How to shut up the Wholesale bashers

How to shut up the Wholesale bashers

Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes

Wholesaling real estate can be life changing. I know a lot of people who started from nothing and now make 6+ figures annually doing so, that pisses agents off lol. 

The things I see about wholesaling on BiggerPockets are discouraging and borderline hate speech. 

Basically, the kids that grew up the nice comfortable middle class neighborhoods, went to college like mommy and daddy told them to are telling people that dont have the credit to get a traditional loan or capital to close on a property that you can't be in real estate. 

If you don't have a sh*t load of money to spend, or near excellent credit you shouldn't be in real estate, is the summary of the BS I've been reading. 

Now on to the legal part of it all...

Is wholesaling ILLEGAL? 

No. Wholesaling is simply buying something low and selling it low enough for the end buyer to make a profit. 

Assignments are legal in most states, some not so much...in every state that doesn't allow assignments I GUARANTEE there's an agent pissed off at guy who made his annual salary in one deal. 

Guys and gals, remember: From a legal perspective for a contract to be legitimate you have to have the intent and ability to close. 

The intent comes when you partner with a Transactional lender to fund your deals, you then have the intent and ability to close, if you meet the transactional lenders criteria with the way the deal is set up. 

Now I can already see someone saying "well if you're wholesaling you don't have the intent to buy" Well...you do. But you're only going to close on it if you can sell it, that's actually smarter to me. Rehabbers buy with the hope to sell, as a wholesaler we buy (double close) when we KNOW we can sell and I advise you to be upfront with your sellers as well. 

If you're an inspiring wholesaler be careful with what you pay attention to on here, chance are you got into the business due to lack of a big ol' fat bank account, excellent credit, connections, etc. (All the things the guys bashing wholesalers seem to have...hm...)

Organize your business, learn the laws, help sellers, be honest with them, and by all mean IGNORE THE WHOLESALING BASHERS ON THIS SITE. I bet none of them had to wholesale their way out of $37,380 in debt and a motel room. They don't know the struggle, they don't want you have a bigger pool than Kanye! 

But all jokes aside, guys and girls wholesalers get a bad rep because there are some people who mislead sellers, honesty and full disclosure is the key. 

I understand some people are afraid to tell sellers they wholesale, and that's understandable Don't say that; What you want to do is set up an LLC before you start, get the website the logo, etc. Look credible. Build your buyers list, build your transactional lender team as well, your business is dependent on those things.

So what do you say when a seller asks what you do or what the hell the and/or assigns means? 

"I work with a group of investors (the transactional funders and cash buyers; truth here!) I buy and sell properties to other investors, sometimes I'll assign the contract just to simplify things, that's less in transfer taxes, etc. 

....if they don't want you to assign it (yeah some people are picky and sensitive) and the numbers make sense just double close using a Transactional lender, 0 money out of pocket. It's very simple. 

So, let's go over that again. 

The "INTENT AND ABILITY TO BUY" comes from having a Transactional lender on your team, develop a relationship with them, get to know them. 

Too many people just brush off this idea, well let me tell you, the agents are getting tired of us helping sellers and making a killing so they're running to the big bosses and trying to stop it all, one day assignments may be illegal everywhere unless you're an agent, so in case that day comes be ready. 

Excuse any spelling or grammatical errors... actually don't, I don't give a sh*t. I made my point. 

Happy wholesaling! 

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Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y

This thread should get a lot of responses:)

Your arguments are bogus. Selling a contract is NOT investing. Closing on a deal and then reselling is investing. Laws vary state to state. Regardless of your arguments, most are just unlicensed operators acting as brokers. Most of the time they bring no or little value to a deal. I just saw a guy "wholesale" a property 20% under market in a HOT area. Any agent could have listed the property and got the seller EASILY 30K more after commission. Please tell me how this benefited the seller?

p.s.--you want to "shut up" people that disagree with your concept, disagree with a lot of post promoting dishonest, etc. What does that tell the BP readers? If you felt like making a statement about disagreeing with posters (I am one well known for expressing opinions) maybe that would promote better responses? I don't recall any posts from people wanting to "shut up" people promoting dishonest or illegal practices. BTW, what professional licensing do you hold and who holds you accountable for honesty and ethics? Anyone? Your arguments are FALSE and misleading. Some people need to do that to convince themselves they are right.

