Wholesaling Successfully

Throughout my time as an investor, I have noticed one common theme with most wholesalers. It is not that they do not market well or know how to talk to seller. Their "deals" are not true deals. How do you become a successful wholesaler? That answer is simple: 

1. Learn how to evaluate a deal!!! I promise you, if you bring a buyer a GOOD deal (emphasis on good), they WILL ALWAYS BUY FROM YOU. If I could electronically create a pile of crap, it would be with all the e-mails I get from wholesalers. All of the deals are overpriced. A wise investor once told me "If you put more than 30% of houses you look at under contract, you are paying too much."

2. Think of your image: If you are wholesaling bad deals, how do you think that reflects on you as an investor, as a wholesaler. If you are consistently putting out bad deals, no one will want to work with you. Let me give you two examples from my experience:

a.) I had a deal that was a 2% rental ($750) for $35,000 in an area that I do not like. I brought it to an investor for $45,000. Sold it in 3 hours. Why? Because it was a GOOD deal. He did not have to fudge the numbers to get it to work. His exact words to me were "Bring me every deal like this one. I will buy them all." Yes, that deal was hard to find. But every good deal is hard to find. It were easy everyone would do it. 

b.) There is a wholesaler who has 100 deals (not exaggerating) under contract. I get an e-mail from him every time he puts a new one under contract. His rentals are all 1% at best. His flips are 85% of ARV. Yes, some people will buy those deals don't get me wrong, but if you want to last in this business, try selling those in a market that is down. You can't! Because those are the people losing their shirts. Moral of that story: I unsubscribed from his list, and I probably will never do business with him. 

3. Find Quality Buyers and Treat Them Right: A lot of wholesalers create a huge buyers list. Why? Is it because you want security, so that you know your deal is going to sell? Well, this goes back to point number one. If you have a good deal, you don't need a huge buyers list. I opt out of huge buyer's list. Because I do not want the competition. If I wanted competition, I would stroll down the street to the nearest foreclosure and join the bidding war that is taking place. I have a buyer for east area of my town. I will ALWAYS go to them first and say it is yours if you want it. As a cash buyer myself, I would absolutely love a wholesaler like this. I would pay you well, and I would buy everything from you. Find quality buyers and stick to them.

4. Do not step over dollar$ to pick up pennies: This may seem counter intuitive. As a wholesaler, you are trying to get the biggest paycheck you can. But sometimes it's better to close a deal, create a relationship with a buyer, and move on. Going back to the example I had of my wholesale for 45k: Based on the comps, I could have probably closed on the deal and sold it on the MLS for 55k. But there are factors to consider: closing costs, holding costs, realtor costs, and most importantly TIME. Time is everything. I would rather give some profit to close a cash transaction with my buyer and create a solid relationship with him than be greedy for a few more thousand.