Is Wholesaling Really That Simple???

Raleigh, NC · Member since 2012 · 31 posts · 0 votes

I read articles, blogs, books and guides about wholesaling and they make it seem so simple and easy. I'm the wholesaler, I find a great deal. Then I find an investor they buy that deal under contract from me for a fee? It seems like that there has to be something else to it? I'm in Atlanta if there are any locals that have some feedback

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J ScottPro Member

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Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes

13y

Originally posted by Mike Nelson:

With that being said, I would consider wholesaling the "easiest" form of Real Estate to get started with. It doesn't require a whole lot of start up capital and you can get started with little knowledge on investing.

I would say just the opposite.

To be a great wholesaler, you need to have most of the skills a great rehabber, landlord and real estate agent have...all combined into one! And, because you're marking up the property as a middleman, you need to be *better* at finding deals than any rehabber, landlord or real estate agent just to make money.

In my mind, being a great wholesaler is a very difficult business...I don't think I could do it full-time and still make a good living, and I'm pretty good at finding deals...

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
13y
It can be simple, but it definitely is not easy. The transaction structure is the simple part, finding and negotiating a property purchase significantly below true value is the not so easy part.
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Jermon Clayborn
Wholesaler · Douglasville, GA · Member since 2012 · 27 posts · 0 votes
13y
Don is spot on also you must "REPECT THE PROSSES"
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Brian Wall
Wholesaler · Santa Fe Springs, CA · Member since 2009 · 219 posts · 83 votes
13y
The process is easy to describe. But the hard part comes in finding the deals.

Once you have a steady deal flow coming in, the rest will come in to place.

Brian
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Will BarnardPro Member
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Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
If it was really that easy everybody would do it. While it is not rocket science, there are several key factors and you need to know how to do them, including finding and locking the deal, finding the buyer to match the investment, and how to properly structure the deal. Time and time again, I have seen who.esalers mess up on the structure of what was a good deal, then due to the poor structure, lose the deal.
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
13y
This is a side note, but one I think is important. We as professionals in the real estate business, whether as brokers, flippers, wholesalers or investors tend to UNDERESTIMATE the knowledge, ability, experience and dedication needed to be a success, and underestimate our own expertise, abilities and knowledge as a result. Maybe the reason for this is brainwashing over time - all the gurus for the last 35 years promising over and over that one weekends seminars are all that is needed for success in this industry.
The truth of the matter is that at least 99% of people who enter this business from the guru side fail, most never even complete one transaction. Almost anyone can make a single decent purchase of a property, hold it long term and reap the benefits of amoritization, inflation, and rising rents over time. However creating a sustainable self supporting business/investment activity is much more difficult.

Thoughts?
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Mike Nelson
Wholesaler · Washington, D.C · Member since 2011 · 449 posts · 94 votes
13y
It's easy for someone that's been doing it for sometime now to say it's easy. The reality of it is that it isn't, finding someone that's motivated to sell below market value it's easy at all. You have to be able to negotiate, build rapport and follow up with these people which all take skill. It took me about 6 months before I was able to get my first deal and I also lost $2,000 while at it.

With that being said, I would consider wholesaling the "easiest" form of Real Estate to get started with. It doesn't require a whole lot of start up capital and you can get started with little knowledge on investing.
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J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
Originally posted by Mike Nelson:

With that being said, I would consider wholesaling the "easiest" form of Real Estate to get started with. It doesn't require a whole lot of start up capital and you can get started with little knowledge on investing.

I would say just the opposite.

To be a great wholesaler, you need to have most of the skills a great rehabber, landlord and real estate agent have...all combined into one! And, because you're marking up the property as a middleman, you need to be *better* at finding deals than any rehabber, landlord or real estate agent just to make money.

In my mind, being a great wholesaler is a very difficult business...I don't think I could do it full-time and still make a good living, and I'm pretty good at finding deals...
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James Vermillion
Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
13y
Originally posted by Mike Nelson:
It doesn't require a whole lot of start up capital and you can get started with little knowledge on investing.

