Why wholesaling is being pushed by gurus?

25 Replies

I have tried wholesaling for a while now and read multiple forums on the topic as well as numerous books. I hear it all the time, "The best way to get into real estate is through wholesaling!" I have wondered why so many gurus push this concept without much details unless you pay for a course they offer. Then it donned on me, wholesaling allows an investor to recieve many properties with majority of the negotiations handled. Often times though, these new wholesalers give inaccuriate deals and turn many investors off any deal but the lure is still there, getting houses without doing much to get them. So, with this thought, I have studied more on what kind of investor I want to be so that any deal , wholesale or otherwise, will be one I want to do, not a deal I just wanna pass on for a quick buck. Its my hope that this approach will take me away from actual wholesaling and into investments and partnerships. 

I'm curious as to how this sounds and what ideas could be offered to build working relationships with other investors that'll build my personal career.

I think it is simpler than that.  The gurus are simply selling snake oil.  They are targeting people with no money, no experience, no credit, who want to make money without a whole lot of work.  They can spin a plausible story about how that is possible with wholesaling.  The story is BS, but it can sound good.

Much harder to sell a course that promises, "If you have 6-figures-plus to invest, and good credit, and you are willing to spend a considerable amount of time learning the basics of this industry, and then work your butt off for years, there is a pretty decent chance you will do well."

Finding a good deal and doing a JV on it is a good idea. You seem to have construction experience so find a deal to rehab and jv with someone on it, ie you dont get your fee, bring your experience to GC and sweat equity a project and split the profits. Oh wait I just had a discussion about doing a deal like this about an hour ago, with another BP member. Network with other's on BP.

In my opinion, gurus push wholesaling because is sounds so easy.  So its easy to sucker people into buying courses, boot camps and mentorships.  Most of these students will never do a single deal because wholesaling is MUCH more difficult than it seems and requires a lot of knowledge that is gained only by extensive experience.  But it sure sounds easy.  So its  easy to sell these expensive educational products.

More generally, I don't think wholesaling is investing at all.  Fix and flipping, property management, being an agent, developing are also not investing.  These are all businesses, not investments.  You may will have to invest significant capital to get these business running.  And you need a bunch of skills.  And they all take work.  But if you have the money, skills and invest the time, they can be very profitable businesses.

"Investing", OTOH, means putting your money into something and expecting a return.  Could be bank CDs, stocks, bonds, treasuries, real estate, gold or whatever.  But its not a business where you have to turn the crank in order to produce income.  The investment produces the income, not your labor.

I think this statement is patently false:

The best way to get into real estate is through wholesaling!

Again, its something gurus who are selling products (or the folks they've pulled into their traps) say to convince people to buy.  But it is a very, very difficult business that's going to require a lot of time, effort, and money to get started and produce any income.  It is, despite what the gurus say, a job.  A commissioned sales job that requires skills someone who's completely new to real estate is unlikely to have.  Does that really sound like a good place to start?

Originally posted by @Jeremy Tillotson :

Finding a good deal and doing a JV on it is a good idea. You seem to have construction experience so find a deal to rehab and jv with someone on it, ie you dont get your fee, bring your experience to GC and sweat equity a project and split the profits. Oh wait I just had a discussion about doing a deal like this about an hour ago, with another BP member. Network with other's on BP.

 I have construction experience and have been talking with sweat equity options, maybe its something I took to casual approach to... i really would like to know more.

In the marketplace (you have to be a paying member) there are people who will do just this though. I think even with sweat equity you will need some skin in the game, but look around BP and search some people they are here. 

The whole business model of gurus is to fleece newbies who don't know any better.  So they have to go after the low end of the market.

They need to make it sound like they have the holy grail, which is something the average guy can do to get rich.  Wholesaling can be made to sound like that.  No money, no experience necessary.

It is a perfect combination for a guru.

Originally posted by @Jeremy Tillotson :

In the marketplace (you have to be a paying member) there are people who will do just this though. I think even with sweat equity you will need some skin in the game, but look around BP and search some people they are here. 

 Getting skin seems to be difficult in some ways but i do have gc friends who may go in with me and make me literally earn the sweat in sweat equity lol

Ok so offer to GC a project and take that cash to JV a deal.

The gurus can sell wholesaling because conceptually, it's pretty easy to understand and theoretically, can make someone decent money. 

Because of the whole no credit, no cash, etc., it attracts (no offense - I am a wholesaler myself) a lot of GARBAGE.  it attracts the desperate, gullible, ill-formed, inexperienced, BUT highly motivated.  absolutely perfect fodder for a guru to squeeze. 

However, I should say that if done correctly, a wholesaler can add significant value to an investor, rehabber, etc. But these people are few and far between. The vast majority of wholesalers do not know how to properly evaluate the condition, repairs required, and perhaps most importantly the ARV.

