Starting a wholesaling business with a partner

25 Replies

Any tips on starting a wholesaling business with a partner? 

Updated over 6 years ago

Let me elaborate: tomorrow I'm sitting down with my friend to discuss starting our wholesaling business. Our roles and goals within the business will be defined. Are there any other topics that should be discussed?

Make sure you are very clear about what each members responsibilities will be. 

Agree on how the 1st $10k will be spent.

figure out if this is going to be a business that will least until one partner reaches a goal or for forever. 

Iv e had a partner since i started, my advice would be to find someone is completely 100% opposite from what your strength is. So you spend 100% of your time getting better at whatever your job is...Myself, i love to market, i love to put together list and spedn every moment finding new way to market. I get the list and make sure it get to the mail house...My partner isnt totally opposite he loves people, he can talk you into buying your shirt off your back. He handles 100% of acquisition..He talk to the client, he meets the client, he get contract signed and takes seller through the enitire closing process...I have never met a customer and never intend to...It works well..

We have an open end about everything, every call get recorded, he only allowed to call clients from an app everytime he speaks to them so everyone can hear whats going on...We have an emal system where we keep track of every lead, the status etc....It very important to be open, especially if both of you know wholesaling very well. It will mess with you naturally, you might think someone is going behind your back closing deals et...

And last you guys need split EVERYTHING 100% and make sure your partner understand finances and what it take sto keep business flowing, if hes bad with money and you are, you will end up fronting every time mailing need to done etc..And it will hurt your relationship...

Both you and your partner need to know, it cost to keep phone lines on, buying your mailing list cost, sending mail will cost, you might hire a couple VAs to do small things.. that will cost,  cleaning your list up making sure your addresses are correct will cost, going to see clients will cost you..Theres alot to having a partner so think of these things when you get into business with someone...Iron all of these out from jump..And of course things happen maybe a family emegengy and your partner cant afford to put as much everytime...Just make sure you work all of it out...

I'll suggest you check with your state laws as to wholesaling as a business. What knowledge and experience does your partner have in real estate? And yours?  Learn real estate before trying to deal in real estate, it is not like other industries of our economy, it is unique. 

I hope Jason gives the proper notice on his recorded phone calls, wiretapping can be a serious issue. :)

@Bill Gulley

Wow you didnt put down the holy hand against wholesalers this time. ;-)

Of course, what business do you call that dosent let the caller  know "They are being recorded for quality and training purpose?"

Thats why i stated it cost to have a phone line, not a google voice number or some free # service...

Originally posted by @Jason Farmer:

@Bill Gulley

Wow you didnt put down the holy hand against wholesalers this time. ;-)

Of course, what business do you call that dosent let the caller  know "They are being recorded for quality and training purpose?"

Thats why i stated it cost to have a phone line, not a google voice number or some free # service...

 I don't like repeating myself, folks can do a little searching and reading on topics they are interested in.

Not many RE companies act like Verizon or AT&T.

Funny, my son started another business, his phone had a directory;

1 for customer service

2 for shipping

3 for accounting

4 accounts payable

5 production tracking 

6 Emergencies

All those numbers just went to he or his wife at first.....LOL

Now, those departments are there and staffed. 

Good deal, you gave notice, now, go and sin no more!  :)

Originally posted by @Bill Gulley :

I'll suggest you check with your state laws as to wholesaling as a business. What knowledge and experience does your partner have in real estate? And yours?  Learn real estate before trying to deal in real estate, it is not like other industries of our economy, it is unique. 

I hope Jason gives the proper notice on his recorded phone calls, wiretapping can be a serious issue. :)

I'm not sure if it makes a difference how I word it. But me and my friend are going to wholesale real estate together. Wholesaling real estate is legal in Maryland. We both educate ourselves daily as far as real estate goes. I personally have a mentor who also is a wholesaler. My friend is more knowledgeable than I am though. But I'm no slouch. Basically I'm at the point where I have to engage in action instead of constantly preparing for battle if that makes sense. 

I was suggest a C corporation to start

Have you and your partner on 48% each and having a referee like a CPA own 4%

I had a 50-50 partner once  and he didn't know as much as I did and much less experienc, but he brought cash injection into the corporation

My CPA said what happens if you guys get divorced???

50-50 partnerships and business formation is absolutely stupid

I had to close the corporation, to clear the corporation into receivership , and reopen a new corp

It cost me six months of my time iand about $35,000 in legal fees

School of hard knocks

Thank God I was only 27 at the time

@Bill Gulley great post :)

@David White , what I was saying was learn real estate, not how to wheel and deal in strategies so much. If you know RE, you probably won't be wholesaling or at least you'll be doing more profitable transactions. That knowledge takes about a week to read through, in 3 weeks you''l be comfortable with accurate comps, settlement requirements, title requirements and valuations as well as buy and hold strategies. Estimating repair cost comes next, then you can be a wholesaler doing things the right way.....which isn't taught by gurus. 

