Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
(Just Ranting here)
It seems to me that wholesaling is the most sought after method by newbies, and yet it seems to have the highest failure rate of all the investing methods you see on here. Thousands of new people say they want to be wholesalers and yet how many actually do a deal??? 1%? or is it less than that?
Why do so many people flock to such miserable statistics? I know there is no way to accurately prove these numbers but having been on this site for 4 years and in the local REI Group, seems like less than 1% is accurate failure number...
Flipper/Rehabber · Springfield, MA · Member since 2016 · 641 posts · 204 votes
9y
I chose the path because it was my favorite strategy. I love negotiating, marketing, and crunching numbers. It took me about 8 months to get a deal but I did it! It's a dedication thing! It's like love for a sport.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
Well - having the lowest barriers to entry (no license or degree or formal ed requirements) and lowest capital requirement (no or not much money available) coupled with guru hype of quick and easy riches from your living room in your pajamas- no wonder it's a sought after niche! They aren't told of the 1% or whatever 'success' rate of doing a single deal.
If it was conveyed that 90+% fail, some would probably re-think it. You're right about that @Joshua D. But what does being rational have to do with anything, right? Let's revisit who is entering this advanced niche - and it is very advanced- when done properly.
Wholesaling attracts new folks that may have a hard time succeeding period. Not all, but many. Take the capital-challenged (broke) that can't even manage their own finances, under-educate and excite them for a neat package of.... broke and uneducated! That like shortcuts & easy money! Search - 'another wholesaler stole my deal' on here. Woo-hoo!
Anyway - it only bothers me to the extent real homeowners that need to sell are misled into thinking they have a buyer, but don't. They are taking their home off the market, wasting valuable time and energy. They are invaded by 'partners' trampsing through their house during the 'inspection' period for a lousy $10 EMD and it's all BS.
Investor · Orlando, FL · Member since 2016 · 1k+ posts · 780 votes
9y
The reason many people go this route is it costs very little money to do them. My recommendation for newbees with very little money is to do wholesaling.
Investor · Orlando, FL · Member since 2016 · 1k+ posts · 780 votes
9y
No because they can get a deal done, but remember this is a numbers game. Meaning you need to work through alot of potential properties to get a prospect, to get to the owner, to get to the owner that will deal with you, to get to the closing to buy, to find a buyer for the property, to get to the closing to sell. As long as you are persistant then yes you can get a deal.
Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
9y
"As long as you are persistent then yes you can get a deal."
I totally agree! But is this not also true in other niches where success is much higher?
I guess if people have no other option then it might be a good option. But I just cringe when I hear new people flocking to this field. knowing they are trying to defy the odds.
Houston, TX · Member since 2017 · 14 posts · 6 votes
9y
Joshua D. Thanks for your honest feedback on the wholesaling. I am personally interested in wholesaling as an entry point into the industry. Although I'm not discouraged, what kind of investing do you suggest for a "newbie" to practice when entering real estate investing? If wholesaling has such a low success rate, what makes better since for you that others are not or have not realized?
Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
9y
@Dan Redd I would encourage people to start with buy and hold. Save up some cash for a down payment and learn the basics. That's the path I would encourage new folks to take. It worked for us.
Houston, TX · Member since 2017 · 14 posts · 6 votes
9y
@Joshua D. Ok. I'll certainly do some more research on this area. Because my expectation is to enter as a wholesaler I have minimal knowledge of buy-and-hold (rentals). Thanks again for your feedback and so quickly.
Developer · Little Ferry, NJ · Member since 2016 · 426 posts · 226 votes
9y
@Dan Redd@Joshua D.@Steve Vaughan Hey guys, I just posted a post on one of the most recent threads about my FIRST EVER wholesaling experience and what I am doing currently and how it helped forge me into who I am today. I started wholesaling (just like most people), and now I am developing/flipping full time. Please read the post and let me know what you think. I would like to most more stories and rants from my end, but I want to make sure that the content that I would be putting out would be a value to anyone. Please let me know what you think. Connect with me, I will also answer any questions that you guys might have.
Houston, TX · Member since 2017 · 14 posts · 6 votes
9y
@Mateusz Prawdzik Thanks for the post. I will certainly read your post. I look forward to learning from it. Also, just a suggestion. Please add a profile photo. It's always good to know who we're speaking (doing business) with.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
9y
I would have to say I mostly agree with this. The successful wholesalers I see do a lot of volume (and have to) and are generally pretty seasoned investors. It's not an easy road and i think a lot of newbies think it is, particularly since you don't need much money to get started.
Developer · Little Ferry, NJ · Member since 2016 · 426 posts · 226 votes
9y
@Dan Redd I will have one of my friends take a photo of me next time I go out. I really don't like pictures so I try to stay away from the camera but I guess I will have to get use to it, if I am going to be standing a stage one day giving motivational talks and speeches. hahaha. I usually just have my experience and my Instagram do the talking for my knowledge on the business. I meet most of the people that I talk to or meet on BP in real life, but in your case, I guess that we can't meet as you quite the ways away. I will get on that picture right away.
