How to be a better wholesaler. With FAQ's.

22 Replies

Whats Happening BP?  

So, first off, hi, I'm darwin, and I don't post or follow on this forum much, because it gets my blood pressure up.  I've been a property investor now for about 4 years, and own some rentals, and some commercial property.  I've also spent the last 2-ish years working for a large-volume wholesaler, and am starting with another one in a week or so.  I trained our acquisitions team, and continue to do so for some up and comers in the business. 

Couple things:

First - I have kind of a foul mouth, which I'll try to keep under control, but for f**ks sake some of this needs to be given to the world of wholesaling.  I don't do much social media, but feel free to re-post, or whatever you need to.  Just please quit giving us a bad name.  The first effing sticky on this ENTIRE FORUM is a rant from a genuine (I think) investor, sharing an experience which I have had as well.  Shame on the slobbering moron who tried to sell him that deal.  

Second - I am, and have been, wrong in the past, and will probably make many more mistakes.  I'm cool with it, and frankly if you aren't OK with doing this same, this business is going to chew you up and $**t you out on the carpet.  And you deserve it.  Happened to me on a few deals.  

Third - your activities here on BP are completely voluntary.  That includes reading this post.  Thanks for your understanding.  

So here you are:  Some FAQ's to the spectacular 3 ring circus of bull***t known as "wholesaling".  I'll use the term "wholesaler" interchangeably in this, as the wine and the espresso fight for my attention.  I get most of these lines of inquiry from this forum, and the trainees in our office.  

**Please, please dear Vishnu try to keep a 30,000 foot view of this game, and don't ask me stupid micromanaging questions.  I get plenty at work**

Q: Wholesaling - WTF is it anyway?  

A: Great question!  Really!   Here is what it is - you are going to use your SKILLS and KNOWLEDGE of a given market to get a DEAL*.  Then, without actually using any of your own money, (because 70% of the people in this game are broke newbies - don't worry I was too, thats not an insult before your knickers get twisted) you are going to find an investor who actually has money (and statistically speaking way more experience than you) and sell it to them for a fee.  Kinda cool right?  No money of your own, close some deals, make some coin.  Sweet, hell yes, count me in!   The problems arise because most wholesalers are a bunch of low-level conniving, lying, duplicitous $h*tbirds.  

*If you don't know what this word means yet, its OK, but keep reading. 

Q: Wait, why doesn't everyone just do this?  

A: Again - you are kicking some @$$ with these questions tonight. Good Job! Well, let me give a couple of reasons - most people learn this "business" from facebook, or some YouTube idiot, or some guru, or god forbid, this website. There is very little concrete information given, and since the barrier to entry is stupidly low, everyone and their younger brother has decided to get into the swimming pool. Said pool is now obtaining the consistency of a port-o-let on the 3rd day of Coachella. I'll let your imagination fill in the smell. Most people grossly underestimate the amount of work that goes into this, are completely effing clueless on pricing, renovation budgets, or even the basics of REI. And so when they go to sell their first deal, its about a smooth as your first time doing, well, whatever you did after prom. Sticky, awkward, and no one feels all that satisfied. Bummer.

Q: You seem so annoyed - why?  

A: Home run junior - here is why - I spent, and continue to spend, a lot of time and effort and money at this game, and I respect the hell out of everyone I've met who acts like a professional.  I've bought property nationwide, made my bosses and partners a LOT of money, but it was a long hard road to get there, and sure, I can freely admit that when some window-licking muppet gets in the pool (we're back to the metaphor part now, just FYI) and overbids on some god-awful deal based on his "Zestimate" and then tries to re-sell it to our office, it costs everyone time, money and hair off the back of my head.  None of which I can afford to lose, just saying.  So yea, annoyed.  While I'm on my soapbox, I also would really like all of you to knock off the fast money big watches wholesaling culture.  It must be awful having to fake your way through your professional life.   I feel sorry for you. 

Here is a free tip from a guy who is way better at negotiation than you and me - he who gives the least amount of f**ks wins.  Set yourself up well as a person, and you can get better deals if you're not desperate.  Kind of like dating! 

Q: Now that you're done ranting like a lunatic, can you actually help me do a deal?

A: Sure, and I appreciate you listening, you are already redeeming your miserable wholesaling ways.  Maybe I need more hugs, and a puppy. 

Q: Seriously, spit it out, and quit being a [email protected]$$, how do they work?  can you give an example?  

