Experienced Investor Dives into Wholesaling in LA: Strategy Insights Requested

Los Angeles County, California
Wholesaling
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Experienced Investor Dives into Wholesaling in LA: Strategy Insights Requested

Martin Forde
Investor · Los Angeles · Member since 2018 · 3 posts · 3 votes

Hello Biggerpockets,

I’m a moderately experienced and networked real estate investor looking to start exploring the wholesaling niche here in LA.

Looking for a gut check of my strategy, and to speak with anyone pursuing similar niches here in LA or other highly competitive markets.

Context and background

My first deal was a massive live-in flip. We purchased a hoarder house and gut renovated it, converting the downstairs space into an ADU. We now house hack the property to mid-term tenants. Long term aspirations for the lot is to use SB9 to split and add 1-2 additional units.

Learned a ton through this process - such as negotiation, deal underwriting, renovation estimates, contractor management, etc. Hosted a meetup and met a ton of local investors, I'm somewhat known in the local LA REI circles. Built out a small REI focused Instagram account as well (@ SB9LA)

I have a stable, corporate, remote W2 job with a ton of bandwidth. We have summer Fridays coming up, which gives me even more time to allocate towards this. No kids yet, just my wife. With weekends and afternoons - I could easily spend 20+ hours / week on advancing this.

Here’s why I like wholesaling and why I think I could break through:

  1. Deep experience and familiarity with sales cycles and tools. I work in corporate sales as my W2. Prospecting, outreach, negotiation are things I do on a daily basis. I look forward to the absolute meat grinder of a sales cycle awaiting me.
  2. Experienced investor. Seems like most people use wholesaling a starting point or a way to generate capital. I want to build this niche to be one of my primary income generators.
  3. Already networked and known within local REI community. Looks like a major hurdle for newbies is simply knowing who to sell deals to once they lock them up. I have a solid established buyers list in place through my years of networking and building my Instagram.
  4. First access to best deals in the marketplace. This is more mid-term, but I’d like to start flipping. I know that being able to get first crack at deals would be a massive competitive advantage. It would also allow me to wholesale skinnier deals or ones I don’t have bandwidth for.

My strategy framework is below:

  1. Narrow focus on lead generation. I’d like to start with divorces and recent probate records as my primary lead targets. I recognize these are highly charged and emotional moments. I consider myself to be very empathetic and believe I could help solve problems to people needing to unload properties quickly.
    1. Would also “drive for dollars” by biking and running but only in my local neighborhood here in Northeast LA. This seems oversaturated and un-strategic, but I know my neighborhood well and believe I could differentiate here as well.
  2. Engagement sequence would be a mailer with a handwritten address, cold call, text follow up, cold call, email, then qualify / disqualify leads.
  3. Using my rental income, I have a ~$1k / month budget for marketing and tools. Goal is to find first deal defining the systems and KPIs, then scaling spend from there.

I appreciate any thoughts or constructive feedback!

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
2y
Quote from @Martin Forde:

Hello Biggerpockets,

I’m a moderately experienced and networked real estate investor looking to start exploring the wholesaling niche here in LA.

Looking for a gut check of my strategy, and to speak with anyone pursuing similar niches here in LA or other highly competitive markets.

Context and background

My first deal was a massive live-in flip. We purchased a hoarder house and gut renovated it, converting the downstairs space into an ADU. We now house hack the property to mid-term tenants. Long term aspirations for the lot is to use SB9 to split and add 1-2 additional units.

Learned a ton through this process - such as negotiation, deal underwriting, renovation estimates, contractor management, etc. Hosted a meetup and met a ton of local investors, I'm somewhat known in the local LA REI circles. Built out a small REI focused Instagram account as well (@ SB9LA)

I have a stable, corporate, remote W2 job with a ton of bandwidth. We have summer Fridays coming up, which gives me even more time to allocate towards this. No kids yet, just my wife. With weekends and afternoons - I could easily spend 20+ hours / week on advancing this.

Here’s why I like wholesaling and why I think I could break through:

  1. Deep experience and familiarity with sales cycles and tools. I work in corporate sales as my W2. Prospecting, outreach, negotiation are things I do on a daily basis. I look forward to the absolute meat grinder of a sales cycle awaiting me.
  2. Experienced investor. Seems like most people use wholesaling a starting point or a way to generate capital. I want to build this niche to be one of my primary income generators.
  3. Already networked and known within local REI community. Looks like a major hurdle for newbies is simply knowing who to sell deals to once they lock them up. I have a solid established buyers list in place through my years of networking and building my Instagram.
  4. First access to best deals in the marketplace. This is more mid-term, but I’d like to start flipping. I know that being able to get first crack at deals would be a massive competitive advantage. It would also allow me to wholesale skinnier deals or ones I don’t have bandwidth for.

