Review of first full year of wholesaling

[Silvio L.]

Like many, I started wholesaling as a first step towards real estate investing. I've been on BP since 2011 and in 2013 I finally decided to give it a try. I kept track of my progress here on BP early on, but I haven't posted anything for a while. Now - a little over a year later -I want to discuss how it's been going. 

To summarize my first year, I would say it was slightly above average. Let's talk cash first. I closed 2 deals - rather - WE closed 2 deals (my mentor/partner, my girlfriend/partner, and I). First deal netted us $14,000 and the second $18,000 for a total of $32,000. We split 50/50 with our mentor, so we made $16,000. Not too bad for our first year. Funny thing is we've been marketing all over northern NJ and the 2 deals we closed were within 2 miles of each other. I'll discuss the deals individually in a separate post. 

We also missed out on a couple of deals. 3 to be exact. I remember them well because I replay the scenarios over in my head to dissect exactly why they fell apart. One deal that still hurts is one that we actually did all by ourselves. We found the deal and a buyer, negotiated the price, and squeezed a $5k profit in for ourselves. The buyer didn't even want to do any inspections and was ready to close in a week!  We had the contract all signed and 2 days later received a letter from sellers attorney reneging the deal. Anyway, maybe I'll go into detail about each collapsed deal in a different post. 

What we've done right: automating systems wherever possible, invested heavily in marketing, improved negotiation tactics, improved deal analysis and running comps, taking internet marketing and SEO seriously, finding unique buyers, and developing a good "instinct" for what is a deal and what is not. 

What we can improve: networking, being more active in REI clubs, being more active on BP and other sites, negotiating still needs work, better system for organizing leads, expand marketing and get more creative.

Goals for 2014/2015: Double revenue, complete deals without mentor assistance, expand marketing, target different types of motivated sellers, grow our name and reputation in the RE community, and do more deals! 

In May 2014 we formed our LLC. It was so easy! After we did it I definitely felt silly for not having done it much earlier.

And as a matter of fact, as of today I am dropping 8 hours a week from my full time job, working 32 instead of 40. Those 8 hours are being dedicated to growing our business.

I have so much more to share about the experiences I've had starting out in real estate investing, I've learned so much this past year. For now I'll stop here, and end by saying that I've listened to a lot of podcasts & read a lot of books, but there is some serious "untold" stuff in wholesaling that no one is teaching, and it can only be learned thru experience. 

[Troy Sheets]

Originally posted by @Silvio L.:

@Doug McLeod, 

A hobby? I doubt that anyone spending as much time, effort, and money doing what I'm doing would call it a hobby. Do me a favor and save your pedantic comments for someone else, I'm not interested. Thanks! 

Hey Silvio,

First off, great job taking action and having success, very impressive first year!!! I did want to say that I suspect Doug's comments were meant to be helpful more than pedantic or derogatory. He's correct that, unless you automate your systems or hire employees, you'll still need to put hours in to equal a payday. Rentals and notes/lending are more passive and I think that's the point he was trying to make (perhaps poorly?). I do understand you've invested in education, time and of course, money, however, the word "investor" generally conjures visions of owning an asset and holding for cash flow or appreciation. I would call you an investor as well, and I think Doug would too, he was just trying to broaden your horizons a bit. 

Regarding the "hobby" comment, I guess you don't know what you don't know and that's why you took great offense to it but, in reality, Doug is trying to give you a heads up in relation to taxes. As your wholesaling business becomes more successful, the IRS won't consider it a hobby and you'll have to start paying all sorts of fun extra taxes you're probably not even aware of at this point. For your sake, the longer wholesaling is a "hobby" for you (in the eyes of the gov'mt), the better!

I encourage you to reread what Doug wrote and look it at from a standpoint of his trying to enlighten you, not disrespect you. Man you Jersey guys are tough :)

Troy