Pros; would you train your own wholesaler?

Question

I've been reading the lengthy "truth about wholesaling" forum post, my god its a read, and there is so many ideas floating around in there that are lost because the post is sooooo long.

One post by @Stinson Bland brought up the idea of pros, NOT GURU'S, taking a wholesaler under their wing. Is this something any body has found success or failure with? I know its something I've looked into doing, and I'd be glad to learn from someone successful (hint hint any one in MN or ND). And if you are willing to train what is it you look for in a student?

William Roberts · Answer

Steven J.

We have tried the hire a wholesaler gig by writing a system and implementing it. All we asked of our team was that they bring us the deals first and if we don't buy it then they can market it out how ever they choose, But we get first right of refusal. In exchange I would teach them how to acquire properties and the proper way to wholesale. We were successful with this program for a short while then everyone wants to go out on their own which was clear from the beginning. There is a lot of turnover this way. But 2-3 deals from 5 wholesalers can be a good year. I would suggest you write it out and implement it, if you get 2 deals from guys then they go on their own so what, maybe it's 2 more deals you would've never had and you helped someone get a start in this business. Good luck!

Troy Fisher · Answer

I've been developing this thought process in my head too...

My solution to keeping them around:  A slice of the pie.

Acquisition Manager: 10% - I pay for the list and marketing costs

Rehab Team: 10% (All members of the team) + w2 Income with a 5% Kicker if it's done 'on-time'

Rehab Manager: 10% +w2 Income

That way they are all vested in the success of the program and we share in the effort.

Figure a 50k profit, Wholesaler pickups their 5k when we sell... Rehab team gets their share of 7k for coming in on time, and the Rehab Manager gets 5k for being my guy.  Of course those number improve when everyone does their job well.  The Acquisition cost is lower, the deal is done early and under budget.

If you are trying to build a business of flipping and plan on doing 10+ properties a year the Acquisition Manager could be making 50,000+ (I would have multiple Managers working different lists)

The Rehab team members could be making their wages plus their share of 70k a year.  5 member team that's a pretty penny.

And the Rehab Manager (GC) could have an extra 50k bonus too.  While I'm making 250k!

Right so here's the kicker... sure your wholesaler or GC might want to go off on their own and do their own things... you can do 1 of two things.  1 - Non-Compete Clause.  Lock them out of your farm area.  I wouldn't go this way it's negative.  2 - When they start talking about leaving become their bank.

David Beard · Answer

A lot of volume rehabbers are hiring acquisition managers these days.  These folks run marketing and mail campaigns to find and negotiate with motivated sellers, generate ARVs, do rehab estimates, etc.

It is very easy for a successful wholesaler or acquisition manager to move on to their own operation to maximize profit for themself.  I don't see how someone captures their loyalty.

Elizabeth Joiner · Answer

@ Ryan Steele:

I can't argue with that. You have a valid point. Some investors don't have the time or desire to train wholesalers.  Good point.

Account Closed · Answer

@Elizabeth Joiner ,

The reason I, as an investor that pays CASH, uses a wholesaler is that the Wholesaler is bringing me something of value. In my view, it is up to you, the wholesaler to learn what the buyer wants, not for the buyer (who pays you) to "TRAIN" you.

I wouldn't waste my time. I would just go do deals that I do every day regardless of wholesalers being around or not.

Elizabeth Joiner · Answer

I'm a wholesaler in Chicago and I think it's a great idea to train your wholesalers on what you want in a property. It makes perfect sense. That way I'm not wasting your time with bad deals, and you're getting a good deal. While some wholesalers would pursue their own investments elsewhere, I fully intend on continuing my business. I even plan on training other friends of mine on how to wholesale once I get more experience under my belt. Some people don't want to turn this into a business, some are satisfied with just flipping a few contracts for the supplemental income.

Steven J. · Answer

I think a non-compete might further hinder the relationship. I would imagine the training as almost apprenticeship like where its highly assumed that person will go off to do their own thing. I say let them, and make sure you remain on good terms. They may have a new technique, or move to a new market, and with that they can include you in on that.

Troy Fisher · Answer

I wouldn't worry about a non-compete.  Previous posters in the thread show some trepidation about wholesalers moving on.  I wouldn't and in fact I would try to continue to build my relationship with them.

Eric F. · Answer

@Troy Fisher

I think it would be really hard to craft a non compete clause for something as simple as a wholesaler working for you.  They exist to protect trade secrets, I highly doubt you could get away with preventing them from buying and selling houses in a specific region.  I will state I am not a lawyer, but I can't see how crafting a non compete clause for this would work.

The idea of training your own wholesaler does sound great though.  I don't know anyone with a setup like this in Raleigh.

Shariyf Grevious · Answer

@David Beard  That's my sentiment exactly. Our business is such that anybody operating the meat and potatoes of our business can just start their own. And REI has such a low entry level cost (Marketing) that it wouldn't make sense for them to stay and get a wage when they can do what they are already doing and get a profit.

I wonder if anybody here would put up how much they are paying an "acquistions manager"

Pros; would you train your own wholesaler?

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