As to legal.......I bet is is legal to assign a contract. You may find later on that assigning contracts as a business venture can be different in the eyes of regulators and others involved in RE than an individual who just assigned a sales contract. Don't expect the wholesaling gurus or mentors or coaches to explain such differences as they benefit from advancing the dream.

Brian......a C Corp for wholesaling? You like being taxed twice? If anything, I'd suggest an LLC.

David, read the wholesaling forums, the issues other investors have with these people, main thing is that they bring in junk deals.......why? Because they don't know the basics of RE and don't understand the real needs of the investor buying. It's also how people get in trouble, messing over homeowners because they are not aware of the homeowner's position or what they are likely to do when they get a contract. Good luck to you and your partner :)

Originally posted by @Jason Farmer:

Iv e had a partner since i started, my advice would be to find someone is completely 100% opposite from what your strength is. So you spend 100% of your time getting better at whatever your job is...Myself, i love to market, i love to put together list and spedn every moment finding new way to market. I get the list and make sure it get to the mail house...My partner isnt totally opposite he loves people, he can talk you into buying your shirt off your back. He handles 100% of acquisition..He talk to the client, he meets the client, he get contract signed and takes seller through the enitire closing process...I have never met a customer and never intend to...It works well..

We have an open end about everything, every call get recorded, he only allowed to call clients from an app everytime he speaks to them so everyone can hear whats going on...We have an emal system where we keep track of every lead, the status etc....It very important to be open, especially if both of you know wholesaling very well. It will mess with you naturally, you might think someone is going behind your back closing deals et...

And last you guys need split EVERYTHING 100% and make sure your partner understand finances and what it take sto keep business flowing, if hes bad with money and you are, you will end up fronting every time mailing need to done etc..And it will hurt your relationship...

Both you and your partner need to know, it cost to keep phone lines on, buying your mailing list cost, sending mail will cost, you might hire a couple VAs to do small things.. that will cost,  cleaning your list up making sure your addresses are correct will cost, going to see clients will cost you..Theres alot to having a partner so think of these things when you get into business with someone...Iron all of these out from jump..And of course things happen maybe a family emegengy and your partner cant afford to put as much everytime...Just make sure you work all of it out...

Your situation with your partner describes mine. My partner is a natural salesman. And I think I can handle the marketing and cost side. Thank you for your response. I'm going to show him your response and use it as a framework for our business arrangement. Do you mind telling me what app you use for your phone calls? 

Originally posted by @Bill Gulley :

@David White, what I was saying was learn real estate, not how to wheel and deal in strategies so much. If you know RE, you probably won't be wholesaling or at least you'll be doing more profitable transactions. That knowledge takes about a week to read through, in 3 weeks you''l be comfortable with accurate comps, settlement requirements, title requirements and valuations as well as buy and hold strategies. Estimating repair cost comes next, then you can be a wholesaler doing things the right way.....which isn't taught by gurus. 

As to legal.......I bet is is legal to assign a contract. You may find later on that assigning contracts as a business venture can be different in the eyes of regulators and others involved in RE than an individual who just assigned a sales contract. Don't expect the wholesaling gurus or mentors or coaches to explain such differences as they benefit from advancing the dream.

Brian......a C Corp for wholesaling? You like being taxed twice? If anything, I'd suggest an LLC.

David, read the wholesaling forums, the issues other investors have with these people, main thing is that they bring in junk deals.......why? Because they don't know the basics of RE and don't understand the real needs of the investor buying. It's also how people get in trouble, messing over homeowners because they are not aware of the homeowner's position or what they are likely to do when they get a contract. Good luck to you and your partner :)

 How would you suggest I go about learning real estate? Are there certain books I should read, etc

Originally posted by @David White :
Originally posted by @Bill Gulley:

@David White, what I was saying was learn real estate, not how to wheel and deal in strategies so much. If you know RE, you probably won't be wholesaling or at least you'll be doing more profitable transactions. That knowledge takes about a week to read through, in 3 weeks you''l be comfortable with accurate comps, settlement requirements, title requirements and valuations as well as buy and hold strategies. Estimating repair cost comes next, then you can be a wholesaler doing things the right way.....which isn't taught by gurus. 

As to legal.......I bet is is legal to assign a contract. You may find later on that assigning contracts as a business venture can be different in the eyes of regulators and others involved in RE than an individual who just assigned a sales contract. Don't expect the wholesaling gurus or mentors or coaches to explain such differences as they benefit from advancing the dream.

Brian......a C Corp for wholesaling? You like being taxed twice? If anything, I'd suggest an LLC.

David, read the wholesaling forums, the issues other investors have with these people, main thing is that they bring in junk deals.......why? Because they don't know the basics of RE and don't understand the real needs of the investor buying. It's also how people get in trouble, messing over homeowners because they are not aware of the homeowner's position or what they are likely to do when they get a contract. Good luck to you and your partner :)

 How would you suggest I go about learning real estate? Are there certain books I should read, etc

 Try that big blue logo below and my link!  It's free!

Or, buy a text book for agents who must take the class for their license, you can get used ones for a few bucks. 

