Newbie. Was looking heavily into wholesale real estate.

Wholesaling
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Newbie. Was looking heavily into wholesale real estate.

Cory Berndt
Member since 2021 · 3 posts · 0 votes

Just starting off and for the past couple of months I’ve been researching heavily on wholesale real estate. It seems like a great opportunity for someone just starting out .

I know the basics of it & I’m enrolling in local real estate groups to start building my buyers list, my question is what are some of the things you guys messed up on in the beginning that you would do different, have any general ideas/ tips that could help me start off/ for the long run ? And how long should I stay in wholesale real estate until I make the jump to a real estate agent then eventually a broker.

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Stephen KeigheryBusiness Member
Rental Property Investor · New Orleans, LA · Member since 2018 · 717 posts · 555 votes
5y

@Cory Berndt find a wholesaler moving volume in your market and offer to JV your first 3 to 5 deals with them (where you split assignment 50:50). You bring the deals and they get the buyers. They should be willing to help you with pricing so that you only lock up deals that you can move. This is the easiest way to get your first deals closed and build confidence.

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    5y

    Network with other active wholesalers/groups in your market. Learn what types of homes and locations your cash buyers like to buy. Always honor your word. Your last question, there is no real answer for that one!!

    Good luck!! 

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  • Tom S.
    Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    5y

    @Cory Berndt  I'm not a wholesaler but for tips, as I've seen deals presented to me, it's all about the numbers.  The #1 mistake new wholesalers make is over estimating the price of a property while under estimating the cost of the rehab.  So they think they have a deal when in fact they don't.

    Also keep in mind it's a lot of work.  You can work at it for 6 months and not make a dime, so keep that in mind up front.

    Certainly wishing you the best of luck!

    3Reply
  • Stephen KeigheryBusiness Member
    Rental Property Investor · New Orleans, LA · Member since 2018 · 717 posts · 555 votes
    5y

    @Cory Berndt find a wholesaler moving volume in your market and offer to JV your first 3 to 5 deals with them (where you split assignment 50:50). You bring the deals and they get the buyers. They should be willing to help you with pricing so that you only lock up deals that you can move. This is the easiest way to get your first deals closed and build confidence.

    Home Buyer Louisiana4.855 Reviews
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    4Reply
  • Ethan Neumann
    Real Estate Broker · Raleigh, NC · Member since 2021 · 80 posts · 62 votes
    5y

    The biggest thing we had issues on early on was improperly comping, or estimating of rehabs. A couple of our first deals ended up falling through because we didnt take into account (or understand) these things:

    1. Renovations on bigger houses must be run differently than renovations for 1500sqft or less properties. Dont use the same $20-$30-$40 x sqft that you would normally use for a 2500sqft house. Watch Jerry Nortons video "How to comp in under 60 seconds" and it will give you a great start. 

    2. When comping make sure to take into account the price per sqft sale price. An ARV house that is 1300sqft CANNOT be directly compared to a house that is only 1000 sqft. Even though it is very similar, price per sqft is what many cash buyers are looking at.

    3. Location, location, location. If a house is in a bad neighborhood where all the comps are selling for very low prices, take into account that buyers are going to be paying significantly less because of the low upside. Not to mean that it cannot be sold, but with houses that need work in bad neighborhoods, you need to make sure its a good price! 

    4. Try to stay within the neighborhood if possible when looking at comps. Our mentor even advised us to look at older comps (over 12months) before ever leaving the subdivison. If you do have to leave the neighborhood to find comparable sales make sure the houses are at least similar. Keep in mind no sales in the neighborhood in the last year is typically a bad sign. 

    Having a deal fall through is never easy, especially when you're starting out. Don't be scared, but make sure you have carefully checked all the things listed above when estimating your buy price. Best of luck to you!

    2Reply
  • Ethan Neumann
    Real Estate Broker · Raleigh, NC · Member since 2021 · 80 posts · 62 votes
    5y

    Also, like mentioned above, dont be scared to JV with local wholesalers in your market if you have trouble moving a deal. If your list of cash buyers isnt interested, leverage someone elses list!!! This has made us a lot of money that we would have otherwise left behind in a canceled deal. Wish I utilized this more early on in my wholesaling ventures.

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  • Yoann Dorat
    Investor · Boca Raton FL · Member since 2017 · 255 posts · 188 votes
    5y

    @Cory Berndt most people I know start as an agent/broker and then become wholesaler which ultimately evolve to flipping and buy&hold down the road.

    I’ve owned a brokerage, did land development and run a turnkey operation before getting into wholesaling.

    We did so many mistakes the list would be too long to enumerate here but my best advice is: most wholesalers do it wrong by locking deals under contract without knowing their exit, when they realize they have less than 30days to move it they panic but it’s already too late. Build your cash buyer list first and the rest will fall into place.

    That way when you sign a PA you can be 95% confident in your ability to perform.

    And don’t be scared of doing mistakes, they are generally the most valuable training you can get out there.

    1Reply
  • Kennith Petty
    Wholesaler · Newport News, VA · Member since 2021 · 4 posts · 4 votes
    5y

    If your end goal is to "make the jump to real estate agent" there's 0 reason to start with wholesaling. You can get your real estate license for a couple hundred bucks and just become an agent it'll take you a month if that. 

    Being an agent and being a wholesaler are two very different things.

    2Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    5y
    Originally posted by @Cory Berndt:

    Just starting off and for the past couple of months I’ve been researching heavily on wholesale real estate. It seems like a great opportunity for someone just starting out .

    I know the basics of it & I’m enrolling in local real estate groups to start building my buyers list, my question is what are some of the things you guys messed up on in the beginning that you would do different, have any general ideas/ tips that could help me start off/ for the long run ? And how long should I stay in wholesale real estate until I make the jump to a real estate agent then eventually a broker.

     You should start out as an agent. All wholesaling is as it's typically taught today is brokering real estate without a license.

    2Reply
  • Jack Hendrickson
    Member since 2020 · 17 posts · 8 votes
    5y

    I totally agree with @Ethan Neumann

    1Reply
  • Jack Hendrickson
    Member since 2020 · 17 posts · 8 votes
    5y

    I totally agree with @Ethan Neumann

    0Reply
  • Cory Berndt
    OP
    Member since 2021 · 3 posts · 0 votes
    5y

    @Ethan Neumann

    Thank you very much this really helped me out!

    0Reply
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