 I personally don't think the Gurus pushing wholesaling is not the issue. The issue itself are those that spend the money on the training and don't do anything with it. I am honestly thankful that I stumbled across a wholesaling webinar on facebook otherwise I probably would have never known that you could get into investing without any money. For me wholesaling got me in the door and it was the best thing I could have done in my current situation which was flat broke and credit shot. I do agree that it is not as easy as they make it seem though. Still happy to be doing it

It's easier to sell people on a DREAM than the harsh reality of setting and achieving goals.

They do this by selling the idea of QUICK CASH for very little to no money or effort.

Appeals to people's greed to be lazy.

In my 20's I was searching for that quick hit to make life easy for doing nothing. What I learned over decades is there are ways to work smarter and not harder to increase your earnings and returns. Having said that being lazy does not enter into the picture of success. You have to constantly be growing and getting better at what you do and the value you offer to others.

Plain and simple all these companies are in the information business selling people on the idea that they can be a successful as the promoters with very little effort. I saw the other day on Facebook. The two guys, and3 or 4 other groups I won't mention all selling the free seminars to learn how to flip properties and be rich. You should have seen all the comments from the clueless people excited to think they found a secret or something and were going to attend. They will milk them dry of what little credit or money they have.

You can't talk to these people as they are so hyped up on fantasy that they do not want to hear the reality.

@Anthony Bostic   very, very good point.  I swear I have meet dozens of "wholesalers" who've spent thousands on courses, classes and my personal favorite "boot camps."  Right, like listening to someone speak is the same as a real boot camp. 

then they attend a few REIA meetings, tell everyone they are a wholesaler - but do jack spit.

@Jon Holdman   wrote

In my opinion, gurus push wholesaling because is sounds so easy. So its easy to sucker people into buying courses,   .   .   .
I think this statement is patently false:
The best way to get into real estate is through wholesaling!

Yes there are Gurus who are crooks who prey on desperate people "with no money, no experience, no credit, who want to make money without a whole lot of work"; as @Richard C. said. However I do not think that is the reason all REI instructors teach it.

The best way to get into real estate is to buy a 300 unit multi unit complex or major shopping center. You will be set for life. Obviously most people can't start there. Some can't even start with a modest SFH. So where do people who have limited resources start? Wholesaling is not easy, but it may be one of the very few places they can start.

I see many experienced investors here poo pooing wholesaling as a place to start.  I think it is a fine place to start as long as the investor has a realistic expectation of how hard it will be and how long it might take.

Originally posted by @Jon Holdman :

I think this statement is patently false:

The best way to get into real estate is through wholesaling!

Again, its something gurus who are selling products (or the folks they've pulled into their traps) say to convince people to buy.  But it is a very, very difficult business that's going to require a lot of time, effort, and money to get started and produce any income.  It is, despite what the gurus say, a job.  A commissioned sales job that requires skills someone who's completely new to real estate is unlikely to have.  Does that really sound like a good place to start?

GREAT POST!!!!

Honestly, it's the number 1 reason I decided to pursue Wholesaling. It "seemed" like a simple way to get involved in "Real Estate Investing" without $$$$$.

After hours and hours of educating myself on the what a TRUE wholesaler (THANK YOU BP!) is it is not as easy as I was hoping or expecting.

What motivates me now...is that there really seems to be a calling for true wholesalers that can be a legit honest profession out of wholesaling and finding the best deals to pass on.

There is a market but even here (at BP) there doesn't seem to be many that have had success in it. Even on threads like this... very few if any people get on and say "I've been successful in Wholesaling". Or much positive feedback about wholesaling.

Another thing that motivates me about choosing wholesaling as a career to break into RE is that though many, many people are looking at wholesaling to start their RE career's very few actually stick to it. There is a LOT of work involved to successful wholesaling. There is a demand and that demand is for reputable wholesalers. That seems to be a dime a dozen.

I'm still learning but so far this is my feeling after weeks of studying.

Manny Rodriguez

Originally posted by @Anthony Bostic :

 I personally don't think the Gurus pushing wholesaling is not the issue. The issue itself are those that spend the money on the training and don't do anything with it. I am honestly thankful that I stumbled across a wholesaling webinar on facebook otherwise I probably would have never known that you could get into investing without any money. For me wholesaling got me in the door and it was the best thing I could have done in my current situation which was flat broke and credit shot. I do agree that it is not as easy as they make it seem though. Still happy to be doing it

 It seems as though i may be doing something wrong with wholesaling. I love advise and maybe there is something i may need to work on. Joint ventures is just another idea i had to try and develop investor skin

Originally posted by @Manny Rodriguez :
Originally posted by @Jon Holdman:

I think this statement is patently false:

The best way to get into real estate is through wholesaling!

