Newbie Wholesaling Questions

9 Replies

Hey All,

As someone looking to get into wholesaling I have a some questions around a few topics in which I was hoping to get feedback, input and advice on.

To be clear, I am just starting, I have done research but I have not sent my first contract out, although I have found a few listings which I want to pursue with offers. My goal is to send out 3 offers by sunday, if not anything at least to get the ball rolling and start getting on the phone and following up and talking to people on the subject. I am located in South Florida.

Below are the topics:

Contracts: I have two blank contracts from local title companies, and I am currently just reviewing them to become very familiar. Do you all, on a normal basis, list any type of special contingencies/clauses to add extra protection in order to get out of the contract within the inspection period? Is there anything specific I need to really pay attention to outside of the inspection period on the contract?

Scripts: I have seen a few good BP post on WS calling scripts; however, it seemed that most of the posts were dated and didnt have the scripts any longer. Does anyone have scripts that they would not mind sharing to help me get familiar with how I should frame my services and the call?

MLS: I am curious as to what percent of your deals you get off the MLS. Before spending money on marketing, I want to learn the business better finding and working on deals from the MLS (so they are free), so that I can work out the kinks there and then add in direct mail.

Also, being new to the MLS and WS in general, it was easy to get overwhelmed with the amount of residences available, so I was curious as to what some of your strategies may be to help narrow the funnel when looking on the MLS (price point, neighborhood "grade", days listed, status changes, sqft, beds/baths).

Paid Mentor Programs: I am very interested in joining a paid mentor program, and I wanted to ask if anyone here has paid and had success in a mentor program before. I have looked at Wholesalers Inc, however they are based on direct mail and I would like to get the business down on the MLS prior to jumping into direct mail. I have reviewed the mentor section but it is a little all over the place so I wanted to ask in here to see if anyone has paid, and has had success in a paid program. (I know that I can learn everything for free in the BP forums, but for me it is worth the money for a little more hands on training, and more importantly speeding up the learning curve)

Thank you all very much for your time. My apologies for the long post; however I am very excited to hear your input.

Hey @Chris Bluem  

Asking to cover a lot but I like the challenge. Let’s see how few words I can put all this. First, for a wholesaler the contract is an extreme important instrument to structure a wholesale deal. It is where you control the deposit you put up; communicates your “out clauses” to protect yourself (here is my out clauses “ This contract is subject to partner approval”) in the evident you can’t find an end buyer. It is where you communicate your need for access to the property. This is just to name a few. The point I want to drill home here is that it is all about control. My rule of thumb is that if I am making 5k or less on the deal I will use an assignment. If I am making over 5k I will use a simultaneous closing. Here are the benefits and drawbacks of each wholesale deal closing. If you are closing using an assignment the benefit is that there are no closing costs. The drawback is that the buyer knows exactly what you paid for the property and the seller know how much you are selling the property for. This may be a problem if the seller or buyer thinks you are making too much money on the deal. If you are closing using a simultaneous closing the benefit is the privacy that seller does not know what you are selling the house for and the buyer does not know what you bought the house for. The drawback of a simultaneous closing is that you will have to pay closing costs when you buy the house and closing costs when you sell the property. Second, scripts. I want you to think bigger than scripts. I want you to build systems. For example I have a phone script; a negotiations script; a checklist to prepare for my appointment to view the house; a checklist to estimate rehab costs that I bring with me to my appointments; and comparable analysis sheet to share with the owner. This is just a few examples to give you some ideas. Getting great deals is the result of preparation. Have every step you walk the home owner through calculated. This will in your confidence and make you seem very professional. I can share my scripts with you. Three, 95% of my deals are off market. That’s where all the hard work is and where all the rewards are. To be a great wholesaler you must know how to find great deals and historical off market deals offer the largest profit margins. Start driving for dollars if you don’t want to start direct marketing. Four, narrow your search to areas where most of the cash traction’s are. Also, think about the highest performing schools. Last, mentor. I have friends who swear by mentors and that one person who you can learn from. But for me I never felt that way. I like learning from a lot of different people without the expectation that one person is going to take me under their wing. But no matter what your perspective is there are many ways to get that support and guidance you seek. Here are a couple of ways:

1. You don't need to meet someone to be mentored by them. When I was getting started and still to this day I am mentored by people I have never meet. Through books, memberships, and podcasts I gotten peoples' best thoughts and ideas. The best part is that they are there for you to review and revisit as much as you want.

