Want to start wholesaling - is it for real???

15 Replies

I’m new to BP so hello everyone! 

I recently switched jobs and my pay got cut by about 30% (around 40k). A friend of mine sent me a podcast where the topic was wholesaling. The guest basically cold called owners off different lists. 90-95% hung up on him and he had a conversation with 5-10%. The guest said he made $50k his first year, $125k his second and projected to make $200k this year. 

Is this for real? I realize there are sellers who have issues, but the whole process seems too simplistic. Get a contract and then just assign the contract to another buyer for $5-10k more? I don’t know, maybe I’m just a skeptical person. And I realize there’s more to it, I’m just making a point. 

I work in the oil & gas industry and negotiate with property owners everyday, so this opportunity seems right up my alley, I just don’t want to waste my time. I will spend a lot more time on this site, but was interested in a few opinions on the subject. Thanks very much! 

Shawn,

I am relatively new to wholesaling as well. There are lots of free resources such as podcasts and Youtube. There are "Gurus" of course, but I have learned everything so far for free and trial and error by doing such things as cold calling and D4D (Driving for Dollars). This route tends to be for people that are new to investing and/or do not have much in the way of capital (like me) to invest with. There are certainly preferred ways to get into the game. As I have heard many times, wholesaling is simple but not easy. It is basically a numbers game, like anything else. I have heard the number thrown out that you will on average talk to 200 leads before you get your first deal. So a lot of "No's" before you get your first yes. Consistency is the name of the game. Likely many get discouraged and quit before seeing their first deal.

Thanks for the reply Robert. The “guru” type stuff is what I was referring to. A bunch of guys selling courses but none of them actually do any deals. 
I think the best course of action for now is curate the list I have and jump in and see if this thing is for real. I know it will take time so I think I’ll give it 6 months for proof of concept. My dad used to say “imperfect action is far better than standing still”. I’ll update when I snag my first deal.

If anyone else has any nuggets of wisdom I would greatly appreciate the advice!

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@Shawn Hershberger

The “trick” is identifying people willing to sell their property well below what they could sell for through a real estate broker. While these people exist, they are few and far between. On BP we have, through the years, exposed many claims of income earned as false, misleading, or unprovable.

The key these days, with all the information available on the internet for anyone to access, is targeted marketing. Most of the successful players spend $10,000 + per month on marketing, SEO, SEM, website development, influencers, etc.

Another issue, depending on your state, is licensing. This is another topic, but the way wholesaling is taught may require a real estate brokers license, depending on the state your in.

One final thought. Wholesalers hit a “home run” when they tie up a property in contract for about half its value. When you ask yourself who’s most likely to sell a property for half its value, the answer is someone totally unaware of what their property is worth. Often this is people with dementia, at some stage of Alzheimer’s, mentally impaired people who inherited property, etc. Are these people you want to “steal” their only asset from? Would you want a “wholesaler” to pay your 90 year old parents 50% of their property value? This relates to ethical, moral as well as legal decisions.

Hey Shawn,

This question gets brought up a lot and agree with what Robert said. In theory, wholesaling makes sense and sounds super straight forward, but practically, it is one of the most diffcult aspects to Real Estate Investing.

We can look into this theory from the book "The Millionaire Fastlane" by M. J. DeMarco:

"How easy or difficult is it to get into this business? [wholesaling] If anyone off the street can start the same business by filling out a form, you are violating entry. A business with zero entry barriers is a cattle call."

Basically, if a "guru" or someone else online is telling (or selling) you that it's super easy to make money off of wholesaling, it's most likely not true and they are just trying to buy YOU. If anyone off the street can get into wholesaling with no prior knowledge, then why doesn't everyone just get into this business?

Realistically, if you want to be succesful in Real Estate Wholesaling, you need to be working hard for months (or years!) without collecting any money by networking, understanding your area, doing hard and dirty like Driving for Dollars, Cold Calling, or using Mailers, and having amazing people skills.

A lot of people have gotten successful off of Wholesing, but as said, it is very difficult if you have no prior knowledge, especially in this market. I would recommend looking into purchasing a simple, single-family-home rental to get you into real estate. But again, this is just some advice from a random guy on the internet that you have never met before!

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    I Started wholesaling a year ago. Yes it's for real. I was able to get my first few deals driving for dollars. My only concern is that some states are requiring a licenses to wholesale, I am sure more are to follow. So get while the getting is good!

    To avoid the moral conflict that Don mentioned, I targeted Landlords. They tend to be business minded, and less emotional about the property. 

    A good teacher is Jerry Norton on Youtube. His content is GREAT for wholesaling/investing in general. I did not buy his course, but I did attend a seminar a year ago that taught me the basics of wholesaling. 

    Good Luck!

    Originally posted by @Don Konipol :

    @Shawn Hershberger

    The “trick” is identifying people willing to sell their property well below what they could sell for through a real estate broker. While these people exist, they are few and far between. On BP we have, through the years, exposed many claims of income earned as false, misleading, or unprovable.

    The key these days, with all the information available on the internet for anyone to access, is targeted marketing. Most of the successful players spend $10,000 + per month on marketing, SEO, SEM, website development, influencers, etc.

    Another issue, depending on your state, is licensing. This is another topic, but the way wholesaling is taught may require a real estate brokers license, depending on the state your in.

    One final thought. Wholesalers hit a “home run” when they tie up a property in contract for about half its value. When you ask yourself who’s most likely to sell a property for half its value, the answer is someone totally unaware of what their property is worth. Often this is people with dementia, at some stage of Alzheimer’s, mentally impaired people who inherited property, etc. Are these people you want to “steal” their only asset from? Would you want a “wholesaler” to pay your 90 year old parents 50% of their property value? This relates to ethical, moral as well as legal decisions.

