What are the first steps for someone trying to learn wholesaling?

9 Replies

I currently work as a union electrician in the DC area. On May 14, 2021 I was in a serious car accident resulting in several broken vertebrae and ribs. I am beginning to question my future in such a labor intensive position. I am looking to start a career in wholesaling real estate. I have absolutely zero experience, but I am dedicated, work oriented, and a fast learner. Please let me know if you have any tips, hints, or insight that could help me build a foundation in this growing industry. Thank you in advance!

God bless,

Kaden Warren

tough gig one of the hardest in the real estate field bar none..  

those that I see that make good money and by that I mean consistantly 6 figures to 7 figures  have 20 to 50k monthly budgets and are vertically intergrated with foxed over ahead  IE it takes a fair amount of capital to pull this off. 

What's gong on Kaden,

Congrats on taking control of your future. I've been wholesaling since 2017 and it's been an incredible journey.

Here are some tips for you:

  • Wholesaling is a sales & marketing field - become a student to both subjects
  • You will have to start from the bottom, use low cost marketing channels to create opportunity, spending tons in marketing comes later in the process.
  • Homeowners are usually in tough situations, focus on becoming of value rather than focusing on how much you can earn
  • Master how to run comparables & how to come up with a fair offer
  • Work on strengthening your mindset daily (no matter how strong you believe it already is). Two books I suggest are 'The Compound Effect' and 'Secrets of a Millionaire Mind'
  • Avoid shiny objects - Ignore every other strategy for now and focus on becoming a wholesaler, once you master wholesaling you will be able to practice other strategies such as: keeping assets/fixing and flipping etc. The transition will be a lot easier since you will have a clear understanding of the most valuable aspect of a real estate transaction - the ability to find off market opportunities.

Best of luck. 

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
  • etc

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.

@Kaden Warren

Rule #1: BP is not the best place to ask for advice on wholesaling 

Rule #2: Don't buy an expensive course/training program most of the information you need to start is available for free on youtube and podcasts, type "wholesaling 101" and watch as many videos as you can, you can also read "flip by Nick Ruiz" it's a little outdated but it's still a good book for getting started.

Rule #3: Don't get analysis paralysis, the best way to learn is to jump right into it. Wholesaling is a very simple business all you need to succeed is consistent action over a long period of time. 

Good luck and I hope you'll feel better soon. 

The above replies really have important points. Just a few things I would stress as you get started. Wholesaling is much more of a marketing business—especially in the start-up phases. You need to connect with active investors in your area, find out what they are buying and what parameters they have when they make a purchase. You may talk to 50 people and only a small percentage of them will be active, responsive investors that can become buyers of your deals. So work on this part aggressively. In talking to these people, show them you are serious and want to succeed. You might be lucky enough to make a friend or two who recognize your drive and will take you under their wing.

Before you start marketing to motivated sellers, decide on one or two strategies you can manage well. Test your marketing efforts and refine them to improve your results as you get real-world feedback. As folks mentioned above, don't go for shiny objects! (I was guilty of that myself in the beginning.) You can easily get distracted and your marketing efforts will get watered down. Also - you'll have an easier time if you have some capital to invest in marketing-so if you can live frugally and put money aside for your startup and marketing costs. 

Finally - go to REIA meetups, find a few solid Facebook groups and monitor the conversations. You already use BiggerPockets which is a tremendous resource. Ask questions and learn from others. Try to sort out who are the people to align yourself with to learn and grow. Wholesaling is a people business - not a real estate business.

Jack Pinard

www.summitbuyshouses.com

Why do you want to get into wholesaling? If it's to make quick money, stop. As many have said, the good wholesalers have huge budgets and for every 1 wholesaler who gets lucky with a first deal, there are 250 others who fail miserably because they didn't take the time to understand exactly what wholesaling is and how to present it as an option to the seller. 

@Kaden Warren .....there's been a lot of good advice given here and decent actionable tips. As @Yoann Dorat so aptly pointed out, there have (sadly) been many folks jumped on out right for a first post like this. However, there is a TON of great content on this site concerning the ins and outs; nuts and bolts of wholesaling. Make friends with the search glass at the top of the page....search is your friend.

I don't really have anything to add until you ask more specific questions, but I do want to point out a central theme. Many here have used the terms "Analysis Paralysis" and "Shiny Object Syndrome". 

These two are things that tend to kill Real Estate Businesses before they can really fly. One causes you to think without ever taking action, the other causes you to act without thinking.

@Kaden Warren

People are attracted to “wholesaling real estate” rather than becoming a real estate agent or broker for three reasons

1. They believe that being a real estate agent is “sales” while being a wholesaler is investing

2. They believe that being a wholesaler is “being in your own business” while being an agent is “working for someone else”.

and

3. They know they will have to pass an exam and get a license to be an agent while they won’t as a wholesaler

All INCORRECT

Wholesaling is not real estate investing, it is a SALES job complete with prospecting, marketing, cold calling, warm calling, and learning to deliver a sales pitch. Remove any thought from your head that wholesaling, as the term in commonly used now, has anything to do with being a real estate investor.

Yes, as a wholesaler you are independent of employment, and so are 95+ % of the real estate agents, who are independent contractors, set their own hours, pay their own marketing, get their own leads, and pay for their own support personnel and workspace.

More and more states are requiring a real estate license for any wholesaling activity short of completing a purchase in your name and reselling it to an investor. Flipping contracts, assignments, double escrow, etc. are all being classified as brokering. There is a very narrow exception that if a wholesaler uses exclusively will narrow their target market and limit profitability.

More to the point; learning what you need to know to pass a real estate exam is minimally what you’d need to know just to be able to appear somewhat competent in any real estate arena. In other words if you don’t have the very basic knowledge enabling you to pass a real estate brokers exam you don’t have the knowledge to be able to successfully bring a deal to fruition.

My advice: research real estate brokerage to see if it’s something you’d like to do AND something you’d be good at. If so, hook on with a good National or local established real estate agency, pass the exam, and become an agent. You’ll have a lot greater chance for success, a lot better training, a lot better support, and a lot less future legal issues.

Good luck!