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  • Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
    10y

    There a few things in this life that are guaranteed:

    1.  Death

    2.  Taxes

    3.  BiggerPockets posters hating on Wholesalers

    I used to care what other folks in real estate thought about wholesalers and wholesaling.  I also used to believe in Santa Claus.  Neither impact my life in any way now that I don't.

    When I cared, I'd tried to convince people that wholesalers weren't evil by definition.  Now I treat those people like a treat people that won't buy in certain areas because they're "dark" or "integrated" or whatever other code word they use to hide their racism - I don't do business with them and don't try to.

    Haters gonna hate.  There ARE bad wholesalers out there - one is threatening to sue me today because he backed out of a deal to buy a house from me and is demanding his nonrefundable deposit back.  There ARE bad real estate investors out there (however you want to define it), too.  Too many people speak in broad generalities and whatever valid points they are making get lost because so few things in life are certain (save the 3 things at the top of this post).

  • Rental Property Investor · Providence, RI · Member since 2015 · 1k+ posts · 594 votes
    10y

    Make so much money that they apply to work for you.  Let em bash while you count cash.

  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    10y
    Originally posted by :

    I do business in 12 states I was in Milwaukee 2 weekends ago.. just missed the  riot there.

    I live in Milwaukee and I missed it as well.  I heard about it on the news but it didn't impact me or the area I invest in.

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    10y

    @Larry Turowski Regarding "But I don't understand the hand wringing over the term investor." The short answer... Allen is a Real Estate Dealer. From an IRS standpoint, it is important to realize that his activity and intent is not classified as an investment.

    The good thing is it appears Allen is extremely successful and will be able to pay the IRS all the taxes due.  

    disclaimer to BP Nation: you should talk to your tax professional regarding withholding and liability for estimated tax payments to avoid penalties. I am not a tax advisor or tax professional.

  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    10y

    We INVESTORS love wholesalers.  If you are really in the investment game, there is no disputing this.  Like any profession, there are good and bad people at it but the good ones can do a ton for landlords, flippers and other investors.  Bashing wholesalers simply means the person bashing lacks experience and awareness in real estate investing.  I love wholesalers like I love investment friendly Realtors.  Why? Because they are virtually the same kind of LEAD SOURCE.  A good lead source is a massive part of the investors success.

    Bad wholesalers like bad investment Realtors wash out and do very little if any business.    The good ones do the opposite and end up benefiting a lot of people. 

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    10y

    Folks, "investing" requires an investor to take on a financial risk, it has nothing to do with money in the deal really, a significant risk, not just the chance of losing earnest money, but taking ownership of an asset, accepting ownership and financial risks. 

    A flipper is investing in real estate if they buy it, they certainly take on a greater financial risk by making and paying for improvements in hopes of forcing appreciation.

    If I buy a house with 100% seller financing, I've taken on a financial risk by signing the note and I take title. Doesn't really matter what I do in the next 30, 60, 90 days or in 5 years, my goal is to make a profit by holding title and paying for that house.

    If you don't take title and take on a financial risk with the dirt, you're not investing in real estate, you're an "operator" such as investing your money in options, you might be an options investor but you're not a real estate investor, you fall in to the real estate operators category. When and if you take title, along with accepting financial risks, then you become a real estate investor. 

    I didn't take a poll, but most members on BP are operators, not investors in real estate.

    When you joined BP, you automatically get tagged by BP as an investor, that is simply marketing hype for the site, it's meant to pump you up, join the exclusive club of "investors" it's simply a cool title for social networking. It's a badge you get to wear on BP, nothing more. 