A: yes.  I purchased a property over the phone, using negotiation, lead generation, quanting (word?  not sure), and a very carefully cultivated relationship with a large, cash-rich organization who was also professional, and in desperate need of inventory.   We were, and continue to be upfront about the fees we charge each other, freely share ideas, paperwork, networks, and tips, training and ethics.  Once I had it under contract, which was after informing the seller that it would be re-sold, we arranged transportation for the seller (he had no car or license) to title/attorney's office, and then funded, closed, and got on with our day.  Easy Peasy.  

Q: How do you know how to do all that?  

A: I worked really f****ng hard and read a lot of books, and spent a lot of time asking people who had been successful before I was.  I also am a property investor.  I am a landlord, I have flipped properties, and I come from the trades (construction).  I've also lost money on property deals before too.  Damn, that taught me a lot.  I carefully cultivated professional networks and relationships, and recognized that when we all work TOGETHER we can make more money.  This isn't a lone-wolf game, despite what some nitwit on InstaGram tells you.  When I screw something up, I spend the first hour berating myself, and the next 24 analyzing how to fix my failure.  Take responsibility, and your career will blossom.  I promise.  

Q: How you you get your buyers list built? 

A: God I'm so glad you didn't say "ur" instead of "your" I might just poo my pants.  Really.  

My buyers list is very, very short.  yes, you read that right.  Short.  The last damn thing I have time to do is answer 45,688 text messages from investors about a property.  I have chosen my buyers carefully, cultivated relationships, gotten to know their business model, and made sure, as in 100% sure, that when I call, they pick up, because I've got good news to deliver.  The responsibility to do that is on me, not them. I don't waste my time on newbies, or other wholesalers, or any other time-sucking-vampire-knuckleheads.  My time is valuable to me, I want to do deals, get paid, and go be with my friends, family, and loved ones.  Efficiency is key, but means nothing without knowledge and hard work.  

Q: No One will buy my deal and I don't know why??

A: If you really want to piss off every actual buyer in your town, keep giving them "deals" that no one in their right mind would take on.  Until you have dropped $30,000.00 (thirty GRAND) of your own hard-earned money on an actual rehab, been stressed out when you are running short of funds, or had to explain to your significant other that you cannot do X because you spent it all at Lowe's, your cute little 1-sheet deal flyers are probably going into the trash/toilet where they belong.  The point of this rant (sorry, I said I'd quit, but I get distracted sometimes) is that you as a WHOLESALER, if you want to succeed in this game, are going to have to get on the side of your INVESTORS.  It is THEIR money that makes this possible, and you need to respect that it took guts and hard work to make it.  If you've never made or lost 5 figures, then you don't have a clue what it feels like to wire $80k out of a bank, and if you belittle that, you're dead in the water.  

For the purposes of this post, lets define a "Deal".  Everyone wants them, right?  A deal, in broad terms, is a property secured by a contract, at a price point that is sharply under market value, and accounts for a REALISTIC rehabilitation to bring to top market standards.  Does that make sense?   Rich guys got rich by working hard and knowing their craft.  If you want to join them, hold yourself to the same standard.  If you cannot complete a basic property inspection, or properly estimate rehab costs, go learn it before you make any more calls or put out those stupid signs on every phone pole in the neighborhood.  There is enough plastic in the oceans without you contributing.  

Or, a third possibility, is that you've lied to the seller/buyer, and they now (rightly) don't trust you any further than a greased weasel.  Can't say I blame them. 

Q: So what do I do to become a better wholesaler? 

A: Damn, I thought you'd never ask - first off, I do NOT know everything, and there are plenty of people out there who are better at this than I am. So take this however you want. Basics - learn to speak clearly and professionally, its harder than you think ; learn WTF construction actually costs before you make an @$$ out of yourself ; get a clue as to what homes need to be good assets ; learn WTF an asset actually is ; read up on phone skills, negotiation, persuasion, learn your markets ; ask your investors what THEY need to earn on a deal and work backwards. If you knock all that out, you're on the way. Remember that there is a reason you are doing this - people actually need help, sometimes because of their own faults, sometimes not. If it were a regular house, it would be on the MLS with some slick-d**k realtor making 6%. So if the thought of unscrambling an egg seems daunting.....I'm sure Starb*cks is hiring.

Happy Investing!

