is wholesaling the best way to start with real estate?

Wholesaling
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is wholesaling the best way to start with real estate?

Aron Fredrix
Kerkrade, Netherlands · Member since 2018 · 22 posts · 2 votes

hey guys! as a new real estate investor, is it better to start with wholesaling or not? or do you recommend an other way to start real estate with little capital/ no capital

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Frank Wong
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y

Hi Aron,

Like all the others pointed out wholesaling is not easy. Probably one of the hardest things to do in real estate.  The cold hard truth about real estate is that it takes money to make money.  

If you want to enter real estate and make extra money I suggest becoming an licensed agent.  The cost is much lower and you have a higher percentage to actually make money. You can take online courses for like $150 pass the state exam and boom you are a licensed agent. You can also do a ton of activities to generate clients that won't cost you money.  

Just look at the available deals.  There are way more opportunities to find buyers and sellers than finding a wholesale deal.  Now being an agent is not easy and there is a high %  for failure, but that's life in general. Nothing is easy if it was everyone would be rich.

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  • Marcus Maloney
    Rental Property Investor · Queen Creek, AZ · Member since 2013 · 368 posts · 191 votes
    7y
    @Aron Fredrix it’s a good way to start but there are many challenges. Don’t get fooled in thinking you can make millions with little to no effort. I’ve been wholesaling for years and it help me build my portfolio. You need to know what you want your end to look like and work toward that.
    2Reply
  • Matthew Rembish
    Flipper/Rehabber · Toms River, NJ · Member since 2014 · 378 posts · 154 votes
    7y

    I personally wouldn't suggested it. To be a truly great wholesaler, you really need to be knowledgeable in multiple fields of REI. It's something that a lot of gurus push since it's low cost and motivational but I've found/seen that it's better to start off flipping if you have the capital. To each their own, but I'm about 7 flips in and it's only now that I'm starting to feel comfortable considering the wholesaling route. It's good to get into your consumer's mindset : )

    1Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    7y

    About 95% of those seeking to get into real estate fail. Many if not most may start with wholesaling and find it is a dead end. It is far easier to simply be patient, adapt a frugal life style, take a second job and save the money you need to start.  

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Thomas S.:

    About 95% of those seeking to get into real estate fail. Many if not most may start with wholesaling and find it is a dead end. It is far easier to simply be patient, adapt a frugal life style, take a second job and save the money you need to start.  

     the other myth is it takes no money when in fact to wholesale takes a marketing budget gas  time and skill.. it can be done but its a full on big time business to make any real money.

    we see folks come on BP all the time even ones who say I am going to spend 5k a month on direct mail.. then they blow 20 to 30k over 6 months make one deal and decide its not best use of time or capital.. tough business.. all of real estate Is tough really

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    3Reply
  • Aron Fredrix
    OP
    Kerkrade, Netherlands · Member since 2018 · 22 posts · 2 votes
    7y

    thanks guys for the replies!

    0Reply
  • Aron Fredrix
    OP
    Kerkrade, Netherlands · Member since 2018 · 22 posts · 2 votes
    7y

    would you suggest that house hacking or flipping houses are better to start with?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Aron Fredrix:

    would you suggest that house hacking or flipping houses are better to start with?

     with limited funds house hacking.. flipping houses takes a lot of capital as well or at least a capital partner

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    0Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y
    @Aron Fredrix my opinion is that house hacking is the best way to start if your goal is acquiring a rental portfolio. It's, generally, the lowest cost of entry and allows you to build the skills and experience necessary to become a landlord.
    1Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Hi Aron,

    Like all the others pointed out wholesaling is not easy. Probably one of the hardest things to do in real estate.  The cold hard truth about real estate is that it takes money to make money.  

    If you want to enter real estate and make extra money I suggest becoming an licensed agent.  The cost is much lower and you have a higher percentage to actually make money. You can take online courses for like $150 pass the state exam and boom you are a licensed agent. You can also do a ton of activities to generate clients that won't cost you money.  

    Just look at the available deals.  There are way more opportunities to find buyers and sellers than finding a wholesale deal.  Now being an agent is not easy and there is a high %  for failure, but that's life in general. Nothing is easy if it was everyone would be rich.

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Frank Wong:

    Hi Aron,

    Like all the others pointed out wholesaling is not easy. Probably one of the hardest things to do in real estate.  The cold hard truth about real estate is that it takes money to make money.  

    If you want to enter real estate and make extra money I suggest becoming an licensed agent.  The cost is much lower and you have a higher percentage to actually make money. You can take online courses for like $150 pass the state exam and boom you are a licensed agent. You can also do a ton of activities to generate clients that won't cost you money.  

