholesaling. Also, search the forums on the topic of wholesaling and listen to the podcasts on wholesaling. You'll see/hear lots of differing opinions on how to do it or if you should do it and it won't be the dreams that they sell you in those wholesaling courses.
@Lenzy Ruffin Dosn't everyone start part time though? I understand it usually takes 6-10 months of repeated mailers before someone becomes motivated enough to sell. That is about $10k alloted for mailers that year. Most people will have to have some sort of income coming in to support that.
Even realtors that get into wholesaling are doing it part time because they are working with their normal retail buy/sell clients to generate their normal income.
I noticed a lot of those guru programs teach the same thing (mail to absentee and probate), making it competitive now that the market is now getting 5x as many of the same letters every week. Why hasn't anyone thought of overlapping multiple lists (absentee list, compared against tax default or something like that) to find true motivated sellers?
Just something I thought of at a local REI meet up the other day when the speaker was talking about competition and spending 10k on mailers without any deals.
Nothing applies to everyone, so there are people who start out wholesaling full time. Also consider that full time income does not mean that someone has a job that doesn't allow them to take calls and visit properties during business hours. There are lots of careers outside of traditional office environments.
I promise you there's no way or combination of ways of analyzing lists to find motivated sellers that isn't already in use. So the answer to why hasn't anyone done it is that they have done / are doing it. You won't likely find a master list of every way to process homeowner lists to find motivated sellers, but know that people build their businesses by doing just that kind of analysis on a recurring basis, always looking for a new way to approach marketing. You have to take the basic tips and ask yourself how you can improve upon them to build YOUR business.
Read this, the article itself is great information but pay particular attention to the very first part ...."stress the importance of perhaps the single most important (yet simple) thing that most investors just flat fail at that is costing them deal after deal without them even knowing it."
I would take this guys advice, he's another Sean Terry student and I've seen him post in the FB group frequently. Working full time is a challenge in running a wholesale business but people do it all over the country. I still haven't found a solution to answering the phone while working as obviously thats not always feasible, but I'm leaning towards an answering service once the volume warrants it. Also I call back every number even if they don't leave a message, most people these days are afraid of voicemail, and that little step will get you leads.