 - Darwin

Wow that’s deep but needed to be said

Great post; informative and entertaining...

You could be a guru and charge $5000 for this! It is great!

@Michael Drinkwater - appreciated!  And you're welcome to send me 5 grand, for which I'd fly up to Battle Ground and help you get some deals done, but I think BP would kick us off here for not being in the marketplace.  Plus, I hate the "guru" thing - this isn't rocket science, and you don't need to spend $5k to have someone show you how to get a deal.  

@Taryn Lewis - I agree, it needs to get said.  Too many lazy idiots out there giving this a bad name.  

@Cornel Smith - thank you for the read, its appreciated!

Dude that was brilliant..  Loved it..   You gotta make sure to do a youtube video of that (possibly in a Brooklyn accent)  lol

@Darwin Crawford I agree with most of what you said. The barrier to entry is next to nothing. Although for the people who are completely broke thinking you don't need anything at all.....you do have to put down EMD where it's 500 or 1000. But there are ways around this for the ones who know what they are doing. It's actuallly funny because most people I know in my area don't have contracts on these houses! Smh. Also I really really hate other wholesalers who just throw anything out to people in hopes of selling it. Not knowing anything about the house or have seen it!!! Most of them think of it as a quick come up instead of a business(organized and professional) it's actually kinda funny when wholesalers are caught in their lies.

I’m still very curious how wholesalers from other states wholesale properties with no rehab crew!!! Unless your looking to only sell to locals. But that wouldn’t make much business sense. I could go on and on about the things I see and hear about. But I’ll rather not. 

I’m going say this and end my post. The goal of wholesaling I hope for most isn’t to stay a wholesaler. Most moderately successful wholesalers who run their operation like a business move into flips and or buy and holds. It definitely is a lot of work. Especially when you have to manage rehabs and get involved with closes to ensure they close. It’s really a full time job and anyone that has done deals would agree with me. 

@Chinmay J. - thank you, I appreciate you reading it!  Brooklyn might be tough, I grew up in the southeast and now live in the southwest....but I do have a gym buddy from Jersey who is the perfect candidate for narrator.  

Whats your point  ???  good Monday morning post.. keep it up...

if you boil that all down.. I would say maybe 2 or 3 people out of 100 could do what you describe.

normally they just don't have the reserves to get from here to there.. they never sold cars.

And grossly under estimate the need to be a super sharp sales person.. and sound like dolts on the phone..  then of course you have the no clue as to what anything is worth and or what it cost to do business.

I won't even talk to a wholesaler or let one put them on my list..

What I really do not like is the ones that even if they pare down their list like you allude to send out a blast that says.. he this is here first non refundable EM takes it.. I won't play that game either.

So at the end of the day while wholesaling is one avenue to get deals.. its not for everyone of us who actually are as you describe ( have the ability to execute on a dime)  we want to be treated special.. not lumped in and have to compete with newbie buyers..

that's why my pipe lines are pretty much all OREO type realtors and we know when they send us something we are getting someone who knows how to transact on our side.. 99% of the time the property can actually be sold.. no daisy chains.. hate that stuff etc etc..

I am sure there are great wholesalers out there I fund enough deals weekly and I see many on the huds making there money.. but really they are just real estate agents and most doing it totally illegally.. I don't like that either.. but anyway.. GREAT FUN POST 

Also  the reason you have all these folks as you describe.. is folks blast out all over GURUS BP FAcebook all those social sites.. that HEY you too can make big money with no money.. this leads the no money crowd into a business that clearly needs money and usually a lot of it to be successful.

or you need to be dealing in the hood or low value assets to get any traction..

how many post do you see that say this.

" Hey I am billy bob  I am new I have no money but I am going to wholesale to get money so I can then be a buy and hold investor"  when in fact they have never done either buy and hold or sold anything.. its just a dream and I understand dreaming.. but its very sad.

I think about all the million of dollars these people who can least afford it spend on marketing when they as you correctly point out have no skills to succeed because they never learned the skills.

your correct they need to go work for someone to learn the skills..

@Elbert Dockery - thank you for the read, and I think you are on to something - most people use wholesaling to get going, not as a career.  Valuable stuff right there.  

@Jay Hinrichs - first off, I'm floored that you'd actually read anything I wrote.  I've read a lot of your content, and have a ton of respect for your business.  Lets just say I do take some notes from you.  So pre-emptive thanks just for giving me a look-see.  