    Everyone has an ego, in psychology we have an "Id" that little character that sits on your shoulder telling you how great you are, we have a mental picture of ourselves as to our social acceptance, this picture needs to be somewhat fairly assessed to be mentally healthy, too much of a higher opinion makes you egotistical and too little is low self esteem, that breads anxiety and depression.     

    A good marketeer or sales person plays on your Id to motivate you, this can also be leadership, influencing others to do what they normally would not do. 

    If you want to know what makes the "world go round" study psychology, you're constantly being "played", another reason to have a good BS Meter!

    So, we will always define ourselves generally a bit better than others see us, keeping this in check realistically is key to our personality. I'm often amused by some of the BSer's on BP, you can spot those whose favorite word is "I" and can't make a post without pumping their ego, then like a room full of junior high groupies following them, they'll dream up more stories to tell. But, it is a social site!

    I've accepted the popular term "investor" on BP, I'm amused when newbies begin a post with "I'm an investor in" everyone needs an identity, it's a hard wired psychological need. I don't see any harm in their impression of themselves on BP, but a bit more care might be in order when someone is speaking with someone who really is an investor, one with experience and means as they may be laughing behind that smile, knowing the difference between an operator and an investor.   

    I'm not a shrink, but I did read a psychology book once! Okay, several.....

    And, Allen, I thought everyone on BP was in the "in crowd" membership status is another ego trip that is sold, (there are advertising advantages with Pro membership) but there is no reason to set yourself on the "outside" unless that is where you want to be. 

    All investors and operators are welcome here! Just don't screw it up......

    :)

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y
    Originally posted by @Bill Gulley:

    Folks, "investing" requires an investor to take on a financial risk, it has nothing to do with money in the deal really, a significant risk, not just the chance of losing earnest money, but taking ownership of an asset, accepting ownership and financial risks. 

    A flipper is investing in real estate if they buy it, they certainly take on a greater financial risk by making and paying for improvements in hopes of forcing appreciation.

    If I buy a house with 100% seller financing, I've taken on a financial risk by signing the note and I take title. Doesn't really matter what I do in the next 30, 60, 90 days or in 5 years, my goal is to make a profit by holding title and paying for that house.

    If you don't take title and take on a financial risk with the dirt, you're not investing in real estate, you're an "operator" such as investing your money in options, you might be an options investor but you're not a real estate investor, you fall in to the real estate operators category. When and if you take title, along with accepting financial risks, then you become a real estate investor. 

    I didn't take a poll, but most members on BP are operators, not investors in real estate.

    When you joined BP, you automatically get tagged by BP as an investor, that is simply marketing hype for the site, it's meant to pump you up, join the exclusive club of "investors" it's simply a cool title for social networking. It's a badge you get to wear on BP, nothing more. 

    Everyone has an ego, in psychology we have an "Id" that little character that sits on your shoulder telling you how great you are, we have a mental picture of ourselves as to our social acceptance, this picture needs to be somewhat fairly assessed to be mentally healthy, too much of a higher opinion makes you egotistical and too little is low self esteem, that breads anxiety and depression.     

    A good marketeer or sales person plays on your Id to motivate you, this can also be leadership, influencing others to do what they normally would not do. 

    If you want to know what makes the "world go round" study psychology, you're constantly being "played", another reason to have a good BS Meter!

    So, we will always define ourselves generally a bit better than others see us, keeping this in check realistically is key to our personality. I'm often amused by some of the BSer's on BP, you can spot those whose favorite word is "I" and can't make a post without pumping their ego, then like a room full of junior high groupies following them, they'll dream up more stories to tell. But, it is a social site!

    I've accepted the popular term "investor" on BP, I'm amused when newbies begin a post with "I'm an investor in" everyone needs an identity, it's a hard wired psychological need. I don't see any harm in their impression of themselves on BP, but a bit more care might be in order when someone is speaking with someone who really is an investor, one with experience and means as they may be laughing behind that smile, knowing the difference between an operator and an investor.   

