Why do you think most wholesalers fail?

Question

What do you think are the top mistakes new investors make when trying to wholesale?

Michaela G. · Answer

Because they've never done a rehab and want to start off with wholesaling. Thus they don't really know how much things cost and totally miscalculate the rehab and ARV etc.

Experienced investors look at those flyers, laugh and move on and don't even bother looking at the property or any future ones by that same 'wholesaler'.

• You don't know what you don't know and thus building up a negative reputation.

Steve Vaughan · Answer

Thinking they are investors. They are finding deals for investors. Wholesalers invest their time, but so does anybody in any industry sector.

Thinking it's easy. I didn't do it for years because you have to be fluent in all aspects of everything. My last few were Masters level course-like. Zoning to lien positions, drafting docs, disclosures , detailed title searches, the buyer and their partners and their issues, all things exit, you name it.

Jill F. · Answer

Most fail because they do not provide sufficient value to investors.

Plus to me I think a fair number operate in a manner that I would consider to be unethical. I do not want to do a deal where anyone is being gouged. I tell wholesalers I do not do double closings where the goal is hide either from the seller or buyer the wholesaler's fee.  I will pay up to a 10% finders fee if the value is there. Some have just scoffed an said they won't do business with me; but that's okay-- I am lucky to live in a place where I can find more deals than I can afford to do.

John Thedford · Answer

Lack of knowledge, capital, licensing, etc. Many suffer from mythomania.

Aly Vizcarra · Answer

I think a lot of the replies here are spot on.  Unrealistic expectations is a big culprit. Not every deal is going to be a home run. If you have all of your eggs in one basket and the deal goes south, you'll be quick to give up. Most of our successful investors are well funded and have a handful of deals under their belt.

If you're just getting started, it's wise to team up with someone with experience.  Find a great local Title Rep. They are a great source of information.

Alexander Felice · Answer

They don't invest in their business enough.

undercapitalization is the #1 reason for business failure, wholesaling is no different.

This site doesn't help either where the ongoing mindset is that you can wholesale with "no money". How can anyone wage a profitable long term lead generating campaign with no money?!?!

The reason it's worked so well in the last ~8 years is because they market has been both HOT and loaded with distressed properties/owners. It's given a false sense of what's needed to be truly competitive.

easy come, easy go

Thomas S. · Answer

They quit when they find out the returnes are not worth the time and effort required.

NA Rose · Answer

As a homeowner repeatedly besieged by "investor" wanna-bes, a lot of them come across as "low class trash", you can tell right from the get-go that they themselves DON'T have money. It makes the whole thing smell like a scam from the beginning. I agree with Manuel Rodriguez, they wasted the only money they had on a "guru".  If it was as "do-able" as the gurus claim, they'd be DOING it, instead of teaching it!

Sean Cole · Answer

They fail because they're brand new to real estate investing, which means:

- they don't know how to accurately assess repairs

- they don't know how to accurately assess ARV

- they don't know anything about contracts, negotiating, closing

They also tend to have $0 money, which means:

- they have no money to market to homeowners

- they have no money to market to investors

- they are in a hurry to get a deal done, which means that EVERY deals looks like a great deal

- they can't double close a transaction

Why do you think most wholesalers fail?

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