     Excellent assessment here, I agree!

    @Shawn Hershberger - Wholesaling is certainly for real but glamorized by gurus and mostly exaggerated by many, not all. It is not easy to make 6 figures from this business (wholesaling is a marketing business, not real estate investing) and many do it illegally and/or immorally. 

    Originally posted by @Duane Alexander :

    I've made 100k in the last two months. I would say yes, it is real. 

    One person coming to the thread to say this does not mean much. I'm not saying you didn't make $100k, but if that is true, there is more behind the curtain than just that. You are either very lucky or you have built marketing systems which cost money, you have been doing this for much longer than 2 months, etc. You are just one, I can post thousands who have done none. Just to say you made $100k and that makes it real is not really an answer to the original posters question. A bit more in depth explanation would likely go a lot further for the OG poster and all who are reading this.

    Others have already answered your original question but I wanted to give you additional food for thought since it sounds like you are new to REI in general. Wholesaling can and should be an exit strategy for you as a real estate investor, but not the only one. In order to make that "5 to 10K" fee from assigning a contract there has to be enough upside for someone to take it off your hands. If it's a flip, how much are they making? 35k? 45k? Add that to your 5 and 10 and look how much you're leaving on the table.

    I realize a flip or BRRRR requires more resources, time and risk than wholesaling but the juice is worth the squeeze. Options are a good thing.

    Originally posted by @Will Barnard :
    Originally posted by @Duane Alexander:

    I've made 100k in the last two months. I would say yes, it is real. 

    One person coming to the thread to say this does not mean much. I'm not saying you didn't make $100k, but if that is true, there is more behind the curtain than just that. You are either very lucky or you have built marketing systems which cost money, you have been doing this for much longer than 2 months, etc. You are just one, I can post thousands who have done none. Just to say you made $100k and that makes it real is not really an answer to the original posters question. A bit more in depth explanation would likely go a lot further for the OG poster and all who are reading this.

     Thread premise seemed fairly simple. I’ll be happy to answer any additional questions op or anyone else may have. I wouldn’t call it luck. I learned all I could and took action.  Really buckled down to study and master the game, read all I could before jumping in,, paid for mentoring (gasp), and a couple courses (super gasp), and completely jumped in by myself 6 months ago. Was able to retire my corporate gig after month 5. So yes it’s very real. Definitely not easy by any means, but is there any business that is easy to run? If I can do it any one can. I am no one special. 

    I appreciate all the posts and responses. I have a high equity, absentee owner list and to keep expenses low I will begin cold calling for a 1-3 hours a day. I've negotiated most of my career so I hope the skills are transferable. 

    @Shawn Hershberger cold calling is a gruesome but potentially profitable activity. If you are going to do all that kind of work why not keep and do the fix-up yourself. This way you will become knowledgeable and you will be on a more legal ground. If you are going to basically list something for sale why not get a RE license?

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    I agree with what Jeff and others have said. At the end of the day, Real Estate Wholesaling is sales position job. Expect a lot of NO's and people mad at you when you try talking to them. The lastest episode of the BiggerPockets Podcast (#524) explains this more.

    But to answer your question, yes, it is real estate wholesaling is "real" but it is not "simplistic".

    Originally posted by @Jeff S. :

    @Shawn Hershberger cold calling is a gruesome but potentially profitable activity. If you are going to do all that kind of work why not keep and do the fix-up yourself. This way you will become knowledgeable and you will be on a more legal ground. If you are going to basically list something for sale why not get a RE license?

    This is a great suggestion, and I may go that route, but first I need to get leads, which is where the cold calling comes in. 

    I was actually required to get my real estate license by the client I’m working for, so I have it. I suppose all the more reason to fix up and list my own properties. 

    Originally posted by @Don Konipol :

    @Shawn Hershberger

    The “trick” is identifying people willing to sell their property well below what they could sell for through a real estate broker. While these people exist, they are few and far between. On BP we have, through the years, exposed many claims of income earned as false, misleading, or unprovable.

    The key these days, with all the information available on the internet for anyone to access, is targeted marketing. Most of the successful players spend $10,000 + per month on marketing, SEO, SEM, website development, influencers, etc.

    Another issue, depending on your state, is licensing. This is another topic, but the way wholesaling is taught may require a real estate brokers license, depending on the state your in.

    One final thought. Wholesalers hit a “home run” when they tie up a property in contract for about half its value. When you ask yourself who’s most likely to sell a property for half its value, the answer is someone totally unaware of what their property is worth. Often this is people with dementia, at some stage of Alzheimer’s, mentally impaired people who inherited property, etc. Are these people you want to “steal” their only asset from? Would you want a “wholesaler” to pay your 90 year old parents 50% of their property value? This relates to ethical, moral as well as legal decisions.

    Hi Don! I think this is a very insightful post and it certainly acknowledges the ethic gap within the wholesale industry as a whole that must be addressed. However, I don't think it accurately depicts a true and successful wholesaler running a legitimate business. There are people in every market that would sell their property at discount in exchange for speed and convenience and it happens all the time. These are not uneducated misinformed homeowners who are unaware of the property's value and have been "swindled" by a wholesaler.

    I would encourage any new wholesaler to be as transparent as possible with each seller that they work with and let them know their options. People will still do business with you, as a wholesaler, despite knowing they can get more going with a retail offer because of the service that is provided.

    Lastly, I do think wholesaling should be regulated, Don. And I think that's the direction that the industry is moving toward. It should be required to have a RE license and, wholesalers should be held accountable for their actions.