I believe this is the biggest and most dangerous misconception presented to new wholesalers. This mentality and teaching is why there a way more failed wholesalers than successful ones and why many investors have a hard time taking most wholesalers seriously. There are some very good wholesalers out there, some who even make a living by it, but I can guarantee you those people have great investing knowledge.

Not only do they understand the process of wholesaling, they know their market like the back of their hand. Not only that, they are marketing experts, have many contacts, and can provide reliable information to potential buyers.
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
13y
wholesalers are in some ways substituting experience/knowledge/ability for capital. To make a lot of money at it you have to be really good.
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Simon Campbell
Miami, FL · Member since 2012 · 612 posts · 189 votes
13y
Some of the challenges (besides finding the good deals) is being able to keep a property under contract long enough to find another buyer.

Additionally, most wholesalers do a double close. You close with seller and then you close immediately thereafter with your buyer. It all sounds easy until you find out the title company that you have chosen refuses to do a double close.
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Braden C.
Real Estate Investor · FL · Member since 2011 · 586 posts · 360 votes
13y
Don Konipol You're respectively wrong, Simon Campbell you're respectively wrong.

It doesn't take LACK of experience/knowledge/ability for capital, it in fact takes all of those things. If you're lacking any of those, it makes wholesaling much more difficult. If you want to be successful then you'd better have a great knowledge of business, your market, repair/rehab costs, a good amount of capital.

If you lack the ability to keep a property under contract long enough to sell it then you aren't getting it for the right price. A true wholesale deal should be sold within 24 hours; 48 if you have zero buyers on your list.
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Tim Czarkowski
Involved In Real Estate · Jacksonville, FL · Member since 2012 · 216 posts · 42 votes
13y
Most things can be made to look simple from the outside but when you dig into it you realize that it is really not so simple. On the other hand I know people who regularly try to make things more complicated then they really are.

The idea is
1. Market for motivated seller
2. Put under contract
3. Market to cash buyers
4. Close deal

It looks simpler and easier than it is. The fact is that each of these steps has a lot that goes into them and not everything works in all areas all the time. Trying to find deals at 65% of ARV - Repairs is not easy. There are plenty of people who will take a lower margin because they are the end user. If you can find the deals you can find the buyers. It entails a lot of market knowledge as others have said. You need to know the end value of the property and have an accurate cost for rehab. This is where most people screw up because it is not easy. You need to have real accurate knowledge of what a rehab costs. The best way I know to do that is to have experience handling rehabs. Which if your just starting out your not likely to have.

Certainly don't let all this stop you but realize that you need to do some legwork to be able to calculate values correctly. You need to look at hundreds of homes to be able to quickly and accurately get a value.
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Wayne Terry
OP
Raleigh, NC · Member since 2012 · 31 posts · 0 votes
13y
Thanks for all the help! Very insightful.
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Will BarnardPro Member
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Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
I agree with J Scott and James Vermillion. Wholesaling success requires the investor to not onlyy know what the rehab flipper knows, but also to generate enough spread for themselves too! In addition, as a wholesaler, you also need to work around the obstacles of no assignment clauses and deed restrictions, thus, you need to not only be a good negotiator, but also you need to know how to properly structure your deal. For the rehabber, it is simple, just vest the contract in your entity name, for the wholesaler, you must get creative.

Wholesalers need ALL the knowledge (or a lot of it), not "a little".
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Mike Nelson
Wholesaler · Washington, D.C · Member since 2011 · 449 posts · 94 votes
13y
I think you guys are making it more difficult than it really is. This is how I look at it, every professional had to learn at some point in their life. As a wholesaler you have to learn somewhere, for some people it's a lot easier to learn than other forms of real estate. IMO someone just starting out would have an easier time learning how to wholesale than actually flipping a property or purchasing a rental.

