Advice Nobody Wants to Hear

Advice Nobody Wants to Hear

Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

Here’s my advice nobody wants to hear

If your business/investing consists of buying houses from homeowners in any shape or form, such as wholesaling, novation, double closing, etc. GET OUT OF THE BUSINESS, and develop a new business model.

For the new business model you have two choices - either stay with homeowners and operate as a LICENSED real estate broker fully WITHIN the legal guidelines set forth by state law, or operate in the arena of commercial property or only deal with investors in residential properties.

Not only is it becoming increasingly difficult to operate within the law of more and more states when attempting to deal with homeowners sans licensure, it’s also becoming more difficult to make a profit as information is now instantly available on line; competition from “students” of gurus is increasing, and entrenched competitors are spending $10,000 + monthly on marketing.

Find another niche in the real estate world to operate in. You’ll be happier, you’ll earn more money, you’ll incur less legal risk, and you’ll be better looking too!

Private Mortgage Financing Partners, LLC
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Matthew MorrowBusiness Member
Investor · PA - NY - NJ · Member since 2019 · 600 posts · 207 votes
3d

@Don Konipol My stance on this has shifted a lot over the last few years. The deeper we get into the industry, the more I realize how much bad stuff happens and how often sellers get taken advantage of. That's certainly not every case, and there are a great deal of ethical wholesalers out there. But especially in Pennsylvania, now that Act 52 is law, requiring people who wholesale to be licensed is doing a great thing for the industry. It means the people actually practicing real estate have to be educated. It won't get every bad actor out of the business, but it's legitimizing wholesaling in a way I never thought possible. Our team is loving it and thriving.

CORE Team | Realty ONE Group Supreme547 Reviews
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  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 600 posts · 207 votes
    3d

    @Don Konipol My stance on this has shifted a lot over the last few years. The deeper we get into the industry, the more I realize how much bad stuff happens and how often sellers get taken advantage of. That's certainly not every case, and there are a great deal of ethical wholesalers out there. But especially in Pennsylvania, now that Act 52 is law, requiring people who wholesale to be licensed is doing a great thing for the industry. It means the people actually practicing real estate have to be educated. It won't get every bad actor out of the business, but it's legitimizing wholesaling in a way I never thought possible. Our team is loving it and thriving.

    CORE Team | Realty ONE Group Supreme547 Reviews
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      3d

      There are a great deal of ethical wholesalers out there but many of them are run by a business, and unfortunately it is probably less than 1% because many will pay $99 for a guru at a holiday inn giving away free breakfast tell you it can be done easilty if you give them another $5k with the credit card machine and application in the back room and many do that.

      7e investments53 Reviews
    • Don KonipolBusiness Member
      OP
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      3d

      Of course both of you are correct. But as important is to concentrate on the fact that earning a decent profit on your time is VERY difficult in “wholesaling”; especially difficult for people without great knowledge, experience, or a talent for sales + negotiation. And the common held belief that “wholesaling” is being an investor or training for investing …. Wow that’s a very unfortunate falsehood.

      Private Mortgage Financing Partners, LLC
    • Matthew MorrowBusiness Member
      Investor · PA - NY - NJ · Member since 2019 · 600 posts · 207 votes
      2d

      @Don Konipol 100% agree. Although wholesaling ethically can get you experiences, exposure, and in the room to start learning.

      CORE Team | Realty ONE Group Supreme547 Reviews
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      2d

      You need to be able to scope a project, create a renovation budget, analyze comps etc in order to wholesale. Thus you need real estate experience. I get people emailing me wholesale deals from MLS that never visited the property and their whole business plan is send offers to homeowners to see what gets under agreement and then sell it without ever seeing property. that is their business plan - to put it bluntly, its effing stupid and a waste of time for anyone who does this. may you eventually sell a property - sure but its not sustainable.

      7e investments53 Reviews
    • Don KonipolBusiness Member
      OP
      Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
      2d

      It was popularized in books, YouTube videos, and seminars under the term “virtual wholesaling”. No need to leave your Lay Z Boy recliner.

      Private Mortgage Financing Partners, LLC
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    2d

    The Indy market is getting hammered with virtual and OOS wholesaling. I get texts everyday to buy our houses and emails for units under contract that are for sale. It's rarely a local wholesaler. The area codes are from all over the country. 98% of the deals are C-/D class warzone marketed as B class CF assets. If you don't know the market it's a disaster waiting to happen. I assume someone is buying those properties and then experiencing either A; PM nightmares, B; higher turnovers, C; Sec8 tenant pool, or D; a combination of it all. Maybe we're just a clueless, local, conservative investor?

    It feels like the entire process is ran from OOS buyers/sellers, but I could be wrong. Maybe investors are crazy enough to buy whatever CF's on paper. Indiana doesn't require a license to wholesale so there's zero accountability for this type of investment.

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