The point?  I guess the point was to write it down, and get it out to the world.  Plus my brother and better half are bugging (encouraging?) me to write some of my experiences down.  And a bit of nice Pinot (oregon, no less) makes me want to share....

I use wholesaling as a job, to fund my rental portfolio, take the better half to dinner, and pay off the motorcycle.  While I agree with you that there is a small percentage of people who can do this well, I suppose that my chief object was to let people know that this isn't some get-rich-quick scheme, and that you don't need a guru, you need a plan and some education.  

I could not agree with you more on the Billy Bob post.  Definitely drives me up the wall.  If 5% of the people I met could define a Real Estate Asset, my life would be exponentially easer.  

I was told this, and used it in another article/post on the landlording forum - If you have no money, you can wholesale to start, raise the cash for a flip or two, and then buy a rental.  Sounds simple, but the execution is as complex as the shuttle launch.  And you better know what the F you are doing.  

Also, as I'm sure you know, wholesaling (or property providing, whatever you call it) is a business, and has to be run like one.  I'm not hating on the new folks, but I am pretty damn annoyed with the guru/facebook/youtube torrent of bull$h*t that drives this market.  When I see someone come from another nice career and want to try this, my soul dies a little on the inside. 

Anyway, I'll shut up now, but again, thank you for doing what you do.  It gives those of us coming up in the industry some much needed guidance to follow.  

" the point"  was me being Factious  I got the point.. and more beginners would do well to understand that even though you style might be out there and a tad harsh for the beginners your dead on.

I always tell those who contact me to go sell cars for 6 months or a year.. hone your closing skills before you blow wads of money on direct mail that you put on your CC... :)

as you know there are top sales people in every industry.. and to be a successful wholesaler you need uber sales skills.. you can limp through it .. but the one who can sell at the end of the day is going to be far more successful than one who has no clue that sales is a very well thought out progression to get someone to say yes.  I learned from the best.. 50's and 60s land salemen.  Think GlennGary Glenn ross that was my incubator as 5 to 12 year old.  

The needing no cash for building/starting a wholesaling business is just a complete fallacy. Thousands a month are needed in advertising to extract good deals. Sure you can get lucky on a few hundred bucks mailer and make a buck to the buyer you have in the waiting, but to really build a wholesaling business is just that, building a business.

@Jay Hinrichs is correct that you have to learn how to sell in order to start putting up decent numbers. Also even beyond sales ability you need hustle. Yeah people don't answer their phone even after they call you , so you gotta stare that list in the face power out follow up calls.

(you can learn though, I do think gifted salespeople definitely have an edge over say a creative or analytical non sales person but you can learn and start to get good at sales (me :) )

But to start a wholesaling business without a decent budget is just silly. Also having been in the trenches for 10 years myself, me talking to a seller or buyer has a very different feel to it when I tell them I have purchased 50 SFRs in the last two years and am a very active landlord.

My point being, I tried wholesaling when I was total newb for all the reasons people get into wholesaling. it failed, I sucked at it. I then figured out that I like buy and hold and just stuck with it, but buy and hold is slow game (powerful game) and there is no get rich quick. I added wholesaling to my bag of tricks because we were finding alot of great deals for ourselves but couldn't take on too much at once. So we found some other buyers and we spoke the same language. We are actually ramping up our wholesaling business because our marketing just works, and we are not afraid to spend bucks. Like many thousands a months. PS we are also not afraid to close on the properties first. That sends a message to your buyers, "oh you own this I am not double closing or buying from an assignment?" - "no we closed on this, its yours if you want it for X price" 

Also there is a fair amount of tech you implement these days for wholesaling and you need a fair amount of operations experience to keep things from feeling they are out of control. 

We also only work with real buyers. Its pretty easy to determine if a buyer is just saying the yearbook words to make them sound smart. Cuz here is how it goes "oh why don't you like that one?" "price is too high or dont like the area" "ok cool so I have one next week at this price in this area you are ready to rock?"  boom next week I find that property, buyer doesn't pull trigger or comes up with other lame reasons. They dont get calls again and are taken off the list. Cuz if its that good a deal and you don't buy from me we most likely will find another buyer, rehab it and flip ourselves or better yet, rehab and rent ourselves. 