I'm able to say that it requires little start up money because I have been doing this for sometime now and have found loopholes that require me to pay put out little on mailing pieces. Also, you don't have to be great at all aspects of wholesaling if you partner up with someone in your market that's successful at it already.
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
So many ways to do a deal, but one way will always be more fitting.

If you're looking for deals and then buyers, you're working way to hard and bass ackwards.

Know your market, it's not so much the property (which you need to understand) but your buyers, the investors.

I knew about a dozen buyers, good ones who had cash and the motivation to execute a deal. Know exactly what they are looking for. Make life easy! Find the property that sells not a property that is for sale. You should be doing this on the phone. I'd have a good idea about the property meeting three investor's needs before locking it up. As mentioned above, your deal should be out the door in hours, not weeks!

Working with pros is much easier than a young couple who wants a bedroom painted a different color and need to get their loan approved!

Investors are cheap when buying, know them and what they will do, your job is to make it a deal for them, if you do, your profit comes from your ability to get it even cheaper. If you can do that you'll be good at it.

Need to spend time with the investors, get to know them, make friends, get them to tell you what they wouldn't pass up. It's a partnership without agreements.

If you're looking for a good deal and then a buyer, you'll get stuck someday. Why do you think a clothing store stocks pants in standard sizes? Because the buyer knows what sells.

So yes, it can be very easy, but I agree with J. Scott as to it being tuff knowing enough buyers and having an inventory to deal with. Just being a wholesale type probably won't make you a good living.
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Will BarnardPro Member
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Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Originally posted by Mike Nelson:
I think you guys are making it more difficult than it really is..
While I can appreciate your opinion, I don't agree. We are not "trying" to make it more difficult, we just get frustrated when others (mostly gurus selling courses) make it out to be "so easy".
True, any professional has a learning curve to enter the field, wholesaling is no different. But honestly, if you don't know what your buyer is looking for, how do you expect to find a deal? Knowing what your buyer is locking for would require you to know how to estimate exit values and rehab costs, otherwise, you can never end up at a correct offer price. Thus, you need to know what the rehabber knows as far as those two items go. You do not need to know how to swing a hammer or when to swing it, but you do need the fore mentioned skills along with an ability to locate the same deals the rehabber is getting, plus have enough spread added for yourself. If that is easy, then why are there so many unsuccessful people!

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Nathan Paisley
Flipper/Rehabber · Atlantic County, NJ · Member since 2012 · 514 posts · 209 votes
13y
Will, BIll and mike I agree with all your comments but to will's question, why are there so many unsuccessful people? Not to get too physcological but we're not taught to become successful or be an entrepreneur. You're forced to pick a (career) job and work 9-5 for 25+ years till you retire or die. Pretty much IMHO from the day you're born you're setup for failure! Go to school for 12 years then go to college for 4-8 years graduate and start your life 60k$ underwater. Now buy a house 200-300k, buy a car 30k! Only to try and work that off the rest of your life! I believe we're trained to be unsuccessful... End of rant.

Point is, real estate is the quickest way to improving your life without a high school diploma, college degree or masters. Imagine if you were taught investment strategies in school!? If somebody told you, you could make more than a dentist, lawyer or surgeon coming out of high school and showed you how to wholesale wouldn't you jump head first? I know I would of. I could be wrong but the key to success is determination. Everything else you just pick up a long the way. Almost all successful investors on here have LEARNED to use other people's money not use THEIR OWN money to invest for their future. School teaches you otherwise. Work hard, get taxed on your hard earned money then spend that hard earned money, get taxed again. Doomed for failure.

Learning to wholesale is easy, actually sticking with it and being successful is a different story.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
Being consistent and implementing a sound plan is what drives success long term.

You can get lucky from time to time but running a full time business performing on all cylinders effectively and efficiently takes planning, thought, and dedication.

Do not look for instant gratification but stick to a plan if the numbers show it is working and grow at a controlled risk rate where odds of success are high but failure is lower.

I think when wholesaling included these other strategies (assignment, double close) then it was easy for most to start up with little to no money. Now employing these strategies is much harder with title companies so the guru's are hucking systems but not mentioning the success stories were from years ago.