;) 

@Jason Farmer pretty much hit the nail on the head on this one. I work with a "partner" and I quote it because she is like family to me. You have to answer the question "Would you TRUST this person enough to take care of your kids?" If the answer is yes, then your business will flourish. Wholesaling is a  lot about trust. I wouldn't add anything else that Jason hasn't said, your definitely on the right track though. You have to wear a lot of hats in this business, and if your partner will help you wear some then you will flourish tremendously! 

Originally posted by @Bill Gulley :
Originally posted by @David White:
Originally posted by @Bill Gulley:

@David White, what I was saying was learn real estate, not how to wheel and deal in strategies so much. If you know RE, you probably won't be wholesaling or at least you'll be doing more profitable transactions. That knowledge takes about a week to read through, in 3 weeks you''l be comfortable with accurate comps, settlement requirements, title requirements and valuations as well as buy and hold strategies. Estimating repair cost comes next, then you can be a wholesaler doing things the right way.....which isn't taught by gurus. 

As to legal.......I bet is is legal to assign a contract. You may find later on that assigning contracts as a business venture can be different in the eyes of regulators and others involved in RE than an individual who just assigned a sales contract. Don't expect the wholesaling gurus or mentors or coaches to explain such differences as they benefit from advancing the dream.

Brian......a C Corp for wholesaling? You like being taxed twice? If anything, I'd suggest an LLC.

David, read the wholesaling forums, the issues other investors have with these people, main thing is that they bring in junk deals.......why? Because they don't know the basics of RE and don't understand the real needs of the investor buying. It's also how people get in trouble, messing over homeowners because they are not aware of the homeowner's position or what they are likely to do when they get a contract. Good luck to you and your partner :)

 How would you suggest I go about learning real estate? Are there certain books I should read, etc

 Try that big blue logo below and my link!  It's free!

Or, buy a text book for agents who must take the class for their license, you can get used ones for a few bucks. 

;) 

 I never thought about that. Thanks for the idea. I'll also check your link out. 

Originally posted by @Edgar U. :

@Jason Farmer pretty much hit the nail on the head on this one. I work with a "partner" and I quote it because she is like family to me. You have to answer the question "Would you TRUST this person enough to take care of your kids?" If the answer is yes, then your business will flourish. Wholesaling is a  lot about trust. I wouldn't add anything else that Jason hasn't said, your definitely on the right track though. You have to wear a lot of hats in this business, and if your partner will help you wear some then you will flourish tremendously! 

Same here. I've known my partner since middle school. Our families know each other with our moms being best friends. We both had a separate interest in real estate before we knew each other did as well. Right now we're only in the beginning stages. We started our marketing campaign. Because funds are low we can't outsource the writing of our letters. So we're writing them ourselves. Yes I know it sucks. But between 500 letters we're each doing 250. I guess its a learning experience. Anyway he brought the leads and our marketing materials and I'm buying the stamps. 

If you're going to use the "I have a partner" approach, understand you take on legal implications, doesn't matter how much you love them. Draw up a simple partnership agreement so you actually do have a partners, you can have a dozen partners. Don't let your mouth over load you tail, it's called CYA and then you don't have to lie to or mislead others. :)

Originally posted by @Bill Gulley :

If you're going to use the "I have a partner" approach, understand you take on legal implications, doesn't matter how much you love them. Draw up a simple partnership agreement so you actually do have a partners, you can have a dozen partners. Don't let your mouth over load you tail, it's called CYA and then you don't have to lie to or mislead others. :)

This might be a stupid question. But, what does CYA stand for?

@David White how about writing one standard letter and make a copies? Make it generic like "We are interested in buying your home and giving you a cash offer, we need to buy one more and hopefully yours will be one call [your number].

If you really want to go all out follow the next easy steps:

Step 1. Create a handwriting font using your own handwriting! 

You need to follow the steps on this website. Click here for handwriting link

(tip: whomever has the best handwriting should be writing this.) This will take a couple of trial and errors to get the customized font working properly. Don't give up if your font doesn't look the best at first.

Step 2. Once done start typing the letter you guys are currently using with your very own hand writing font within Microsoft Word.

Step 3. Mail merge your mailing list into this Microsoft Word Document. 

Step 4. Use the handwriting font to mail merge onto the envelope. You will need to adjust your margins for your printer on this one. 

Once everything is done you can print, fold, and stamp. No need to write them yourselves and once you do the process over and over it should take about 5 minutes or less to print about 500 letters and then just put the stamps. If you don't have a printer I would suggest going to your local UPS store, you can print black and white letters for .10 cents, plus they can help you with printing your envelopes. Just make sure you save everything in PDF format. 

@Jason Farmer  

@Jason Farmer Hi, Jason would really like to know more on how you setup your partnesrship. I am looking to do the same, find someone I can partner with in the same way you set up your partnership. My strengths is not in acquisition and I would probably not want to deal directly with the seller. Did you use a JV agreement with your partner, if so can you tell me what were the terms or provide a sample copy. thanks so much.