My strategy framework is below:

  1. Narrow focus on lead generation. I’d like to start with divorces and recent probate records as my primary lead targets. I recognize these are highly charged and emotional moments. I consider myself to be very empathetic and believe I could help solve problems to people needing to unload properties quickly.
    1. Would also “drive for dollars” by biking and running but only in my local neighborhood here in Northeast LA. This seems oversaturated and un-strategic, but I know my neighborhood well and believe I could differentiate here as well.
  2. Engagement sequence would be a mailer with a handwritten address, cold call, text follow up, cold call, email, then qualify / disqualify leads.
  3. Using my rental income, I have a ~$1k / month budget for marketing and tools. Goal is to find first deal defining the systems and KPIs, then scaling spend from there.

I appreciate any thoughts or constructive feedback!

Here’s my honest opinion; not trying to be overly critical, just hopefully constructive advice

Your plan sounds like a newbie with no money and experience trying to wholesale 

Look, wholesaling real estate is a BUSINESS.  As such it doesn’t earn a high enough LOI when done as a part time “hobby”.  Sure, you can find a few deals, probably close one or two.  But at the end of the year when you add up your income per hour, you won’t be happy.

I know some successful wholesalers.  They use various strategies, techniques, etc.  One guy I’ve known for 30 years completes the purchase in his own name for cash, and turns around and sells sometimes minutes later.  He calls this “real” wholesaling, and showed me his PFS with a net worth of $50 million. He started with $25k in 1983.

More conventional “wholesalers” I know try to “flip” the subject property before their purchase contract expires.  As a whole they have the following in common as per their operations
1. They spend $10,000 or more per month on SEO, SEM, direct mail, direct email, text, and call center 
2. They have admin people on payroll to handle tasks that can be handled by trained people and spend their time at higher level tasks
3. They have developed relationships with buyers and can usually “flip” a contract in hours
4. They manage their business full time

I’m any case, good luck in whatever way you decide to proceed 
Private Mortgage Financing Partners, LLC
WebsiteView Page
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  • Joe HomsBusiness Member
    Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
    2y

    @Martin Forde

    My strategy framework is below:

    1. Narrow focus on lead generation. I’d like to start with divorces and recent probate records as my primary lead targets. I recognize these are highly charged and emotional moments. I consider myself to be very empathetic and believe I could help solve problems to people needing to unload properties quickly. (OMG) Its difficult enough to wholesale, why would you start with divorces and probates?  These are the most difficult transactions for an experience RE Agent or wholesaler.  Try picking on the low hanging fruit first, "Pre-foreclosures" you already know they are in trouble.)
      1. Would also “drive for dollars” by biking and running but only in my local neighborhood here in Northeast LA. This seems oversaturated and un-strategic, but I know my neighborhood well and believe I could differentiate here as well.  (Not a bad idea since these properties are on no one's list, but it's very time consuming.)
    2. Engagement sequence would be a mailer with a handwritten address (This is also very expensive and time consuming.  What do you do with this type of mail?  If you are going to mail then target 55+ communities whom the residents still open mail), cold call (One way, but again time consuming.  Hire at VA overseas and just have them send you back the "yes, I am interested in learning more."  then follow-up with them), text follow up, cold call, email, then qualify / disqualify leads. (The phone companies are cracking down.)
      Using my rental income, I have a ~$1k / month budget for marketing and tools. Goal is to find first deal defining the systems and KPIs, then scaling spend from there. (If you are going to do this right I would say $5K a month and look into incoming lead sources like facebook and google pay per click.)

    Good Investing...

    [email protected]949-625-4533
    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    2y
    Quote from @Martin Forde:

    Hello Biggerpockets,

    I’m a moderately experienced and networked real estate investor looking to start exploring the wholesaling niche here in LA.

    Looking for a gut check of my strategy, and to speak with anyone pursuing similar niches here in LA or other highly competitive markets.

    Context and background

    My first deal was a massive live-in flip. We purchased a hoarder house and gut renovated it, converting the downstairs space into an ADU. We now house hack the property to mid-term tenants. Long term aspirations for the lot is to use SB9 to split and add 1-2 additional units.

    Learned a ton through this process - such as negotiation, deal underwriting, renovation estimates, contractor management, etc. Hosted a meetup and met a ton of local investors, I'm somewhat known in the local LA REI circles. Built out a small REI focused Instagram account as well (@ SB9LA)

    I have a stable, corporate, remote W2 job with a ton of bandwidth. We have summer Fridays coming up, which gives me even more time to allocate towards this. No kids yet, just my wife. With weekends and afternoons - I could easily spend 20+ hours / week on advancing this.