Any businesses failure most of the time is undercapitalization and improper use and rate of growth for funds taken in (mismanagement).

So sadly it doesn't matter what venture a person goes into they will many times get the same result as how they conduct themselves is the common denominator and NOT what they are selling or buying.
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Jerry Kisasonak
Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
13y
Wow... lots of great comments. You have to be very smart and very skilled to do wholesaling effectively. But if you really want to be successful at it, nobody can kill your dream but you.

Thankfully, due to advances in technology, you can automate and systematize things and scale the business without alot of overhead/employees. Sadly, many people take this to mean that you can still remain a crude and undeveloped person and still rock and roll with this business. Technology will never take the core human element out of the equation, things like: Initiative, leadership (and knowing when to follow), courage, honestly & fairness, good communcation skills/ability to listen, financial literacy, persistence/stick-to-it-tiveness, negotiating, persuasion, tactfulness, and so on. As much as it is a numbers game, it should not mistaken for mere gambling. There's alot more that goes into it!
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Morris Lucas
Rental Property Investor · Atlanta, GA · Member since 2012 · 256 posts · 64 votes
13y
Originally posted by Nathan Paisley:
Will, BIll and mike I agree with all your comments but to will's question, why are there so many unsuccessful people? Not to get too physcological but we're not taught to become successful or be an entrepreneur. You're forced to pick a (career) job and work 9-5 for 25+ years till you retire or die. Pretty much IMHO from the day you're born you're setup for failure! Go to school for 12 years then go to college for 4-8 years graduate and start your life 60k$ underwater. Now buy a house 200-300k, buy a car 30k! Only to try and work that off the rest of your life! I believe we're trained to be unsuccessful... End of rant.
Point is, real estate is the quickest way to improving your life without a high school diploma, college degree or masters. Imagine if you were taught investment strategies in school!? If somebody told you, you could make more than a dentist, lawyer or surgeon coming out of high school and showed you how to wholesale wouldn't you jump head first? .

Wow. That was powerful. I always said college really didn't prepare for anything useful, and in my opinion, it still doesn't. No one through high school to college is ever taught basic investing, stocks, importance of credit, time value of money, etc. I wish that i knew 1% of what i know now when i was 20 years old. It was all about DEGREE and that GREAT JOB! lol. Oh well, no use whining, better to get the memo late than never!

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Wayne Terry
OP
Raleigh, NC · Member since 2012 · 31 posts · 0 votes
13y
Jerry Kisasonak Great response. "stick-to-it-tiveness" I'm going to have to start using that
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Wayne Terry
OP
Raleigh, NC · Member since 2012 · 31 posts · 0 votes
13y
My plan is to rehab and rent properties. Since I don't have cash to start out, wholesaling seemed like a great way for me to get some extra cash without alot of cash. Am I wasting my time?
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Chris Langston
Structural Contractor · Leesburg, VA · Member since 2012 · 4 posts · 1 vote
13y
These are great posts. I too am thinking of getting into the wholesale market but have wondered if its a waste of time. Like anything else it has to take work, skill, and determination, but the guru's out there talk it up like Anyone can do it. I'll call BS on that. If it were that easy everyone Would be doing it (within market constraints). I was a new home builder in California (since 1991) but got wiped out a few years ago, I am now a contractor in the DC metro area, would love to find some investors to network with and start building a real business.
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Jerry Kisasonak
Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
13y
Wayne Terry Chris Langston Wholesaling for me is a means to an end. I believe in passive income through rental real estate. Wholesaling is not passive (if you don't believe me just ask the IRS). I have 16 rentals now, and I'm using wholesaling to generate capital to build my portfolio even more. Wholesale a few deals, buy a rental. Wholesale a few deals, buy a rental. I'm a full-time RE investor, so that's MY plan. It may be right for you, but might not be either. You'll find in real estate that answer is usually "It depends."
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