@Andrew Syrios What you said is 100% right. The best wholesalers are also flippers that know how to calculate true rehab cost, have credibility in the business, are good salesmen and get people to sell their house for CRAZY premiums, and do volume so they get the most deals out there. Lots of people say it's a numbers game, that is true but you have to make sure that you are mailing to quality leads. Finding quality leads takes more than just going online and buying a list. You have to drive around and talk to people EVERY SINGLE DAY. Wholesaling is hard work if you are just focusing on it 100%, but it gets really easy if you just do it as you are doing your flips because you talk to someone new every day.
Investor · Raleigh, NC · Member since 2015 · 189 posts · 102 votes
9y
The thing is, finding wholesale deals is TOUGH. You really have to be a hustler and go out of your way to contact people who own properties (95% of which don't want to sell them). To be good at wholesaling, it seems you have to be okay with potentially getting yelled at, berated, and people just being pissed off at you in general because you contacted them to buy there house. The only house I ever wholesaled, I found by walking up and door knocking. I tried a few more door knocks after that, and some people got VERY MAD at me.
It's not that you cannot be successful in wholesaling, that is clearly possible, it just that those who do well in it are 1 in a 100.
Our local town of 100,000 people has 2 main wholesalers that run the show. While at the same time there are thousands of buy and hold investors who have done well and made money.
I feel like I hear people all the time that say "I don't have any money so I'm gona start with wholsaling". Lack of capital is not a good reason to enter a biz. Saving money is a lost art and there are too many trying to short cut.
I would encourage people to just know the challenges of what you are getting into if you are wanting to wholesale.
It's not that you cannot be successful in wholesaling, that is clearly possible, it just that those who do well in it are 1 in a 100.
Our local town of 100,000 people has 2 main wholesalers that run the show. While at the same time there are thousands of buy and hold investors who have done well and made money.
I feel like I hear people all the time that say "I don't have any money so I'm gona start with wholsaling". Lack of capital is not a good reason to enter a biz. Saving money is a lost art and there are too many trying to short cut.
I would encourage people to just know the challenges of what you are getting into if you are wanting to wholesale.
That's what I meant to say. Yes, there are successful wholesalers, but it tends to be a relatively small group of high-volume wholesalers that have large marketing budgets, not some newbies with little to no money.
Flipper/Rehabber · Springfield, MA · Member since 2016 · 641 posts · 204 votes
9y
I chose the path because it was my favorite strategy. I love negotiating, marketing, and crunching numbers. It took me about 8 months to get a deal but I did it! It's a dedication thing! It's like love for a sport.
Real Estate Investor/Wholesaler · Philadelphia, PA · Member since 2015 · 757 posts · 318 votes
9y
Don't get me wrong...I pretty much agree with everything you just said......now take a step back.......think about most professions in life. Don't know about you but I've spent 12+ yrs in the corporate world and there were ALWAYS 1% of the sales rep doing much better than the other 99%. Only the top 1% of athletes make it to the professional leagues. No difference with wholesaling.......most will try but only the top 1% will really thrive in this business. It's super frustrating to see some many "newbies" but it's the nature of the beast.....besides if you are a true professional...all these "newbies" will only make you look better. Majority of our client's sign with us because they say we are the most professional. Don't rant..use it to your advantage!
My concern is that we could point newbies to many better paths than trying to start a high pressure sales biz. We as a community of investors could point new people to getting on a budget, saving up 10,000 dollars and the buying a rental property.
You don't have to be 1 in 100 too do that. You can just be a below average dude and still win over the long term! I prove that every day because I am exceptionally below average.
Wholesaling is for the a select group of salesmen. Buy and Hold can work for a majority of folks (still not for everyone)
I think this message should be shared loud and clear as I do not want people to waste time and money. Education is what BP is all about and I want to do my best to help people out.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
The wholesellers I've worked with (and paid well) were not really "wholeselling" to me as I told them I didn't want that relationship. Rather I told them to bring me someone willing to sell (a hot lead). If I worked a deal directly with them to buy their property, I'd pay the wholeseller (really birddoger) a 3% fee + some of the upside on the sale.
I've cut some pretty fat checks to people that have brought me big deals.
Rental Property Investor · Torrance, CA · Member since 2016 · 724 posts · 1k+ votes
9y
Joshua D. I like what you said about saving money being a lost art. We all know there are legit wholesalers out there. I'm sure some of them do very well. But, from reading the forums I get the impression that many who go down that road are doing so because they think it's the "easiest and fastest" way to break into REI. The gurus and HGTV play a big part of that I believe.