2. Don't look for one look for many. Don't put so much pressure on one relationship. If you're only getting advice from person you're missing out on different points of view.

3. Be specific not vague. Ask very specific questions here on bigger pockets or else where and you will shorten your learning curve.

4. Earn respect and trust through action. If there is someone out there that you really want to learn from you have to be a devoted fan. So buy their books, join their programs, engage in their community.

5. Work your butt off. Hustle, problem solve, be resourceful, and be consistent.

I think that’s everything. Hope this helps. 

Signing contracts to purchase without intent or ability to close is called FRAUD. The FRAUDS AND SCAMMERS promote this and promote lies such as "subject to my partners approval" and others as escape clauses. 

One thing to think about in terms of leads. Most people listed in MLS have already taken action and done the work needed to be done on their house prior to listing. These updates are more than likely built into the asking price.

If you do a mail campaign to off-market leads you can offer a lower price because you will be doing the updates - and you will probably have a lower cost.

@Jose Flores - Thank you so much for that response, that in and and of itself was very helpful and I have added many of the things you listed to my notes for taking action. And I 100% agree with you about building systems. I started with scripts because if I can find properties on the MLS, have the right contracts with appropriate clauses, and have the scripts to help me pitch the story... Then I can TAKE ACTION. I am an analyst with a heavy finance background, so I dont want to get overwhelmed building a plan for a year with all the tools and have zero execution. This way, I can get moving and get a feel for things, and if I get zero contracts (at first) that is OK with me! But, agree and plan on building the whole infrastructure/systems/toolbox, and I took note on what you listed. And I appreciate the mentor feedback as well, my thoughts were that I would rather pay for a program if I can get up and running in 6months vs learning over the next year. That would be worth it to me, so it was more around a paid program that has shown to work, but that seems difficult to find. But I agree with your mentor comments, they were very insightful and spot on, and I am excited to build those relationships over time! Lastly, number 5 always wins!

@Chrissy Arnold - Thank you, I agree with you and it seems so does @Jose Flores. My only thought was that I want to learn what I am doing before throwing money at the wall. So it was more to work deals from the MLS so I can learn the process, learn the phone, learn the contract, etc... Learn learn learn and then scale and invest.

All others - I appreciate your feedback as well. I plan on getting licensed in the near future.

Contracts: I have two blank contracts from local title companies, and I am currently just reviewing them to become very familiar. Do you all, on a normal basis, list any type of special contingencies/clauses to add extra protection in order to get out of the contract within the inspection period? Is there anything specific I need to really pay attention to outside of the inspection period on the contract?

Have an escape clause but never use it. If you do wholesaling the monkey way (honestly) you never have to worry about the escape clause. Tell them you have no intention of buying the house and you will wholesale it.

Scripts: I have seen a few good BP post on WS calling scripts; however, it seemed that most of the posts were dated and didn't have the scripts any longer. Does anyone have scripts that they would not mind sharing to help me get familiar with how I should frame my services and the call?

NO, NO scripts! Throw them out. Ma gonna slap you! Talk to them as you would talk to yo mama, yo friend, your neighbor. Listen to their problems. Talk about their cat, be human, and know they are human. Think about it. A script is a ploy to menigle information out of them in a sneaky way. Now focus  my green lil grasshoppah! Tell them how the process works. Let them ask the questions and answer honestly. Why do you need a script?

MLS: I am curious as to what percent of your deals you get off the MLS. Before spending money on marketing, I want to learn the business better finding and working on deals from the MLS (so they are free), so that I can work out the kinks there and then add in direct mail.