    I'm not a shrink, but I did read a psychology book once! Okay, several.....

    And, Allen, I thought everyone on BP was in the "in crowd" membership status is another ego trip that is sold, (there are advertising advantages with Pro membership) but there is no reason to set yourself on the "outside" unless that is where you want to be. 

    All investors and operators are welcome here! Just don't screw it up......

    :)

      You're absolutely right, and I apologize for any disrespect. It was an emotionally heated debate and it got to me, but I learned a lot. Thanks

  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    10y

    BP has got to be the only place where a debate between those thinking wholesaling is investing and those thinking wholesaling is dealing can become "emotionally heated".  LOL!

    Private Mortgage Financing Partners, LLC
  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    I am going to start a thread "How Can We Shut Up The Agent Bashers"....that should be fun! We all have a right to post opinions on a social networking site. Right, wrong, whatever...everyone has one. There are those that want to tag me a "hater", "basher" whatever, and they are welcome to their opinion. I don't hate anyone. There are people that promote dishonest and illegal activities. Can ALL of us agree that promoting anything in that manner is wrong? Maybe I should have been a cop instead:) 

    This is my last post in this thread. It has been entertaining and in fact one BP friend of mine that I have a business relationship with commented that my posts ARE entertaining:) If I can add value along with a little entertainment I am glad to do so:) 

  • Real Estate Consultant · Brookfield, WI · Member since 2014 · 873 posts · 350 votes
    10y

    I started out in the wholesaling side way back when. Obviously, I have since moved forward and progressed in my real estate knowledge and career since that time.  Like many have echoed there are some good apples and a few bad unfortunately...

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y
    Originally posted by @John Thedford:

    I am going to start a thread "How Can We Shut Up The Agent Bashers"....that should be fun! We all have a right to post opinions on a social networking site. Right, wrong, whatever...everyone has one. There are those that want to tag me a "hater", "basher" whatever, and they are welcome to their opinion. I don't hate anyone. There are people that promote dishonest and illegal activities. Can ALL of us agree that promoting anything in that manner is wrong? Maybe I should have been a cop instead:) 

    This is my last post in this thread. It has been entertaining and in fact one BP friend of mine that I have a business relationship with commented that my posts ARE entertaining:) If I can add value along with a little entertainment I am glad to do so:) 

     John, we love agents. It was emotionally charged discussion, but I'm sure we all learned from it. I apologize for any disrespect, have to be the bigger man. FYI I'm engaged to an agent:-) 

  • Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    Well over the past two days I just read where two different people said on two different posts that FLIPPING isn't investing either.

    I guess it all just comes down to that old saying, "Opinions are like..." well you know the rest.

    Do whatever you're going to do, and succeed at it.  That's all there is to it.

  • warren, OH · Member since 2015 · 49 posts · 5 votes
    10y

    So I must ask,  if I was to find a house the same as a flipper or buy n hold invester,  I buy said house and I'm up front and totally honest about my intentions and what I plan on doing. How is that wrong? No investor buys a house at market value so if I make a little bit of money for my work how or why is that bad?   Oh and this whole issue is why I stopped coming on to biggerpockets.

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    10y
    Originally posted by @Adrienne Bryson:

    Well over the past two days I just read where two different people said on two different posts that FLIPPING isn't investing either.

    I guess it all just comes down to that old saying, "Opinions are like..." well you know the rest.

    Do whatever you're going to do, and succeed at it.  That's all there is to it.

    As has already been pointed out, the IRS defines investment property a little different than BP Nation. Flipping isn't investing to anyone except on Bigger Pockets. If flipping or wholesaling was "investing", then flippers would just 1031 all day and not pay taxes. Again, thanks to all the wholesalers and flippers who pay taxes (because they have to) since they aren't investors per the IRS.

