I am looking to start my future as a real estate investor, specifically as a wholesaler to begin with then eventually moving on to renting out mutli-family properties. But I need help getting started. Can I get some recommendations on what my next step should be. (besides reading more books)
Hello @Sebastian Torres ,
Welcome to the BP forums!
Why do you want to wholesale? Is your long-term goal to buy & hold rental property?
Wholesaling, at a successful level, is a FULL-TIME business. Now, if your long-term intentions are to have a real estate marketing company where you find, negotiate and offload off-market inventory, wholesaling may be a good route.
If you are like many BP members, you're looking to get started in RE investing with the objective of getting into multi-family property investing. If this is the case for you, which it sounds to be, I'd highly recommend using the house-hacking strategy as a new investor.
Here are the reasons why folks use the house-hack strategy when building/growing their portfolio:
- House hackers can get in with a low down payment - You can get into a multifamily property with as little as 3-3.5% down!
- They can significantly lower their current living expenses - People currently paying rent can pay as little as half of that for their portion of the mortgage (after collecting rental income). In some markets (i.e. Midwest) house hackers can even cashflow while living in their property. ** We have had this result in Brooklyn, New York as well but cash-flowing on a house hack deal is extremely rare in high-priced markets.
- They gain acquisition, project management AND property management experience - all which will help tremendously when its time to scale and grow the portfolio.
-When house hackers move out (to the next house hack OR forever home), the income of their currently occupied unit will usually allow them to cash flow.
Not saying that wholesaling is not a potentially successful way to get started in RE... I'm just making the argument that the funds, time and energy that would go into a marketing campaign to target seller leads can also go into an actual asset with a SFR or MFR house-hack deal. The seller lead conversion timeline can be 1-24 months depending on conversion skills, market knowledge, network of investors/buyers, ability to close, etc.
Best of luck to you moving forward!
Join a local meetup group or a REIA. You can gain access to people who are investing locally or out of state. Network with whoever you can while you are there!!!
Hey Sebastian! There's a lot to take in when getting started, and it can be tough to know where to start. Wanted to share that BiggerPockets is launching a pro-exclusive 12 week Rookie Bootcamp in late August, with Ashley Kehr leading the way. It's a mix of on demand videos, live Q&A sessions, and a step-by-step curriculum to help you get your next deal. Sharing in case it would be helpful to get the wheels turning and potentially shortcut the learning curve! You can learn more here.
Everyone knows someone and most of us know at least 100 people
So, start out by listing everyone you know on an Excel spreadsheet.
Why Excel? Because later, you can easily use it as your mailing list! Create columns for Name, Street Address, City, State, Zip and then contact info: Last Contact, Relationship, Status, Email & Phone.
Now, make it a goal to call at least 5-10 of these people EVERY day and ask a MAX OF THREE off the list below of who they know that:
- Just inherited a home
- Had a loved one pass away
- Is behind on their mortgage or tax payments
- Has a relative that can’t take care of their house anymore
- Has a house they’re having trouble selling
- Is facing bankruptcy
- Knows a probate attorney
- Knows a bankruptcy attorney
Why only three of the list per contact? Because on average, we can only remember three things at a time. If you try to go over the whole list, you’ll lose the attention of an average person and they won’t remember anything.
It should only take you about a month to contact everyone on your list and then the tough part – you start all over again.
Why the repetition? Because it takes repetition for people to remember things and you have to be top-of-mind when they encounter a potential client for you!
Have you ever been to McDonalds? Of course you have! So, why is McDonalds still spending billions on advertising?
One more tip – people remember stories that trigger their emotions. So, tell a story of how you (or a fellow wholesaler) helped a seller out with their challenge(s). Change your story each month as different stories will resonate with different people AND use wash story to emphasize one of your “who do you know…” questions.
As you start closing deals, you will need to reinvest your profits into mailing lists and other scalable activities to grow your business.
One last thing – we recommended you create a Status column on your spreadsheet, now we’ll explain why. If you find someone that seems to know a lot of people needing your services, wouldn’t it make sense to focus more resources on them? Conversely, you will run into people on your list that just seem to be a waste of time, so you’ll want to avoid them. So, create status codes for both of these and a few in-between codes to help you work smarter, not harder.