4-Step Process That Netted $180,000 in Wholesale Profits Year 1
In my conversation with Brooks, who is a wholesaler that completed 45 deals totally in $180,000 in revenue during his first year, he explained the 4-step process that he follows that enabled him to achieve a high level of success in such a short period of time.
Step 1 – Obtain a List of Motivated Sellers
Brooks obtains his mailing lists from many different sources, including:
Essentially, Brooks will mail to any list that he can get his hands on!
Step 2 – Prepare Motivated Sellers List
Every Thursday, before sending out the mailers, Brooks scrubs his list. He removes all the “do not mail” names, as well as duplicates. Any “do not mail” or duplicate names that are left on the list are money down the drain. Since Brooks conducts mailing campaigns on a weekly basis, the additional expenses could add up quickly. Therefore, spending the extra effort to scrub the list is well worth time investment.
Step 3 – Send Postcards to Motivated Sellers
Brooks has found that postcards are the most effective form of direct mail marketing. Every Thursday, he sends out approximately 2,000 postcards to motivated sellers.
He has found that sellers are constantly being bombarded with postcards and yellow letters, so timing is key. According to Brooks, to stay at top of mind of the sellers, sending out mailing campaigns frequently and consistently is what’s most important.
Instead of manually creating 2,000 postcards per week, Brooks uses Click2Mail’s mailing services. Click2Mail allows you to quickly create your own postcards, upload your scrubbed list and automatically put in mail merge fields for the property address and seller name that is referenced on the post-care. Click2Mail’s production time is only one day. If you were to upload today, the mailers would be sent out by tomorrow!
Step 4 – Determine Investment Strategy
After a successful first year of wholesaling, Brooks and his partner brought on a third team member, who happened to be one of their buyers and a successful fix-and-flipper. The trio combined forces and morphed into adding retail flips and turnkey flips to their arsenal, on top of wholesaling.
Therefore, as leads begin to come in, after negotiating a contract price, Brooks and his team will determine which investment strategy they will pursue. The decision is based on three factors: (1) price point, (2) amount of rehab required and (3) location:
- 1.Price Point below $50,000 = Wholesale
- 2.Price Point $50,000 to $80,000 = Depends on the area
- Good area = Turnkey flip
- Bad area = Wholesale
- 3.Price Point $80,000 to $110,000 = Turnkey flip
- If there is a ton of work that needs to be done = Wholesale to mom-and-pop fix-and-flippers
- 4.Price Point over $110,000 = Retail Flip
- If there is a ton of work that needs to be done = Wholesale to mom-and-pop fix-and-flippers
While Brooks and his team utilize all three strategies, depending on the price point, rehab required, and location, the most profitable strategy is retail flips. However, they keep the other two strategies so that they are able to maximize the number of deals they can pursue.
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