    I know 98% of wholesalers will look at this post and think (or say) 'he doesn't know squat...' but I contend if those 98% actually made a dime wholesaling, they would learn quickly that using "investing" methods (exchanges, installment sales, depreciation allowance, etc.) will not work for IRS non-investment transactions.

    When you sit across from an IRS officer, post about who's OPINIONS matter;)

    References:

     "Owners of investment and business property may qualify for a Section 1031 deferral."

    - "Qualifying use standards... The dwelling unit is owned by the taxpayer for at least 24 months..."

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    10y
    Originally posted by @Eric Mikesell:

    So I must ask,  if I was to find a house the same as a flipper or buy n hold invester,  I buy said house and I'm up front and totally honest about my intentions and what I plan on doing. How is that wrong? No investor buys a house at market value so if I make a little bit of money for my work how or why is that bad?   Oh and this whole issue is why I stopped coming on to biggerpockets.

    There is nothing wrong with what you are doing. In the current market, in 'hot' markets or perceived 'hot' markets, the astounding reality is that "investors" are buying at retail or above, with intent to hold for a year or longer. If you plan to sell quickly, just realize the realities that you transactions are viewed by the IRS differently than as if you intend to "invest" in real estate.

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y

    I'm late to the party here (have been busy doing real REI work 😉 ) but my take on wholesaling is this: 95-99% of it is total ********. People "hate" on it because most of it is completely unethical. Very few wholesalers have the means or intent to close on a property themselves. Even the OP admits as much when he tells the seller that the reason he is assigning the contract to someone else is because "Oh, its just more convenient for me right now". Total BS. Who would knowingly give away big profits to someone else? Someone who cannot close on the property themselves, that's who. Wholesaling is an unlicensed middle man way of skimming profit while adding little to no value to the deal. Real estate agents, in contrast, at least have to meet some standards, carry insurance, be licensed, and work both ways. They are also middle men, but a good agent will do a lot of administrative legwork. Most all wholesale deals I see are not deals at all, but unlicensed agents desperately trying to unload a profit less deal on someone who actually has money.

    Oh, and I grew up in a ghetto.

    Skyline Properties
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  • Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    "Who would knowingly give away big profits to someone else?"

    Um... Lots of people. Rehabbing is a big undertaking, I'll gladly pass on those profits if it means passing on that huge risk and massive effort, neither of which I'm in a place to take on. Same reason car dealerships don't manufacture, and grocery stores don't farm and process food.

    "...while adding little to no value to the deal."

    I would imagine if the was "no value" to wholesaling, rehabbers wouldn't use them. If investors did their own legwork and found their own deals wholesalers wouldn't exist.

    I think a lot of people get into wholesaling thinking it's a get rich quick scheme. They do some immoral, unethical, and straight up stupid things trying to make the $10mil per year the gurus promise... and they ruin the collective reputation of all wholesalers in the process.

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y
    Originally posted by @Adrienne Bryson:

    "Who would knowingly give away big profits to someone else?"

    Um... Lots of people. Rehabbing is a big undertaking, I'll gladly pass on those profits if it means passing on that huge risk and massive effort, neither of which I'm in a place to take on. Same reason car dealerships don't manufacture, and grocery stores don't farm and process food.

    "...while adding little to no value to the deal."

    I would imagine if the was "no value" to wholesaling, rehabbers wouldn't use them. If investors did their own legwork and found their own deals wholesalers wouldn't exist.

    I think a lot of people get into wholesaling thinking it's a get rich quick scheme. They do some immoral, unethical, and straight up stupid things trying to make the $10mil per year the gurus promise... and they ruin the collective reputation of all wholesalers in the process.

     Sorry, but there are a couple things about wholesaling that I don't think anyone will ever be able to change my mind about:

    1. It is not "real estate investing". Making phone calls and sending "we will by your house" letters is not investing. Wholesaling is a job related to real estate - an unlicensed broker. That's it.

