New investor with ALOT of questions

19 Replies | Orange County, California

Hello Fellow Investors! I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property. Anyway, I’m curious on a few things: What’s an average wholesale fee in California? Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale? Any tips on marketing/website design? Who has a good mailer campaign company that they use to send out mailers? Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!
Originally posted by @Isaac Lipscomb :
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 Hi Issac, here is a thread to get you started

https://www.biggerpockets.com/forums/93-wholesalin...

Originally posted by @Isaac Lipscomb :
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 I have concerns when a potential wholesaler indicates they have minimal capital.  What do you think an ethical wholesaler does if they fail to find a qualified buyer by the agreed upon close date?  Any answer other than close on the property themselves is what gives wholesalers a bad name.  

I have no issues with ethical wholesalers.  I do have issues with wholesalers indicating that they can close on a property that they can only close on if a qualified buyer.  

Think about it.   Determine if you want to be that person.  

Dan, I appreciate your post and it helps with my decision of trying to figure out this method. I do understand people tend to get a bad name for not honoring their proposed sell by date, which is why I plan on networking at my local REI meeting and other forums first and then search for properties that they would like to buy. Most importantly (especially in the beginning) I will be very upfront with the potential sellers and let them know exactly what I’m doing by showing their house to other investors who may or may not buy the property. If they do not like the circumstances, it is completely okay for them to walk away and say no. Transparency is the key as far as I’m concerned.

Thanks again.

Originally posted by @Dan Heuschele :
Originally posted by @Isaac Lipscomb:
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 I have concerns when a potential wholesaler indicates they have minimal capital.  What do you think an ethical wholesaler does if they fail to find a qualified buyer by the agreed upon close date?  Any answer other than close on the property themselves is what gives wholesalers a bad name.  

I have no issues with ethical wholesalers.  I do have issues with wholesalers indicating that they can close on a property that they can only close on if a qualified buyer.  

Think about it.   Determine if you want to be that person.  

Your statement that anything besides closing on the sale gives wholesalers a bad name in my opinion shows a lack of understanding in the sales process or an acceptance of wholesalers in general. Maybe I'm wrong, but you're holding them to unreasonable standards.

In Orange County, 12% of starter homes sales fell through in 2016 - Source - Why should it be expected for wholesalers to operate at a margin of success we don't see with standard real estate purchases? That seems unreasonable. A seller could misrepresent a property, repair issues could arise, all of the same reasons an investor could change their mind on a purchase that are discussed here at length can apply to a wholesale deal. 

There are unethical individuals of all walks of life and professions. I imagine you are quite busy if your passion for ethics brings you to this discussion, you wouldn't be bringing this up with only wholesalers on bigger pockets would you? 

Originally posted by @Isaac Lipscomb :
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 
Welcome, I have wholesaled over $20M in real estate in Southern California. Let me give you some current, and accurate info. 

Wholesaling is not the fast track to build capital as it used to be. Anyone telling you to start wholesaling in Socal has probably not closed a deal here in years if at all.

Direct mail is no longer a creative marketing strategy, 4 years ago it was. Today its an old trick used by investors, agents, everyone. Its a quick way to go broke. It takes around 2-3 years for a website to rank organically and produce deals.

As most deals today can be listed an sold as is to regular non investor buyers for a premium. Most sellers are best off listing their home and selling it for more (closer to the price they wanted) than lowering it to sell to an investor or wholesaler. Since the pie has shrunk, there are less deals for investors to buy. The area where there is growth is standard buyers picking up light fixers on the MLS as they are confident in market conditions, prices are high and its a way to get a house at a small discount (too much for an investor to pay).


So, the fastest way to build capital in Southern California is to be a listing agent. Marketing direct to sellers, offering to buy the deal as a wholesaler or investor and if they don't like that price, offering to list the home. Direct marketing will reach motivated sellers but the majority will want a higher price than an investor can pay. So, why not list that home and get a commission versus focusing on a smaller piece of the pie by trying to low ball them. Its a sellers market, work with the system. 

