3 Strategies Every Wholesaler Should Master to Close More Deals
Everyone’s real estate investing journey starts slightly differently, but based on my experience, the vast majority of aspiring investors try their luck at wholesaling first. There are numerous benefits to becoming a great wholesaler in route to building a real estate business; however, it is definitely not as easy and straightforward as the “expert” hosting free real estate investing seminars at your local hotel makes it seem. The most important step to wholesaling success will always be property acquisition, so if you need help finding motivated sellers, I strongly urge you to read the book The Art of Wholesaling Properties by Aram Shah & Alex Virelles. Assuming you’re already gaining access to great deals by hanging bandit signs, pulling records of absentee owners, sending out handwritten mailers, cold calling purchased leads, online marketing, etc.; mastering the three strategies below will definitely help you convert more of your opportunities into actual contract assignments and completed sales.
Strategy 1: Get your numbers right
As wholesalers, you MUST know how to accurately calculate your numbers! You are fighting for attention and money from wealthy investors who rely on you to help save them time and energy by finding deals with huge upside. Seasoned investors HATE getting emails from wholesalers suggesting the deal of a lifetime, only to discover inflated after repair values (ARV) and/or vastly understated construction costs. After a few instances where investors perform due diligence and discover that the real numbers make your opportunities far less profitable, your credibility will be shot.
For example, if an investor plans to use a hard money loan, she will typically need to be fully invested in the project at or below 75% of the ARV (purchase price + rehab costs = 75% or less of the after repair value). Since inaccurate estimates can cost the average investor tens of thousands of dollars, an easy way to close more deals is to build a reputation for always providing accurate projections. A quick and dirty method to create repair estimates on your own is to use web or app based repair calculators. If at all possible, however, have one to two contractors walk the property with you, providing you with an itemized proposal and a written commitment to take on the project if you follow through with the purchase. The same type of validation can be performed on your ARV projection by partnering with a real estate agent who can determine what the market will pay for a renovated property in your area. To increase credibility with potential investors, and prove that your estimates are sound, I suggest attaching official contractor proposals and comps from real estate agents with each new opportunity you pitch.
Strategy 2: Really listen and take notes
Mastering the skill of listening seems simple, but it is a powerful tool for any wholesaler looking to stand out. Every real estate investor has (or should have) a specific criteria dictating exactly what type of properties she invests in. If you are a wholesaler, you should be hanging on to every word from the investors you add to your buyers list. You should make notes about the neighborhoods they are most interested in, the class of property they are most comfortable with, the price ranges they stay within when buying and selling most of their properties, the style of properties that fit their business models, etc. You should ensure that buyers’ preferences are clearly defined and easy to reference in Excel spreadsheets, word documents, or Google sheets/docs. You can even go old school and keep hard copies of information with specific files for each buyer.
If you remain organized and send investors potential deals that are tailor made for their investment strategies, they will prioritize reviewing your opportunities over the mass produced lists sent by other wholesalers. As an active investor, I get flooded weekly with emails from several wholesalers containing numerous properties that are not even close to my specific investing criteria. I invest in 3 to 4 unit full gut rehabs in the inner city of Newark, NJ. My team has told multiple wholesalers about our specific criteria, but very few actually filter the opportunities they send us to reflect only houses unique to our investment strategy. The wholesalers that get my attention upon first glance of their emails use wording like “New Inventory - Distressed 3 Family Properties in Newark, NJ Under $175K.” A descriptive title like that shows me that the wholesaler knows what I want, which makes me much more susceptible to giving her my business.
Strategy 3: Focus on your presentation
After you start applying skills one and two, presenting your analysis of open inventory with a polished presentation is like adding the cherry on top of the ice cream Sundae. By proving to be a sophisticated wholesaler, the investors you work with will start to view you as a knowledgeable business consultant instead of just another wholesaler in the crowd. You will want to show potential buyers why the property you are pitching makes sense as a flip or a hold. You also want to show them how the property could perform over time given rent assumptions, growth expectations, and market trends. Overall, you want to look as professional as possible. In my opinion, the best way to produce this professional looking presentation is to use the Fix and Flip and Rental Property calculators on the Bigger Pockets website. The pro membership is about $30 a month, but it allows you to easily provide presentation level analyses on each deal that can be exported as a PDF and attached to the emails you send to your buyers. These tools even let you add your own company logo, which only enhances your ability to brand your wholesaling business. I have actually used these tools to send wholesale opportunities to other investors when I came across good deals that didn’t fit my criteria.
With more and more new wholesalers joining the fold each year, it is so important to your success that you distinguish yourself as a value leader by always providing accurate estimates, tailoring your pitches to investors’ specific opportunities, and promoting your deals in a professional way. Using these strategies may require a little more time and energy, but the ROI could be well worth it!