    2. It is mostly unethical, because nearly all (I would bet virtually all, but I'll leave a percent or two on the table) wholesalers have no means for buying the house they've put under contract. You admit so yourself, to wit: "I'll gladly pass on those profits if it means passing on that huge risk and massive effort, neither of which I'm in a place to take on" Exactly my point. You *absolutely* should be in a place to take on that risk and effort, because you are representing as much to the seller - or you should be, if you are being honest with the seller. If you flat out tell a seller "Look, I have no money to buy this house myself, I am only going to find you a buyer", you are going to have virtually no business. So you tell the seller (maybe!) that you're going to sign a contract to buy the house, and you intend to assign that contract to someone else, but if that doesn't happen you'll buy it yourself. And then, if/when the wholesaler can't find a buyer (because it's a profitless deal), they either work like hell to get their earnest money back (if they put any down), or simply renege on the deal and leave the seller trying to figure out how to make it happen. 

    3. The rehabbers that I know don't use them, because the "deals" are not deals - they are typically something someone found from Craigslist or the MLS that's a couple of grand below asking, or they are some property that will require an Act of Congress to successfully close on - title problems, ownership questions, etc.

    4. I expect virtually everyone who is a "wholesaler" is a person with no means that wants to be a real estate investor. Wholesalers are the NINJAs of real estate investing - No income, no job, no assets. Virtually all of the posts I read on BP from wholesalers are people who have no job and want to create a job, or have a job but don't make any money and absolutely sees wholesaling as a way of making lots of money without doing any work or spending any money. My question is this: if you want to buy & sell houses - that's what you are doing as a wholesaler - why don't you become a real estate agent? Too expensive? Too many licensing requirements? Too much ethics? Might actually have to show up for work every day?

    5. It is not the same thing as a grocery store or a car dealership. Both of those examples offer real value beyond just selling a product. Explain to me what value a wholesaler offers to a deal besides (theoretically) finding a property and locking it under contract at a price that is cheaper than the ultimate buyer could himself/herself get on their own? What exactly do you do besides sign a contract with someone, then try to call people who actually have money to see if they're interested in taking on your contract?  

    Maybe I'm too harsh, and maybe you'll hate every word I said, and if so I'm sorry for that but that is the way I feel. I busted *** for a lot of years, saving money, working multiple jobs, learning about real estate, working in the field, making mistakes, and generally getting my hands dirty, and I see the overwhelming majority of wholesalers as people who see a big pile of money to be made in real estate and want to get their hands on it without having to do any of the hard work of actually compiling capital and putting it to work.  

    Skyline Properties
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  • Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    1. I won't argue with that. Call it what you want doesn't matter to me.

    2. Reread what you quoted... I clearly said I'm not in a place to take on RISK or EFFORT. Nowhere did I say I was incapable of closing, add a matter of fact I explicitly said I COULD. I'm just not currently at that place yet. I don't feel like I'm educated or connected enough to be successful at it, so I'm waiting (I plan to purchase my first investment property for myself mid 2017).

    By the way I am completely honest with my sellers. I tell them I find deals and usually pass them on to investors. I am fully prepared and capable of closing myself of it comes down to it, and I tell them that too. Don't make assumptions about me.

    3. You and the rehabbers you know might not use wholesalers, but clearly SOMEONE does. Obviously someone must, as many make quite a career of wholesaling.

    4. I have no reason to comment on your "expectations".

    5. I will not speak for all, but *I* offer value by finding off market deals and getting them under contract at a significant discount. You are free to do the legwork yourself but if you don't want to, don't have time to, don't have negotiation skills, etc, that's where wholesalers come in.

    I don't hate anything you said. I'm a adult capable of disagreeing without getting my feelings hurt. I'm just trying to offer perspective as an " upstanding " wholesaler. I'm not trying to change your mind and in fact I agree with most of your ideas except I will not lump am entire group of people in with the lowest of them.

  • Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    And yeah you're right grocery store isn't really a good comparison.

    Let's break it down for real in an analogy, if houses (move om ready) were bread...

    The "market" is the farm. That's where the "wheat" (houses) come from.

    Wholesalers are the farmers. They're the ones that go out and get the wheat. They harvest, and separate the good from the bad.

    Then come the investors/rehabbers, the "processing plant" where the "wheat" is turned into "bread" (ugly houses are rehabbed).

    Then the processing plant ships the bread to the grocery store (rehabbers seller's agent) who them markets the bread to the consumer.

    Sure you could farm yourself, process yourself, and market yourself. But having that division of labor allows each entity to have the time and effort to focus on their own specialty. If you're willing to go out and till the soil, good for you.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Adrienne Bryson  when you say you tell sellers you USUALLY pass them on your inferring that you close most of the time.. when in fact you probably never buy any property.

    this is the crux of the matter. selling RE without a license.. and the issue is the states just don't have the man power to crack down on this.. some are though, Ohio,  FLA,, CA 

    at the rate of wholesalers messing up transactions I suspect within 3 to 5 years this activity will be curbed quite a bit and you folks will HAVE to Have your funding to make these deals. you WILL have to buy them then resell them.

    like I have said in this post 2 to 3% can make a living the rest just blow whatever money they have on yellow letters.. and never do a thing.... its a tough business.

    Its also very very regionalized.. if your in an area of low value RE in an area which in the US are usually filled with owners that are regular joes and not really very astute to the RE game. its prime grounds for fast talking wholesalers.

    I actually buy a lot of property in a lot of markets.. well over 30 to 40 a month.. some of my vendors get them from wholesalers occasionally .. but most do not. I get hit all the time to put me on their lists I did that for a whiles but the deals were just waste of time.  Real Estate professionals are far better to deal with.. give me a good OREO broker any day.

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y

    ^ Except that there's already a group of farmers - they're called Real Estate Agents. Most states - all of them, I believe, but I wouldn't swear to it - have determined that the business of assigning contracts and connecting buyers and sellers for profit (as a middle man) is such that licensing, continuing education, ethics rules, etc are required. 

    What is the difference between a wholesaler and a real estate agent, aside from the obvious (one group is licensed and professional, and one is not)? And if one is interested in working in real estate, assigning contracts and connecting buyers and sellers, why wouldn't one just work as a real estate agent? 

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  • Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    Jay, I'm brand new at this. I've done a handful of deals. I am actively searching for my first buy & hold investment for myself, and I approach each deal looking for myself first. I will eventually be on that level of buying multiple properties a month but I'm just not yet. I literally sent out my first yellow letter a month ago.

    Yes it was not quite the truth to use the word "usually" but if I had to explain my whole life story and lay out my investing plans and goals just to be 100% precise I'm sure the sellers would feel their time was wasted. So I skip that and speak as if I'm 6 months in the future.

    I'm sure that's not the end of the world. As I've already stated I'm capable and willing to close myself if need be. I make an effort to be a good person AND good at my business, not one of these slime balls that makes everybody cringe at the word "wholesaler".

  • Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    Jd agents aren't farmers. They generally only find you deals on MLS, that wheat was brought to them they didn't till the field for it.

    You don't see value in wholesalers. I get that and respect that.

    Anyway, I'm going to bed. I still work a day job!

  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y
    Originally posted by @Adrienne Bryson:

    Jd agents aren't farmers. They generally only find you deals on MLS, that wheat was brought to them they didn't till the field for it.

    You don't see value in wholesalers. I get that and respect that.

    Anyway, I'm going to bed. I still work a day job!

     Not true. Many agents are lazy, I agree, and wait around for prospects to waltz on in the door - but plenty of them generate leads and actively pursue them. But I still don't get why someone who wants to connect buyers and sellers doesn't simply become an agent - or start their own agency and have other agents work for them. 

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