    Just look at the available deals.  There are way more opportunities to find buyers and sellers than finding a wholesale deal.  Now being an agent is not easy and there is a high %  for failure, but that's life in general. Nothing is easy if it was everyone would be rich.

    I hope you get two more votes Frank then you will have double the votes to posts.. which indicates strong content on your side.

    the ones that get rich in wholesaling generally are the ones that charge 20 to 30k to teach you how.. its a very very tough gig.

    and its highly regional too.. in some areas it can work pretty good especially in low value asset areas that are underserved by the real estate community and the sellers are not at all sophisticated in the ways of real estate or they are BURNT out landlords. 

    either way.. it takes a good chunk of money … some great sales skills and organizational skills and TIME.  

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    1Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Frank Wong:

    Hi Aron,

    Like all the others pointed out wholesaling is not easy. Probably one of the hardest things to do in real estate.  The cold hard truth about real estate is that it takes money to make money.  

    If you want to enter real estate and make extra money I suggest becoming an licensed agent.  The cost is much lower and you have a higher percentage to actually make money. You can take online courses for like $150 pass the state exam and boom you are a licensed agent. You can also do a ton of activities to generate clients that won't cost you money.  

    Just look at the available deals.  There are way more opportunities to find buyers and sellers than finding a wholesale deal.  Now being an agent is not easy and there is a high %  for failure, but that's life in general. Nothing is easy if it was everyone would be rich.

    I hope you get two more votes Frank then you will have double the votes to posts.. which indicates strong content on your side.

    the ones that get rich in wholesaling generally are the ones that charge 20 to 30k to teach you how.. its a very very tough gig.

    and its highly regional too.. in some areas it can work pretty good especially in low value asset areas that are underserved by the real estate community and the sellers are not at all sophisticated in the ways of real estate or they are BURNT out landlords. 

    either way.. it takes a good chunk of money … some great sales skills and organizational skills and TIME.  

     Thanks Jay!

    Just trying to follow under your lead and add great content and value where I see fit. 

    2Reply
  • Ray Fisher
    Rental Property Investor · Higginson, AR · Member since 2015 · 123 posts · 101 votes
    7y

    Aron,

    My son has been house hacking for about 9 years now, living in his 9th house, looking for #10. I have been doing zero down loans, rehabbing and renting,  looking for #54, sold a few along the way, paid off a few,  Domino effect is starting to take hold after 15 years.  Some people think I have done well. Others think I'm Crazy as a loon.

    Seems like the ones I sold. If I had kept them collected the rent I would have had my money back in three years anyway on the paid for houses, And still had the asset producing the income. 

    There is no right or wrong here It's what fits your market, level of expertise and the ability to learn. The right Partners or team, A bit of luck. And the willingness to take a chance is where its at.   Paralysis of Analysis is the biggest obstacle to overcome.

    I figure Worst case scenario  is I have another rental, with a positive cash flow if everything goes right.

    0Reply
  • Jason Hirko
    Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    Getting your RE license first is the best way to start... for some reason that and wholesaling seem to be mutually exclusive....

    1Reply
  • Richard Queen
    Member since 2018 · 1 post · 1 vote
    7y

    I started wholesaling because I have just a few thousand to start.  I also have previous success  from years ago.  So far I have gotten very little response to direct mail campaigns.  It sounds like this avenue could be a waste of time and money??

    1Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    @Jay Hinrichs

    Frank just got another two votes from me.

    @Frank Wong you are a pleasant surprise, sir. I hope you keep it up.

    0Reply
  • Jackie Siracuse
    Member since 2018 · 7 posts · 1 vote
    7y

    What is house hacking ?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Jackie Siracuse:

    What is house hacking ?

    its when you buy a 2 to 4 unit building and live in one of the units and you get a FHA loan with 3.5% down.. great way to amass rentals with minimum down.. you have to live in one of the units though for at least a year.. and you can only have one FHA loan out at a time.

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    0Reply
  • Account Closed
    Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    Hey guys! as a new real estate investor, is it better to start with wholesaling or not? or do you recommend an other way to start real estate with little capital/ no capital.

    Yep ---- forget the word "wholesaling" - it is nothing more than investing ---- just go find a deal you can CONTROL at a price under market value - use a "Skinny Contract", make full disclosures and offer the property for sale using the public auction method of marketing. Don't confuse your future real estate career with all that junk about wholesaling ---- you are or you will an investor ---- I use a system I built years ago --- called Control and Roll - how it works is you only deal with sellers who have a problem --- also known as "motivated sellers" - if you can't control that property for at lease $10,000 potential profit - you are wasting your time.