Again, its something gurus who are selling products (or the folks they've pulled into their traps) say to convince people to buy.  But it is a very, very difficult business that's going to require a lot of time, effort, and money to get started and produce any income.  It is, despite what the gurus say, a job.  A commissioned sales job that requires skills someone who's completely new to real estate is unlikely to have.  Does that really sound like a good place to start?

GREAT POST!!!!

Honestly, it's the number 1 reason I decided to pursue Wholesaling. It "seemed" like a simple way to get involved in "Real Estate Investing" without $$$$$.

After hours and hours of educating myself on the what a TRUE wholesaler (THANK YOU BP!) is it is not as easy as I was hoping or expecting.

What motivates me now...is that there really seems to be a calling for true wholesalers that can be a legit honest profession out of wholesaling and finding the best deals to pass on.

There is a market but even here (at BP) there doesn't seem to be many that have had success in it. Even on threads like this... very few if any people get on and say "I've been successful in Wholesaling". Or much positive feedback about wholesaling.

Another thing that motivates me about choosing wholesaling as a career to break into RE is that though many, many people are looking at wholesaling to start their RE career's very few actually stick to it. There is a LOT of work involved to successful wholesaling. There is a demand and that demand is for reputable wholesalers. That seems to be a dime a dozen.

I'm still learning but so far this is my feeling after weeks of studying.

Manny Rodriguez

 I agree 100% I'm not giving up on wholesaling,just expanding my investing skin and finding other ways to generate the cash flow to flip and hold. I absolutly love seeing something built or rebuilt and after an accident in framing, D did sales till I discovered wholesaling. The concept opened my eyes to the variety of methods out there and I am glad i chose this career. just frustrated at seeing my persistance and hard work going so roughly. but it only takes one to really get a feel and i believe the more I work and the harder i work, the benefit will surely become evident.

I buy quite a few properties each year from wholesalers, and I have wholesaled in the past.. IT IS A LOT OF WORK, AND YOU NEED TO KNOW HOW TO EVALUATE PROPERTIES! 

For every 1 good wholesaler I get 5-10 bad ones... Buy me a beer, and I can tell you some stories! haha

I have a friend who wholesales full time. She made 26k in October. ONE MONTH = 26k from wholesaling.. This is in Indiana too, where our average SFH sells for 107k in bread and butter neighborhoods. That's not to say she doesn't have months where she makes 3-5k a month, but she had a stellar October.

To wholesale successfully you have to work your butt off.. Just like pretty much any other thing that makes money.

You go for it! Wholesaling is something any 12 year-old buy can do (with 20 years of practice.) LOL

Originally posted by @Lee Smith :

I buy quite a few properties each year from wholesalers, and I have wholesaled in the past.. IT IS A LOT OF WORK, AND YOU NEED TO KNOW HOW TO EVALUATE PROPERTIES! 

For every 1 good wholesaler I get, I get 5-10 bad ones... Buy me a beer, and I can tell you some stories! haha

I have a friend who wholesales, she made 26k in October. ONE MONTH = 26k from wholesaling.. This is in Indiana too, where our average SFH sells for 107k in bread and butter neighborhoods. That's not to say she doesn't have months where she makes 3-5k a month, but she had a stellar October.

To wholesale successfully you have to work your butt off.. Just like pretty much any other thing that makes money.

 Honestly I love how hard I work and I spoke to my wife about expanding my focus to other more lucrative neighborhoods. I definitely feel my hard work will pay off. Quitting is not my style

Wholesaling requires work, energy, effort and perseverance. Yes it's simple (process), No it's not easy. If wholesaling was so easy most of these gurus would be pushing paper instead of pushing their products. Don't fall for the shiny object syndrome.

i like the idea of wholesaling

I need to make a business outa my REI and my primary model is buy and hold multi families and i decided to focus on wholesaling as my strategy and those are the models that i'll do everyday as my grind, i'm new to investing and initially stayed away from wholesaling for the sketicism brought by the constant "fast cash " i was reading . That was until stumble upon a podcast that explained that the cash comes fast once your system is in place. And the system will take time to be setup so im coming in with the attitude that i need to spend money to raise this business

Gurus are wholesaling wholesale courses to wholesalers :) Their courses are far under market value and the after course value will allow you to triple your ROI in no time at all.

I am honestly pursing wholesaling so I can build capital to help purchase properties to buy and hold. I believe even on here when asking questions about the process of wholesaling or even a situation that I find myself in gets overlooked on the threads. Why....because so many people are flooding the market with trying to wholesale. 

I have never listened to any guru speak on wholesaling and never intend to.  Everything I have learned came from BP.  I am also pursuing wholesaling because so many people say it's a bad way to start in real estate. So I consider that a challenge and now I'm more determined to successed. 

I hate seeing all the hate for wholesalers especially when there are people like myself trying to change that view. 

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