How Can Wholesaling Possibly Be A Viable Long Term Strategy?

23 Replies

Hello All,

I have been learning about wholesaling for the past week now and have my plans to set up a buyers list as well as a plan for finding deals. 

The big question that has sprung to my attention is: How can I run a long term wholesaling business if I already find the deals? 

Translation: If I scoop up all the great deals in the area then how are there going to be enough good deals left for me to continue business? 

It's like I'm a company selling sexual assault whistles; the more I sell, the lower the crime rate thus leading to less sales! Isn't it ironic? 

How do I remedy this issue?

"Translation: If I scoop up all the great deals in the area then how are there going to be enough good deals left for me to continue business?"

If I remember correctly, there are quite a few houses in California (and just in your area).  

In your lifetime, how could you ever "scoop up" all the great deals?     

@Brian Vaughan

Thank you for the response. I just heard this guy talking about 4 deals a month "in his area" and I'm doing the math and that is 48 deal annually just for him. Accounting for other wholesalers in his area I just have a hard time thinking there are that many properties in such poor condition

@Cody Evans   You're welcome.    In my business, I've been walking through about 5 houses per week for the past 27 years.   There are TONS of houses that look fine from the street, but are a MESS on the inside.   Some portion of them are owned by people in distress.    Your job is to find those people!   Good luck. 

I would say that the deals keep coming because there are always new people that need to get out of their house for one reason or another.....moving, divorce, job loss, etc

Have you done any driving around and looked? Just on my small street in a decent area there are 4-6 houses that I would call distressed. One bank owned, one bank owned and they just sold for cheap, and a few others with no maintenance, damaged and issues just from the exterior. In my driving around I find TONs of houses in distress (again just from the outside). Nice areas with plenty of properties that need rehab. 

Originally posted by @Jarrod Forbes :

I would say that the deals keep coming because there are always new people that need to get out of their house for one reason or another.....moving, divorce, job loss, etc

When I first started looking at "distressed" property it was by accident. There was no BP then. I did a job for a guy on his house. He told me his accidental story. He was retired in Houston and wanted to move back to his home town. While visiting he heard about a house that might be for sale. 

He approached them and they said 125,00 ish. They were going through a divorce. He declined but gave them his number anyway in case they couldn't sell it for that. A year later the husband calls and asked if he still wanted it. Days of you will give me 60,000 now in cash it's yours. Had a judge decree that said sell it and split the money by a certain date or else. He bought it of course. 

It sits on twenty acres and needed no work done to it. The work I did was cosmetic to update to his taste. I agree, not every property like that looks terrible. I don't wholesale anything but find stuff all the time like this for me or I will tell other friends about it if it's not. 

Cody you have to be careful listening to Nationwide experiences  real estate is local.. what works in one area simply will not work in others.. Most wholesalers simply do not keep properties.. 

if you have the means to keep all the great deals you find then your not wholesaling your investing for your personal portfolio..

BUT NO QUESTION the pickings on the west coast are not like other areas of the country were you can roll into a city and buy 5 distressed homes before dinner.. I  know I do this.. 

IN my market of PDX your lucky to buy 5 in a year.. granted there are some wholesalers that do a little volume .. but they come and go.

I think your experience in Solano county will be more like PDX than upstate new york. Or other areas.. West coast simply has no where near the distressed assets.  West coast has A LOT of very cashed up investors.. ( this is why the turn key companies hammer CA as an area to find buyers).. etc etc..

Wholesaling is really an advanced strategy much tougher than those make it out to be and a failure rate in the hi 90s on the west coast..  Like in PDX were I have been active for more than 25 years in the distressed space.. there are only 1 or 2 wholesalers I know that have done this more than 3 years the rest come and go.. and the bigger players buy at court house steps to control the inventory.. 

when a decent RE agent can make 250k a year why go through the brain drain of wholesaling..

I thought the same thing. But it’s incredible how many are out there. Chalk it up to people being lazy and/or old and/or going through financial problems. It’s constant.

So much help from everyone; I am grateful to be a part of this community.

@Jay Hinrichs

I'm not looking to make four sales a month. I would be happy with getting one by May to make a small piece to pay a bill or two. This isn't my long term plan but a small way to get active and learn my market so I can find deals when it is time to invest. I figure it's better than doing nothing and saving my regular job's income.

I am also a little confused by what you are saying here. A few days ago you recommended a guy to me so I can run a targeted direct mail campaign as well as Property Radar and now you suggest that the market here may be dried up. 

Would you recommend I try my hand at wholesaling for a few months or are you saying it is not the best plan because of the market? 

You're like the used car dealer.... people will always need/buy homes. You're just going to have hone your skills at getting inventory, buyers are the easy part. 

