Easy Way to Get Started Wholesaling
I've read literally thousands of threads on BP over the years asking how to get started wholesaling. In addition, I probably get asked the same question by email, phone and in-person about a dozen times a week.
So, I thought I was share my advice for new wholesalers who are looking to get into the business:
Start by buying and selling (wholesaling) items you are familiar with off of Craigslist and eBay.
In other words, before you start trying to buy and sell houses, figure out how to many $1000/week buying and selling smaller stuff that you're familiar with.
To be a good wholesaler, you need to learn lots of stuff -- and most of the important skills can be learned by wholesaling much less expensive than houses:
- Arbitrage: First and foremost, you need to have a gut-level understanding and appreciation for arbitrage -- buying at one price, selling at another and creating value for all three parties (buyer, seller and yourself) in the process. Too many wannabe real estate wholesalers don't appreciate the value they need to add in the process, and think it's all about them.
- Process: Wholesaling is the same, regardless of the commodity. It's important to understand the role of a wholesaler in a transaction, and that role is similar regardless of the item being arbitraged. Understanding that you need to find deals, buy at a discount, potentially figure out how to add value, market the product for resale and then sell for a profit is key. And understanding that there are hidden costs throughout the process is also important. Too many wannabe real estate wholesalers ignore the process and the hidden costs and get themselves into bad situations.
- Negotiating: You need to learn how to negotiate with buyers and sellers. Whether it's a book or a house, buying at a discount and selling for a profit is paramount. Too many wannabe real estate wholesalers think great deals just appear out of nowhere. In reality, it involves lots of good negotiation skill.
- Research. If you're not comfortable researching and learning about how to arbitrage $10 items, you're never going to be successful researching and learning about how to arbitrage $100,000 items. Go pick something you know nothing about -- baseball cards, pens, watches, electronics, clothes, etc -- and practice wholesaling those things. You'll quickly realize that you need to spend many dozens (or even hundreds) of hours learning the ins and outs of whatever it is your wholesaling. Too many wannabe wholesalers don't know anything about houses, and don't realize that's an impediment. Once you realize that trying to wholesale something you know nothing about is really, really hard, you won't make that mistake.
- Commitment. If you want to make any money wholesaling anything, you'll have to spend a LOT of time. Doesn't matter if you're wholesaling fruit bowls or motorcycles, but the time it takes to learn the product and learn the process -- as well as the time it takes to actually complete deals -- is surprising to many people. For some reason, many wannabe real estate wholesalers think they can do the business in a couple hours a week; once you realize that you can't wholesale small stuff in a couple hours a week, you'll realize that you CERTAINLY can't wholesale houses in a couple hours a week.
- Logistics. You can't just wholesale stuff by sitting in your pajamas in front of your computer. You need to talk to people to learn the business, meet with sellers, meet with buyers, look at product you're considering, etc. When you're buying and selling off Craigslist, you'll start to realize how much time is spent outside the house with "boots on the ground." For some reason, lots of wannabe real estate wholesalers think that "virtual wholesaling" is even easier than getting their asses out of the house -- sorry, it doesn't work that way, and you need to be prepared for the amount time/travel it takes to be successful.
- Business. If you're buying and selling stuff, you're running a business. That requires record keeping, entity management, financial skills, tax considerations, etc. If you can't do that when your business is transacting a couple hundred dollars a week, you certainly won't be successful when you're trying to make thousands of dollars at a time.
- Reality. Wholesaling anything is really hard. It requires a lot of time, energy, knowledge and commitment. Great wholesalers are experts in whatever it is they're wholesaling. When the stakes get bigger (houses!), the difficult and commitment increases as well. Many wannabe real estate wholesalers say they are willing to put in the commitment ("I'll do whatever it takes!!!"), but they aren't really expecting to have to do much work -- they think money will just fall into their laps. Before you waste lots of time and money trying to wholesale houses, see if you have the commitment to do something on a smaller scale first.
Overall, if you're sincerely willing to spend the time and energy it takes to become a successful real estate wholesaler, you shouldn't mind spending a couple months learning and preparing by doing what I suggest above. If you're not willing to do that for a couple months first, my guess is that you're not truly serious about getting into this business, and likely won't be successful anyway.
Worst case, even if you never become a successful real estate wholesaler, perhaps you'll learn some skills to help you make some extra side cash buying and selling other stuff...