When i committed to becoming a RE investor I was making next to nothing and barely getting by. 4 years later I owned a duplex. I just worked like crazy and saved as much money as possible. I worked 60-70 a week and took frugality to an extreme. Being a "wholesaler" never even crossed my mind. I didn't know what it was until I got on BiggerPockets. The ability to save and manage money is the weeding out process for newbies.
Investor · Grapevine, TX · Member since 2014 · 152 posts · 24 votes
9y
Well, I think most people fail because they don't understand flipping to start. Every wholesaler should have an understanding of rehab costs and the profit there buyer will make. Newbie wholesalers often pull numbers out of a hat and call it a deal! If you want to be really successful and have repeat business study flipping so that you know your end buyer will be making a profit. They choose this path because they think it's easy! It's not easy wholesaling properties.
Wholesaler · Waldorf, MD · Member since 2015 · 459 posts · 245 votes
9y
@Joshua D., @Keith N., @Dan Redd as someone that currently wholesales I would constantly tell "newbies" that wholesaling is not the easiest way to get into real estate, nor do I suggest it, & I wholesale. All this no-money needed is misleading.
All these 15K+ wholesaling courses that the hotel Gurus sell (btw they actually don't show up), is to teach the uninitiated how to "wholesale" properties off the MLS. These hotel guys never teach about how to find off-market properties. I get properties sent to me all the time from wholesalers that want to sell me these MLS properties. I get these emails because of my online marketing & my "we buy houses" website. Whenever I do a simple google search on the address, I see that it is on the MLS pending, because the wholesaler has it under contract. Then to make things worse, they tack on 10K on top of the LIST price and think it's a deal. When I look into the listing I find these common descriptions - "needs work", "sold-as", "DOM 90+ days", "seller is motivated". Unfortunately I just spilled the secret to what is taught at these courses & what you get when you pay (I did) 15K+ to one of those hotel gurus selling wholesaling courses. Then of course they promise you support (a person on the phone reading a script), contacts with "nationwide lenders", a bus trip to the local HD/Lowes, ..blah, blah, blah. All of this to justify the price of the course.
Wholesaling takes the following to succeed:
Knowing the difference between a motivated seller & someone that wants to sell their property. To many new wholesalers I see get properties under contract of sellers that simply want to sell their property, not need to. These are the guys/gals that end up tying up properties and have "contractors" come through a sellers house, etc. @Steve Vaughan
Gaining the knowledge and having the desire to find and/or market for off-market leads
Understanding the math/the numbers of investment properties in your market, ie) understanding your MAO, rehab costs, ARVs
Ability to negotiate or a desire to learn
Ability to talk to strangers on the phone or a desire to learn
Not having a greedy/needy mentality. I've run across "wholesalers" that need at least $5k on a deal. In other words they could make $3K , but won't do the deal b/c need $5k. They don't have a volume mind-set. @Andrew Syrios smh
Cultivating a buyer's list. It's not hard and you don't need to buy some special access to some list of so-called buyers
Thick skin
Determination to constantly learn different aspects of Real Estate. Ex) I started learning about multi-families, now I've wholesaled plenty of them.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Joshua D. many new investors/professionals feel that wholesaling is just slapping a few contracts together and voila!!! Money starts falling out of the sky. Many don't fully understand the mechanics of negotiating, marketing, evaluating, transparency, honesty and time that goes into identifying a property, analyzing it, negotiating a contract, having the properties title pulled and working with title Co and seller, writing contracts, proper assignments, ARV and so on.........I can go on for a day or two. Bottom line is that the wholesale business is work. Unless you want to close one deal and disappear, A sustained wholesale business requires time and effort. Ahhhh that was cathartic LOL!!!
Developer · Little Ferry, NJ · Member since 2016 · 426 posts · 226 votes
9y
@James Green@Leo Lanza@Cody Z. I totally agree with the fact that all these new people getting into the business because the market is going up and trying to just make a quick buck without any investment don't know what they are talking about. They pull random numbers or miscalculated numbers out of hat and call it a deal because they think it makes sense. TRUE wholesalers do their own flips and actually know the rehab cost. TRUE wholesalers market and spend LOTS and LOTS of money on marketing and mailers in order to acquire that one good deal that wants to sell. I have been there and done that when i was starting but you have to know when to move up. I am now developing and flipping full time and only wholesale or give properties that I don't want to be bothered with that I got a better deal elsewhere.
There is no such thing as get rich quick, if you want that go to the casino with 10k and go on red. Big risk = Big Reward and there is no such thing as no capital and making money. There is no free lunch and these new wholesalers don't seem to understand that. Additionally, to this, there are good deals on the MLS, I have wholesaled a couple I am not going to lie. But I was there 10 mins after it was listed and called the agent at 10-11pm and told them to put it under contract, I didn't even want to see the property. These are deals where I was willing to call 10-11pm and I was looking at the MLS at that time when realtors usually post the good deals when someone else was not. So I put it under contract and for being in the right place at the right time, I made 30k. But that is VERY RARE. LIKE VERY only happened once.