@Cody Evans   the point of referring you to Ryan is so you can have a frank discussion on what it cost to do direct mail . if your goal is to buy one or two a year then direct mail is far to expensive you need to network and drive for dollars

@Matt K.

I'm not sure if I am just looking for a reason to keep going with this ridiculous idea of trying to wholesale houses but I think the way you put it right there is great. It feels like that way of looking at it cemented my will to keep going with this. 

Either thank you or I regret meeting you!

P.S. Are you going to the Meet Up "Solano County Real Estate Investing Network?" It is hosted by Chris Music, an investor from Walnut Creek.

Also, you need to realize that if you're going to be serious about whole sale then you'll have costs associated with acquiring the inventory. If you're going to be like the dealers on craigslist selling a car or 2 for fun.... it's a lot different than running a used car lot.

@Cody Evans

If one used car dealership opens up, could they possibly buy up all the used cars out there? Wholesaling just applies to houses - there will always be people in distress that need to sell, or inherited a property they don't want, or get sick of landlording because they got a disaster tenant... just a few examples.

If you listen to BP Podcast #231 - you'll get your answer. It goes through the evolution of wholesaling, super good podcast for Brett Snodgrass. He does mention it gets harder and harder as competition gets fierce, but see how he adapted:

https://www.biggerpockets.com/renewsblog/biggerpoc...

My brother has a moving company, his crews move 5 families per day. That is 30 families per week (off on sundays.) At this rate they will run out of families to move :-( 

Originally posted by @Pablo Mendez :

My brother has a moving company, his crews move 5 families per day. That is 30 families per week (off on sundays.) At this rate they will run out of families to move :-( 

 just take sat off, problem solved lol

@Cody Evans My advice is to stay in constant contact with a group of sellers in a specific market , there are enough deals out there for us all. The ones that stay consistent and get in touch with sellers that others cant seem to locate, is where the true gems are found in regards to wholesaling. Also working with a few buyers you can trust who buy a few properties a month is always suggested!! In my wholesale business  with only work with buyers that can buy multiple properties from us in a given year! 

I will agree with a few people on this thread to have a consistent flow of deals from direct mail i suggest five mailers to your list minimum otherwise you likely wont see the type of return on investment you're aiming for. I would say one of the biggest things that has helped me with my wholesaling business the last 2.5 years is consistency and omnipresence. Hope this helps! 

@Ethan Summers

Keep in contact with a group of sellers in a specific markets means to keep in contact with the same exact people or what do you mean by this specifically? 

When you say 5 mailers to my list you mean send 5 letters to the same property over the course of a certain amount of time?

Our markets are different  but if I drive for dollars 6 or 10 or 14 hours a week would it be realistic to be able to find a deal by May? 

Originally posted by @Jay Hinrichs :

Cody you have to be careful listening to Nationwide experiences  real estate is local.. what works in one area simply will not work in others.. Most wholesalers simply do not keep properties.. 

if you have the means to keep all the great deals you find then your not wholesaling your investing for your personal portfolio..

BUT NO QUESTION the pickings on the west coast are not like other areas of the country were you can roll into a city and buy 5 distressed homes before dinner.. I  know I do this.. 

IN my market of PDX your lucky to buy 5 in a year.. granted there are some wholesalers that do a little volume .. but they come and go.

I think your experience in Solano county will be more like PDX than upstate new york. Or other areas.. West coast simply has no where near the distressed assets.  West coast has A LOT of very cashed up investors.. ( this is why the turn key companies hammer CA as an area to find buyers).. etc etc..

Wholesaling is really an advanced strategy much tougher than those make it out to be and a failure rate in the hi 90s on the west coast..  Like in PDX were I have been active for more than 25 years in the distressed space.. there are only 1 or 2 wholesalers I know that have done this more than 3 years the rest come and go.. and the bigger players buy at court house steps to control the inventory.. 

when a decent RE agent can make 250k a year why go through the brain drain of wholesaling..

 I am doing business in places like Vallejo. I'm not sure if you know of it but it has a pretty notorious reputation for being distressed. It is home to the six flags discovery kingdom theme park if that jogs your memory at all. Do you think I'd be able to find 3-5 deals a month driving for dollars and reinvesting that money into a $5000/month direct mail campaign? 

@Cody Evans   of course I know Vallejo very well.. I lived at Silverado for a decade and drove to lake co through Vallejo once a week for 20 years.. and all before six flags was built. 

no I don't think you will find 3 to 5 a month.. but maybe one in 6 months or so.. I know its reputation quite well.  My sisiter in LAW owns the Benecia coffee company right off of Columbus park way when your driving around stop in for coffee

That's super cool, Ill definitely check that place out.

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