    Where to find sellers with a problem:

    • Rent court - sit in rent court a few days a week
    • Housing court -- same as above
    • Housing code violation
    • Unsold TAX Certificate properties 
    • READ the Daily Record -- or the legal paper in your area - a ton of leads can be found if you know what to look for.
    • Radio ads --- Wanted Real Estate - houses - commercial or non-conforming buildings - make sure all calls come to your cell - and remember to pick up when the phone rings.
    • Public auctions - get on the mailing list of all the auctioneer in your community - attend auctions and meed some real professional investors - investors who are making lots of money.
    • Classified line ads in all local papers
    • Probate - be a profession - write a great letter to executors and lawyers
    • Run ads in you local legal newspaper
    • Expired listings ---- forget the letter - go knock on the door - find the owner - make an offer subject to assignment.
    • Listings that have been on the market for 180 days or more - contract the owner (if you are not an agent) talk to the agent - make an offer.
    • Form a syndication - everyone in the groups puts up $5,000 - they are all looking for bargain properties
    • Deal with newly licensed real estate agents - they are still eager to work with you - get them before they get brained washed!
    • Find a local experienced investor with a proven track record - make friends - ask the investor for help.

    Charlie ---- Good luck

    2Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    7y

    It would depend on your market. No single strategy should be suggested as "the place to start" this is a business. Treat it as such, learn your market and create a plan that works best for your situation. 

    1Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    7y

    It would not be for me. Wholesaling is marketing-- I'm pretty sure marketing is what I'll do if I die and go to hell...I'd even rather sand drywall

    1Reply
  • Aron Fredrix
    OP
    Kerkrade, Netherlands · Member since 2018 · 22 posts · 2 votes
    7y

    thanks guys for the amazing input here!

    0Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    7y

    Interesting to read the responses.  

    Personally I would say no, it is probably easier to find other ways to generate extra cash, doing things you are already good at, using the skills and connections you already have.  

    I believe that best way to get started is to just find some way to buy property somewhere that makes sense.  Partner with somebody, and preferably somebody that has some experience doing it.  Contribute whatever you can, in terms of cash, work, whatever.  Don't worry about making a LOT of money on the first one, just try not to lose any while you learn.  If you do lose a chuck of cash, don't worry.  You will survive and move on, your mom will still love you.  Be smarter on the second one.

    Also the BRRR method is a great way to get started. Yes, you need some money to get started, and you need credit and the ability to refinance later, you can solve those problems.

    Every house project, after all, is nothing more than a series of little problems that need solving.  Some are easy to solve, some are harder, and some projects have more problems to solve than others.  But you can break each project down in to a series of little problems, prioritize them and work on them.  

    2Reply
  • Scott Krone
    Investor · Northbrook, IL · Member since 2017 · 352 posts · 295 votes
    7y

    @Aron Fredrix  I appears from your tag line you are in Holland.  To say one strategy is the best across the board, country, or in your case the world, is difficult at best.  While wholesaling may be good in Ohio, that doesn't mean it works in Illinois.  Each market is different.  I also agree with @Frank Wong and @Jay Hinrichs regarding the misnomer that wholesaling doesn't require money.  Any business requires working capital to begin and operate.  

    That being said, I did have a client that implemented a very interesting business model in Holland that did not require a lot of cash.  He would acquire housing in Holland utilizing owner financing.  It would cost him slightly more than the owner's current payment, so they could generate monthly cash flow.  He would then lease the house out per room, and generate income off the property to pay the owner.  Because he was able to lease it per room, he was able to generate a higher rental rate compared to renting the house.  He did this close to schools and cities.  

    While he was successful at this model, in many cities here in the US, we could not do that due to zoning.  So to determine which strategy is best for you, I would suggest first determine what do you want to do in real estate, is there a market for that product in the area you want to focus, and then determine the necessary cash to accomplish your goal. Once you determine that, then you can explore the equity capital verses the debit options you can further pursue.

    Hope this is helpful.

    1Reply
  • Whitney Sewell
    Rental Property Investor · Roanoke, VA · Member since 2016 · 69 posts · 94 votes
    7y

    Some great advice in here @Aron Fredrix .  What are your goals in real estate?  What is your why?  

    Find someone that is doing what you want to do in real estate and provide value to them.  You need a mentor to help accelerate your real estate journey.  Keep in mind that you need to provide value to them before ever asking for anything.  Do this and you will be much further ahead than spending your money and time trying to learn how to wholesale to learn real estate.  A lot of people have made millions wholesaling.  However, it still a JOB, and, a lot more people have quit because they started with wholesaling thinking it was the way to get started with the least amount of effort.  

    Househacking is a great idea.  I wish my eyes had been opened to househacking when I was younger.  

    0Reply
  • Aron Fredrix
    OP
    Kerkrade, Netherlands · Member since 2018 · 22 posts · 2 votes
    7y

    thanks guys for your answers!

    0Reply
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