As an agent you can list the deal, or wholesale it. Best of both worlds, as a wholesaler you can do only one. You will spend a lot of money on marketing to talk to great listing leads and do nothing with them if you only have one trick in your bag. The "wholesaling is the best place to start" line is complete [email protected]#% with no consideration for current market conditions. Its like someone telling you to grab an umbrella without checking the weather report. You need to know current market conditions to make an educated decision on how to move forward. 

thanks a lot for that info @Tim G. . I’ve definitely thought about getting my license and being a Liston agent. I like your idea of offering the client both options, wholesale and regular listing. 

@Joe Homs thank you for reaching out! I will connect with you soon. Maybe we can grab a coffee.

Originally posted by @Tim G. :
Originally posted by @Dan Heuschele:
Originally posted by @Isaac Lipscomb:
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 I have concerns when a potential wholesaler indicates they have minimal capital.  What do you think an ethical wholesaler does if they fail to find a qualified buyer by the agreed upon close date?  Any answer other than close on the property themselves is what gives wholesalers a bad name.  

I have no issues with ethical wholesalers.  I do have issues with wholesalers indicating that they can close on a property that they can only close on if a qualified buyer.  

Think about it.   Determine if you want to be that person.  

Your statement that anything besides closing on the sale gives wholesalers a bad name in my opinion shows a lack of understanding in the sales process or an acceptance of wholesalers in general. Maybe I'm wrong, but you're holding them to unreasonable standards.

In Orange County, 12% of starter homes sales fell through in 2016 - Source - Why should it be expected for wholesalers to operate at a margin of success we don't see with standard real estate purchases? That seems unreasonable. A seller could misrepresent a property, repair issues could arise, all of the same reasons an investor could change their mind on a purchase that are discussed here at length can apply to a wholesale deal. 

There are unethical individuals of all walks of life and professions. I imagine you are quite busy if your passion for ethics brings you to this discussion, you wouldn't be bringing this up with only wholesalers on bigger pockets would you? 

Maybe I was not as clear as I should have been.   If the wholesaler indicates they are going to purchase the property and the only reason they do not is that they do not find a buyer and have not indicated that they will not close if they do not find a buyer I have issues with this.  

Wholesalers typically do not express finance contingencies and often do not express inspection contingencies so their rate of falling out of purchase should be lower than the traditional MLS sale.

If a wholesaler is clear to the reasons that a purchase may not close at the time of negotiation and the property does not close for one of those reasons, then the whole saler has done what they indicated to the often desperate seller. I have zero issues with this. If, however, there are no finance or inspection contingencies (often the case with wholesaling) then there are few legitimate reasons not to close; certainly a lot less reasons than a standard MLS purchase that typically states financial and inspection contingencies.

I believe most wholesalers do not indicate that they will pull out of the sale if they fail to obtain a buyer.  

Rather than busting your hump and spending money trying to wholesale, which for most is a total failure, concentrate on improving your credit, living frugally to save every penny and spend your time educating yourself on finances, investing, real estate and your local landlord tenant regulations.

The best thing you can do is adjust your life style. Move to less expensive housing, cancel all your electronic toys, spend less time and money with friends etc.

If you make saving and investing your priority in life you will be amazed at how much money you are actually wasting on useless items every month.  Hundreds possibly thousands that could be used to grow your investment savings at a rapid pace.

The majority of people live paycheck to paycheck by choice.

Like a number have people have mentioned, don't be so quick to get in to direct mail. There 2 forces at play. 

A) Focus on fixing your finances, killing off credit card debt, build up savings, increase your main source of income. Earn some OT, uber, but the best would be to get licensed as an agent. In becoming an agent you learn RE, earn some money, network with a lot of folk.

B) Listen to every podcast on the given subject you are interested but take each one with a grain of salt realize that majority of the Wholsale specific podcasts are not in your type of market. By far the best learning experience in this numbers game, while you are getting licensed, is driving for dollars, knocking on doors, and cold calling. Get your feet wet, talk to sellers, find different levels of motivation, and potentially come across investment opportunities or listing opportunities.

