What's the Toughest Part About Wholesaling?

11 Replies

Well wholesalers have to do a lot of work for a relatively small profit. They also have to make sure that the deal is good enough for whoever they're wholesaling to, to make a profit, and then they have to make a profit on top of it. It's a good model to make money in real estate because there's very little risk, but it's also one of the ones with the lowest return.

I have done some wholesaling in the past, but I prefer holding rentals now. Yep, returns can still be excellent, but if you're making $60k on a wholesale deal, I should hope you're leaving a lot more profit available for the end buyer, as they are going to be the one taking on all the risk. It's possible to make even more than that wholesaling. =)

Toughest part is finding the deal. You have to sink a lot of marketing dollars and time. Sometimes, you'll have to be in touch with a seller for months before you get it under contract. For example, I've been after a property for the past 2 months now. The owner went MIA, I found out he was in jail....so I went and visited him....then visited him again once he got out....about to visit him again in 2 days and HOPEFULLY get it under contract. 

How much you make depends on how well you negotiate. I'll have to disagree with Ian. Just because you're making more doesn't mean the buyer has to be given a price cut. If a property is worth 200k to an investor, then that's what you should sell it for regardless if you get it for 150k or 199k.

Finding the deals, and being persistent through the down times of the market, but also still smart and patient enough to know when to say no to a deal. 

Originally posted by @Account Closed :

@Pratik P. , wow - THAT'S dedication! Did you end up landing the contract? @Tim G. and @Isaac Barrow, what is it about finding off-market deals that you guys have found challenging? I'd love to hear about this. 

you just have to do a lot of digging. That includes marketing, being at REI meetings, having an online presence, and there are so many other people digging for off market deals, so you have to find a way to separate yourself from the competition somehow

From what I see and I guess we wholesale but we close first then resell.. 

but for those that are basically acting like brokers.. I think the toughest thing is your doing it on an island.. ergo only very very few make it work..  you need so many skills and you need some pretty good money to market and you need the time to do it all while your making no money or getting started..  

those that I know in the industry that are making some big money have fully vertically integrated companies spending 10 to 50k a month or MORE just on marketing..  that's a lot of bread to get the leads.. so you need tons of seed capital.

those that have little to no marketing money to start .. pretty tough unless you bag a deal right out of the gate to keep you going.

its the same for real estate agents getting started in that industry.. when  I had my shops and interviewed new licensed agents it was something we talked about.. you need ONE years of living expenses in the bank to even think about starting in this business.. same with wholesaling.. to try to do it with no money while it can be done .. flame out is virtually assured because of lack of capital in your small business. 

This is why a lot of Real estate brokerage business is dominated by Women who have spouses that support them in the start up phase..