Forget MLS! Can you get a deal from there? Maybe, probably not. Waste of time. They want market value, don't bother. Find deals the best way. There is a method a brilliant NASA scientist developed. It's name is Jerryll friggin The Monkey Noorden! It is called Get A website! And then, mind the Seriously Evil Ostriches (SEO). DO this wrong and one SEO will be unleashed onto you! Scary stuff bro! Feel the money Sniff the monkey!

Also, being new to the MLS and WS in general, it was easy to get overwhelmed with the amount of residences available, so I was curious as to what some of your strategies may be to help narrow the funnel when looking on the MLS (price point, neighborhood "grade", days listed, status changes, sqft, beds/baths).

You  little rascal!! Dang it! I just told you NO MLS!! Focus!!

Paid Mentor Programs: I am very interested in joining a paid mentor program, and I wanted to ask if anyone here has paid and had success in a mentor program before. I have looked at Wholesalers Inc, however they are based on direct mail and I would like to get the business down on the MLS prior to jumping into direct mail. I have reviewed the mentor section but it is a little all over the place so I wanted to ask in here to see if anyone has paid, and has had success in a paid program. (I know that I can learn everything for free in the BP forums, but for me it is worth the money for a little more hands on training, and more importantly speeding up the learning curve)

My opinion on this is harsh so I will not say anything. I paid for Cody Sperber Clever Investor. It helped me not because of I didn't know how to.I knew how to, you know how to and even that guy there a few posts above me with that really weird looking face eeww (yes you!) KNOWS HOW TO! I got it because it helped with self confidence on finally starting to just do it!

Thank you all very much for your time. My apologies for the long post; however I am very excited to hear your input.

A secret of mine. Want to be successful? 

GO

TO

THE

GYM

!!!


I know what the hell right?

Trust your master you little grasshopper! All hail the monkey!


Dude you should see my pecs now!! So big it's freaky! 

If the seller doesnt want to wholesale you say (in dracula transilvania accent): "looook intoo mai booobs" and then flex each pec separately. They will be hypnotized!


@Chris Bluem -- Sounds like you've put much thought into this but so far everyone's responses are spot on. The MLS is generally a dead end for wholesalers. Off-market is where it's at, and driving for dollars is one of the cheapest ways to jump in.

Have you joined any real estate investment meetups or clubs where you are looking to wholesale? You'll meet the major players and get a feel for marketing strategies that are working, and even meet your future mentor. 

I wrote these three BiggerPockets posts to find motivated sellers;  pick 2 or 3 techniques, stick with them long enough to note your return on investment -- and find something that works for your area:

https://www.biggerpockets.com/blogs/8814/72016-55-resources-to-find-real-estate-deals-online

https://www.biggerpockets.com/blogs/8814/71506-27-ways-to-find-off-market-and-wholesale-real-estate-deals-offline

https://www.biggerpockets.com/blogs/8814/72664-35-relationships-to-help-you-find-more-houses-to-flip-or-wholesale

These 3 offers you were going to send out on Sunday -- how are you analyzing the properties and figuring out what you should offer on them?

@Jerryll Noorden thanks for the feedback, I am taking notes. And on the paid programs, I am in the same boat, its more that I just want help to actually get started vs reading on the sidelines. So it is more to throw me into the fire.

@Kuba F. Thanks for your feedback as well. You mentioned driving for dollars. I have done that a bit for fun. Once I stop a place and get the address, do I follow that up with a mailing? Leave a note in their box? Track down their number and call?.... I have not joined any groups yet, but have researched two big ones in my area, now I just have to go. And thanks for the links, I am looking forward to the reads, and will follow up with you on any questions after! Regarding offer prices, I am looking at what the value could be after renovation, subtracting what I think a full rehab would cost (given the location), and subtracting margin from there. These are on the MLS so I will try to see them to get a better idea of rehab, but assuming a full rehab.

Driving for dollars is the easiest lowest money needed strategy. Best method would be to skip trace and call the owner. Forget MLS, they all mostly want retail and most cash buyers want off market deals. They won't buy once they see the house is listed. And signing contracts without the ability to close is practiced everyday. Even the big guru's always preach to lock the deal up, then worry about setting up financing. The most important line on your contract is where it says buyer an it says your name or company name "and/or assigns"