Start taking action in whatever you choose. 

Good Luck

Originally posted by @Dan Heuschele :
Originally posted by @Tim Gordon:
Originally posted by @Dan Heuschele:
Originally posted by @Isaac Lipscomb:
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 I have concerns when a potential wholesaler indicates they have minimal capital.  What do you think an ethical wholesaler does if they fail to find a qualified buyer by the agreed upon close date?  Any answer other than close on the property themselves is what gives wholesalers a bad name.  

I have no issues with ethical wholesalers.  I do have issues with wholesalers indicating that they can close on a property that they can only close on if a qualified buyer.  

Think about it.   Determine if you want to be that person.  

Your statement that anything besides closing on the sale gives wholesalers a bad name in my opinion shows a lack of understanding in the sales process or an acceptance of wholesalers in general. Maybe I'm wrong, but you're holding them to unreasonable standards.

In Orange County, 12% of starter homes sales fell through in 2016 - Source - Why should it be expected for wholesalers to operate at a margin of success we don't see with standard real estate purchases? That seems unreasonable. A seller could misrepresent a property, repair issues could arise, all of the same reasons an investor could change their mind on a purchase that are discussed here at length can apply to a wholesale deal. 

There are unethical individuals of all walks of life and professions. I imagine you are quite busy if your passion for ethics brings you to this discussion, you wouldn't be bringing this up with only wholesalers on bigger pockets would you? 

Maybe I was not as clear as I should have been.   If the wholesaler indicates they are going to purchase the property and the only reason they do not is that they do not find a buyer and have not indicated that they will not close if they do not find a buyer I have issues with this.  

Wholesalers typically do not express finance contingencies and often do not express inspection contingencies so their rate of falling out of purchase should be lower than the traditional MLS sale.

If a wholesaler is clear to the reasons that a purchase may not close at the time of negotiation and the property does not close for one of those reasons, then the whole saler has done what they indicated to the often desperate seller. I have zero issues with this. If, however, there are no finance or inspection contingencies (often the case with wholesaling) then there are few legitimate reasons not to close; certainly a lot less reasons than a standard MLS purchase that typically states financial and inspection contingencies.

I believe most wholesalers do not indicate that they will pull out of the sale if they fail to obtain a buyer.  

How many wholesale contracts have you reviewed? The inspection contingency is a key element to the contract and almost impossible to execute without this feature. I'm not trying to be rude Dan, but I don't get the feeling you aren't fully aware of the mechanics to a wholesale deal if you believe the contract doesn't have this feature. It needs the inspection contingency.

Originally posted by @Tim G. :
Originally posted by @Dan Heuschele:
Originally posted by @Tim Gordon:
Originally posted by @Dan Heuschele:
Originally posted by @Isaac Lipscomb:
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 I have concerns when a potential wholesaler indicates they have minimal capital.  What do you think an ethical wholesaler does if they fail to find a qualified buyer by the agreed upon close date?  Any answer other than close on the property themselves is what gives wholesalers a bad name.  

I have no issues with ethical wholesalers.  I do have issues with wholesalers indicating that they can close on a property that they can only close on if a qualified buyer.  

Think about it.   Determine if you want to be that person.  

Your statement that anything besides closing on the sale gives wholesalers a bad name in my opinion shows a lack of understanding in the sales process or an acceptance of wholesalers in general. Maybe I'm wrong, but you're holding them to unreasonable standards.

In Orange County, 12% of starter homes sales fell through in 2016 - Source - Why should it be expected for wholesalers to operate at a margin of success we don't see with standard real estate purchases? That seems unreasonable. A seller could misrepresent a property, repair issues could arise, all of the same reasons an investor could change their mind on a purchase that are discussed here at length can apply to a wholesale deal. 

There are unethical individuals of all walks of life and professions. I imagine you are quite busy if your passion for ethics brings you to this discussion, you wouldn't be bringing this up with only wholesalers on bigger pockets would you? 