I love wholesaling. But I really don't feel like its a newbie game unless you have a couple of bucks for continued marketing, have a plan to find real buyers, a plan to market alot to find real deals and really stick to it for a while to get your rhythm going and even then you just might make a couple of bucks.  (and by sticking to it for a while, like a year maybe to get some slow stride)

@Darwin Crawford channel your inner Gary Vaynerchuk and be unapologetic in your business approach. If you feel the rant was necessary to get your point across, then by all means rant on! Thank you for the words of wisdom in telling people to take the time to shut the F##% Up and learn from the people you need to execute your deals.

@Jay Hinrichs - sorry about that, sometimes I'm a little slow on the uptake...however, I am very jealous of your experience with those land salesman - truly the golden age of selling, with Ogilvey on Advertising as the gospel, and all that other mother jazz, as Frank would say.  Actually played Alec Baldwin's monologue today for the office in the conference room - struck a note with a few of them you might say.  

@Chris Jackson - thank you for the input, and you hit that one out of the park!  If I recall, you and I actually spoke a couple of years back about some property in Syracuse, glad to know you're still doing well.  I 100% agree that wholesaling is sales, pure and simple, and is a far better strategy to offload deals you cannot afford to people you do business with, in a manner that benefits everyone.  It also costs money to obtain and maintain leads and deals.  More than most newbies have in their pocket.  

One of my co-workers actually mentioned to me today at lunch that we function more like agents without restraints, which I thought was a good way to put it.  

Agreed as well that this can be learned.  Sales is systematic, albeit some people are naturally born to do it.  I just really, really wish someone would tell the newbies how it is before they blow all their money.  It'd save us all time and headaches.  

Thank you both for your posts and inputs to this!  

Love your posts, and as a newbie this is what I need to hear.  I do plan to go into wholesale to get started, but I don't want to do it blindly, it's just to get my foot in the door and for me to learn the ropes.  I am so glad I found this site and will be following several of you to grab what crumbs of knowledge I can.  My focus is to be on pre-foreclosures and abandoned properties and build a network of rehabers and realtors to do basically the legwork for.  Not interested in screwing anyone, as I feel any business is built on mutual respect and trust.  Do any of you have thoughts on setting a flat fee for contract assignment?  Pro's and con's are appreciated.  Thank you!

As a newbie this is what I needed...the honest truth without the sugar coated unrealistic aspirations I have been hearing about how to get rich quick by wholesaling.  After speaking with a buyer and what they were seeking in a property, I quickly realized it takes dedication and many hours of research.  I have yet to find a property for my buyer.  I have ran across numerous properties, but I see my buyer having to spend entirely too much in rehabbing the property.  I want to best deal for my buyer because I want their continued business. 

This initial reminds me of Vincent Polisi. An aggressive sales man with foul language that says the same things the gurus do with a different flavor of flair. I didn't fall for it, mainly because I didn't like his personal approach, and quickly saw that he had nothing new to offer that the gurus didn't, the BP community didnt, and the @Jay Hinrichs and like didn't already inform me of. Unfortunately, many people, especially those who took a course and felt 'burned' are the prime suckers for this type of tactic. 

@Penny Thompson - thank you for the read and the support, and I hope this helps you on your journey.  Its certainly doable with some hard work and practice.  Just please educate and train yourself, if only for your own success and sanity.  

@Brandie Lyons - you hit it on the head.  There is a decent amount of complex math and research that goes into evaluating these deals, and you are very correct to keep your buyer's best interests at the forefront.  

@Steven J. - appreciate the feedback.  Agreed, I have a potty-mouth.  Believe it or not, I'm also very calculatedly passive on the phone.  Helps my closing ratios.  

For the record, I'm about the furthest thing in the world from a guru, and have never tried to sell my advice to anyone other than my employer, who happily pays for it.  As I tell everyone, I'm just another hard-working small-time guy in real estate investing, but I don't apologize for sharing my views and frustrations with the unprofessional elements.  And yes, wholesaling is sales.  Says so right there in the word.  Anyone who thinks otherwise has kind of missed the point.  

@Darwin Crawford Glad you appreciate the feedback. And yes, I think I can predict how well calculated you would be on the phone and I'll let you know part of the reason I'm not a fan of your approach is my personality. I definitely do respect the approach you work because it works for you and not for me.

I'll also wish you not to pull away your views and frustrations with the unprofessional elements. I appreciate getting the uncomfortable and conflicting views from others because it pushes me harder so I do thank you. But expect me to come back with my views. I look forward to following more of your posts.

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