How to be a better wholesaler?

Question

Hey fellow BP members! I am just starting out in wholesaling and am wanting to be the very best one I can be and eventually the best in my city here in San Antonio. One thing I have heard from investors and by reading through articles and such is that people do not like how most wholesaler's numbers are not accurate. I want to be honest, reliable and great at communication which I feel will help put me above the rest so I want to avoid this problem. How do I get the most accurate numbers for an investor? What can I do to make an investors life easier? What do you see most wholesaler's doing that you wish was done differently? What in your opinion do successful wholesaler's do? Any feedback or advice is appreciated thank you!

Brian Pulaski · Answer

@Michael Guzik my opinion is that to be a good wholesaler and really know the numbers, you need to have a lot of rehabs/flips/but and holds under your belt. Newbie wholesalers who have never done a deal, most likely won't know what things cost.

Truth be told, you don't "need" to have done deals, but within about 30 seconds of reading a wholesalers advertisement, I can tell if they have ever rehabbed a house or not. Very few I have seen get the rehab estimate even close. When I see $20-30k rehab estimates on houses that are in complete disrepair it's a sign the wholesaler isn't experienced. When they forget to include any holding costs, closing costs, etc into the "potential profit" number, again, shows lack of experience.

I don't know your area, but the bar is not set very high for being a good wholesaler from what I have seen.

Caleb Heimsoth · Answer

@Michael Guzik I understand your goals and the people you have listened to on podcasts and interviews say wholesaling is great but the reality is wholesaling is extremely difficult.  If you got your license, you would have traIning through your brokerage and others you interacted with on a daily basis.

Wholesaling can work but make sure you have realistic expectations and goals.  I saw an earlier post of yours about bandit signs.  If you go that route I would recommend using at least 500 signs and replacing them bi weekly or so.

For direct mailing you need to spend at least 3-5k a month to likely get deals.  Maybe this would be less if you did all the postage and what not yourself.  Just a general idea of what you’ll probably need.

Good luck!

Brian Pulaski · Answer

@Michael Guzik these costs will depend on the house and your buyer.

I just bought a $120k house and paid about $9000 in closing costs... no wholesaler I have seen a deal from shows the closing costs, they just say ($50k profit). Out of that $50k comes my $9k closing costs on the buy, my $12k selling costs, and a couple thousand in holding costs (these are round figures). All of a sudden $50k is really under $30k, and that is usually based on their inflated ARV and terribly low rehab costs.

Knowing holding and closing costs, again, comes with experience. These vary area to area, and even house to house. A cash buyer and a borrower will have different holding costs, a guy running his own job verse a guy hiring a GC will have different rehab costs etc...

Michael Guzik · Answer

@Caleb Heimsoth Thanks for the comment and advice! I don't want to be an agent because I don't believe it will help me reach my goals. All the investors that I want to be like advise against it and I agree with them.

@Brian Pulaski Thank you for the comment! I 100% agree the bar isn't set very high that's why I'm trying to go above and beyond. What would you say is about the average sum of holding and/or closing costs? Where would I find these numbers in my area so I can add them with my report to investors?

@Brandon Reed Thanks for the comment and advice brother! Is my iPhone a good enough camera for that or is that what most people use? Do you suggest saving up to afford a more expensive and quality camera?

Dave Rav · Answer

I think this a great post, with some equally good post-commentary feedback.

What is really cool is a wholesaler/prospective wholesaler wanting to be better and do things right.   I respect this.

Some wholesalers I have dealt with dont seem to have it all together.  All kinds of holes in their data and inaccuracies.  Once I even went to a property for a showing and the wholesaler's relationship w/the seller was virtually nonexistent.  Bascially, we never even got inside - seller denied us access.  Lesson to the wholesaler:  if you can't even get us access to properly view the home, please dont contract the deal.  If seller won't let us in, you think they will actually attend the closing?

Rick Pozos · Answer

All of the above is great advice except for the realtor part. I am not a fan of being a realtor AND investor or even just a wholesaler.

The main thing to remember is that this is a business. Most businesses do not make money for several years. That means you have to put $1000s into marketing every month, put 30k miles on your car every year, talk with hundreds of people every month, hand out 100s if not 1000s of business cards just to get your name out there. After all of this you may be negative for a year or two. You may need a part time job to keep going.

After you help some people with their home, you will start to see referrals. Also you will get more at ease with your speech that you give people and they will start to believe and trust you more easily. All of this will take time. If you read anything from Malcolm Gladwell, he says that you need to do something for at least 10,000 hours before you get good at it. Think about it, 40 hrs at 50 weeks per year is only 2000 hours. It takes years to get good at something.

Kevin Castaneda · Answer

Hi @Michael Guzik, I'm glad you're asking this question as it a huge issue... It shows you want to do things the right way for yourself and your buyers. As @Caleb Heimsoth recommended. I'd second getting your real estate license. This will allow you to provide more accurate home sale comps in order to determine the ARV. This will not only protect your bacon when buying properties from distressed homebuyers, but will also give confidence to your investor-buyers that you're not just making up numbers. Many inexperienced investors do not have their real estate license and are relying upon you to gauge the ARV. How do you think they'll feel about recommending you if the house appraises for 30k less than ARV because they took your word? At least with a real estate license you can share the comps with them so they can make their own somewhat informed ARV opinion...

Brandon Reed · Answer

@Michael Guzik - No don't worry about saving for a nicer one. Yeah that'd be a plus...but certainly not necessary. The main factor in good or bad pictures is lighting. If you are going to try and light an entire dark family room with your iPhone flash, then it's going to turn out horribly. I would do my best to make sure you are taking pictures during the day time and that the images are crisp (not shaky and blurry). That should give most potential investors enough visual info to get a feel for the property.

Also, equally important to the quality of the photos is what you are taking photos of. As I stated above, make sure you err on the side of MORE photos than less, and make sure every major area of the property is documented.

How to be a better wholesaler?

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