Maybe I was not as clear as I should have been.   If the wholesaler indicates they are going to purchase the property and the only reason they do not is that they do not find a buyer and have not indicated that they will not close if they do not find a buyer I have issues with this.  

Wholesalers typically do not express finance contingencies and often do not express inspection contingencies so their rate of falling out of purchase should be lower than the traditional MLS sale.

If a wholesaler is clear to the reasons that a purchase may not close at the time of negotiation and the property does not close for one of those reasons, then the whole saler has done what they indicated to the often desperate seller. I have zero issues with this. If, however, there are no finance or inspection contingencies (often the case with wholesaling) then there are few legitimate reasons not to close; certainly a lot less reasons than a standard MLS purchase that typically states financial and inspection contingencies.

I believe most wholesalers do not indicate that they will pull out of the sale if they fail to obtain a buyer.  

How many wholesale contracts have you reviewed? The inspection contingency is a key element to the contract and almost impossible to execute without this feature. I'm not trying to be rude Dan, but I don't get the feeling you aren't fully aware of the mechanics to a wholesale deal if you believe the contract doesn't have this feature. It needs the inspection contingency.

 I am not a wholesaler.  I do buy n hold and seldom sell.  I was under the belief that many/most wholesale purchases deals were as-is.  If they have an inspection contingency, I see even less reason to sell to a wholesaler than if the negotiated deal was as-is.  

If a buyer has an inspection contingency, the seller might as well list on MLS indicating cash offers only. I can close real fast on deals with a smaller discount than a wholesaler would require and I am not alone.

Originally posted by @Dan Heuschele :
Originally posted by @Tim Gordon:
Originally posted by @Dan Heuschele:
Originally posted by @Tim Gordon:
Originally posted by @Dan Heuschele:
Originally posted by @Isaac Lipscomb:
Hello Fellow Investors!

I’m new to investing and I’ve been chomping at the bit to find a good way to start. Right now capital is at a minimum and I’m improving credit so while I start saving money and networking with other investors, I’ve decided that whole-selling is probably my best bet to get a little extra cash in the bank account before I go buy a hold property.

Anyway, I’m curious on a few things:

What’s an average wholesale fee in California?

Has anyone had success in the Orange County/ LA/ Riverside/ San Diego area with wholesale?

Any tips on marketing/website design?

Who has a good mailer campaign company that they use to send out mailers?

Also.. looking to network with any investors especially in the SoCal area (I’m based out of OC) so would love to hear some success stories / cautions of warning if anyone has some to share!

 I have concerns when a potential wholesaler indicates they have minimal capital.  What do you think an ethical wholesaler does if they fail to find a qualified buyer by the agreed upon close date?  Any answer other than close on the property themselves is what gives wholesalers a bad name.  

I have no issues with ethical wholesalers.  I do have issues with wholesalers indicating that they can close on a property that they can only close on if a qualified buyer.  

Think about it.   Determine if you want to be that person.  

Your statement that anything besides closing on the sale gives wholesalers a bad name in my opinion shows a lack of understanding in the sales process or an acceptance of wholesalers in general. Maybe I'm wrong, but you're holding them to unreasonable standards.

In Orange County, 12% of starter homes sales fell through in 2016 - Source - Why should it be expected for wholesalers to operate at a margin of success we don't see with standard real estate purchases? That seems unreasonable. A seller could misrepresent a property, repair issues could arise, all of the same reasons an investor could change their mind on a purchase that are discussed here at length can apply to a wholesale deal. 

There are unethical individuals of all walks of life and professions. I imagine you are quite busy if your passion for ethics brings you to this discussion, you wouldn't be bringing this up with only wholesalers on bigger pockets would you? 

Maybe I was not as clear as I should have been.   If the wholesaler indicates they are going to purchase the property and the only reason they do not is that they do not find a buyer and have not indicated that they will not close if they do not find a buyer I have issues with this.  

Wholesalers typically do not express finance contingencies and often do not express inspection contingencies so their rate of falling out of purchase should be lower than the traditional MLS sale.