    Here’s why I like wholesaling and why I think I could break through:

    1. Deep experience and familiarity with sales cycles and tools. I work in corporate sales as my W2. Prospecting, outreach, negotiation are things I do on a daily basis. I look forward to the absolute meat grinder of a sales cycle awaiting me.
    2. Experienced investor. Seems like most people use wholesaling a starting point or a way to generate capital. I want to build this niche to be one of my primary income generators.
    3. Already networked and known within local REI community. Looks like a major hurdle for newbies is simply knowing who to sell deals to once they lock them up. I have a solid established buyers list in place through my years of networking and building my Instagram.
    4. First access to best deals in the marketplace. This is more mid-term, but I’d like to start flipping. I know that being able to get first crack at deals would be a massive competitive advantage. It would also allow me to wholesale skinnier deals or ones I don’t have bandwidth for.

    My strategy framework is below:

    1. Narrow focus on lead generation. I’d like to start with divorces and recent probate records as my primary lead targets. I recognize these are highly charged and emotional moments. I consider myself to be very empathetic and believe I could help solve problems to people needing to unload properties quickly.
      1. Would also “drive for dollars” by biking and running but only in my local neighborhood here in Northeast LA. This seems oversaturated and un-strategic, but I know my neighborhood well and believe I could differentiate here as well.
    2. Engagement sequence would be a mailer with a handwritten address, cold call, text follow up, cold call, email, then qualify / disqualify leads.
    3. Using my rental income, I have a ~$1k / month budget for marketing and tools. Goal is to find first deal defining the systems and KPIs, then scaling spend from there.

    I appreciate any thoughts or constructive feedback!

    Here’s my honest opinion; not trying to be overly critical, just hopefully constructive advice

    Your plan sounds like a newbie with no money and experience trying to wholesale 

    Look, wholesaling real estate is a BUSINESS.  As such it doesn’t earn a high enough LOI when done as a part time “hobby”.  Sure, you can find a few deals, probably close one or two.  But at the end of the year when you add up your income per hour, you won’t be happy.

    I know some successful wholesalers.  They use various strategies, techniques, etc.  One guy I’ve known for 30 years completes the purchase in his own name for cash, and turns around and sells sometimes minutes later.  He calls this “real” wholesaling, and showed me his PFS with a net worth of $50 million. He started with $25k in 1983.

    More conventional “wholesalers” I know try to “flip” the subject property before their purchase contract expires.  As a whole they have the following in common as per their operations
    1. They spend $10,000 or more per month on SEO, SEM, direct mail, direct email, text, and call center 
    2. They have admin people on payroll to handle tasks that can be handled by trained people and spend their time at higher level tasks
    3. They have developed relationships with buyers and can usually “flip” a contract in hours
    4. They manage their business full time

    I’m any case, good luck in whatever way you decide to proceed 
    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    1Reply
  • Gustavo Munoz Castro
    Specialist · Bothell, WA · Member since 2014 · 269 posts · 80 votes
    2y

    1. Narrow focus on lead generation. You're in a super competitive and very high priced market. I'd say try whatever can work, try different lists (absentee, notice of default, pre-foreclosure, old Expired, FSBO that looks run down, etc), get 1K numbers at a time, call 2-3 times and shelve it for at least 1 month a get new ones. When you've tried several categories then you can niche down. If you got that suggestion through networking and folks killing it with those strategies then maybe start there. Follow-up sequence looks solid. For the driving for dollars strategy, keep following up long term.

    $1K isn't a lot once you factor in list building, dialer, mailers, etc, but should be enough to get you started. Once you gain some traction you can hire a VA caller to at least batch up and make the calls more efficient, its what takes the most time (I run a call center for Real Estate).

    0Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    2y

    Neither target opportunity types are ideal for wholesaling, especially right now. Sellers have too high of expectations, too high a chance for holdouts who bog down sales and too many eyeballs questioning your transaction “creativity.”

    There’s money to be made but you need to think through how you add value. It’s not going to be high volume that wholesaling implies.
    If you’re familiar with the real estate economic cycle, you’ll recall that the period following a rapid period of price inflation leads to a flat period (stagflation - rising interest and flattening sales). 

    There are opportunities in probates but by design the court system limits what these are. Court confirmed sales prevent you from assigning contracts, while Full Authority sales (which only require noticing) get so much attention from competition that margins are compressed to the point of not worth the trouble for all but a few.

    If you actually have your own funds (!) you could look for opportunities with reverse mortgages in default (backwards marketing) and tax defaulted property (the last group can be difficult to sift and sort due to large quantities).

    In the end, you’ll do much better focusing on solving problems that others cannot or are not willing to solve (hoarding, squatters, liquidity, defective title, skips, etc.).

    BTW, I started with working foreclosures (1978) and then deceased owner and title-impaired property about (35) years ago and have closed several thousand deals to date.  

    0Reply
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