If a wholesaler is clear to the reasons that a purchase may not close at the time of negotiation and the property does not close for one of those reasons, then the whole saler has done what they indicated to the often desperate seller. I have zero issues with this. If, however, there are no finance or inspection contingencies (often the case with wholesaling) then there are few legitimate reasons not to close; certainly a lot less reasons than a standard MLS purchase that typically states financial and inspection contingencies.

I believe most wholesalers do not indicate that they will pull out of the sale if they fail to obtain a buyer.  

How many wholesale contracts have you reviewed? The inspection contingency is a key element to the contract and almost impossible to execute without this feature. I'm not trying to be rude Dan, but I don't get the feeling you aren't fully aware of the mechanics to a wholesale deal if you believe the contract doesn't have this feature. It needs the inspection contingency.

 I am not a wholesaler.  I do buy n hold and seldom sell.  I was under the belief that many/most wholesale purchases deals were as-is.  If they have an inspection contingency, I see even less reason to sell to a wholesaler than if the negotiated deal was as-is.  

Dan, it is important not to place yourself in the sellers shoes. They are a different individual with a life experience of their own, applying your logic to their decision making process could stop you from understanding their situation and needs. 

They could have taken care of the property and maintained it so it didn't need to sell to an investor, they could have handled their affairs more responsibly to not need to sell the home, they could of done many things we view as common sense but they didn't and they have their reasons why. 

Many have a negative view of real estate agents so the opportunity to avoid dealing with them makes them feel more comfortable. Quite often they are embarrassed by their situation and the prospect of less visitors and a shorter process sounds more appealing than scraping for that extra dollar and inviting the circus over. Again, its not our place to get in their heads and try to logic out their decision making process. Doing that is one of the fastest ways to alienate yourself from the seller and their situation. 

While you might believe you are faster than a wholesaler in the closing process, that isn't the first step in buying a deal from a seller direct. You're putting the cart before the horse.

Step 1 is being in front of the willing seller, that requires an actionable step (marketing to them). If you are waiting for a deal to be on the MLS or brought to you by an agent then it would appear you are not faster than a wholesaler at buying a deal from a seller direct.

Step 2 is closing on the deal. You may be faster at this but that is irrelevant if you aren't able to beat the competition to step 1. 

@Isaac Lipscomb , OC has a lot of great REI clubs you can go to and really educate yourself about wholesaling. You will also hear other options in creating an income stream through investing. I strongly suggest to look into these clubs and dive into the education, learning, hearing the experiences of others. It is also a great tool for networking. Good luck and happy investing!

I really appreciate all of the feedback on this post and I will move forward accordingly! I've taken steps to write down all of my expenses and cut where I can to start paying down debt. 

@Tim G. I listened to your podcast and was very impressed with what you've done in the San Diego market. I'd like to address something you mentioned in your previous response to me. I don't see real estate or wholesaling either as a way to get rich quick. I feel that there will be more rejection than success and I'm in this for the long run. I've also started looking into getting my real estate license so that I can have more solutions for people when I do come across deals. In the mean time, while I'm networking and saving. I would like to be able to shoot you a question every now and then if possible? Maybe get an idea of the SD area. 


@Walter Roby jr - Great advice. Definitely listening to podcasts everyday after work & whenever I'm in the car. From listening to podcasts and reading some material I've decided that when I do have the funds and credit necessary, I will buy a property with a 203k loan, fix it up, and use the equity to help fund buying other properties. 

@Jeric L. Thank you! I'm attending a REI group on Tuesday in Irvine and looking to network there.

The best way to get started may be to look for active wholesalers in the area and offer to shadow them or be of service to them in some way. That way you can learn the trade from someone who understands it (without having to re-invent the wheel), while at the same time leaving your own finances out of it. I tried my hand at listing agent/wholesaler strategy but didn't treat it like a full time occupation, which it is if you plan to have any success. If you are going to work at it full time, why not have someone teach it to you while still earning some money.

Hope that helps!