A forum discussion that I came across about working with wholesalers recently caught my eye. This person was saying something to the effect that they wanted to go around the wholesaler and work directly with the seller. I can tell you that doing that with the wholesalers I know, would guarantee that you would be off their list — forever!
Why in the world would someone think it would be OK to “steal” that lead from the wholesaler? Do they really think it’s OK to make their own deal with the seller, and then tell the wholesaler to figure out how to get paid?
If you are new to real estate investing it might help you to understand the process, and also to understand the rehabbers and landlords that buy from wholesalers do so for a reason.
The Process of Getting Wholesale Deals
I can only speak from my experience, but those leads don’t just “appear”. Each month I spend a considerable amount of time and money to get the phone to ring. I have ongoing direct mail campaigns and use various other methods to get leads. Continuous direct mail campaigns done correctly can be costly, and for every lead that ultimately turns into a deal, there are many more that don’t.
What this means is that the wholesaler has to talk to a lot of people and look at a lot of houses to get one deal. This takes a lot of time, and it takes a lot of work. Everyone is familiar with the formula used by real estate investors to buy houses. The wholesaler has to buy the property below that threshold in order for it to be a good deal for their investor buyer and for them to make money too. They have to build their fee into this equation when making the offer.
The Gold Is In Your Buyers List
Now that I have finally found a deal that I know will be profitable for the folks on my buyer’s list it’s time to get in touch with them; with my “A list”.
I can tell you that I not only appreciate them, but I cherish these folks! I’m thrilled that they “want to be on my list”. When they see my name come up on their caller ID, I want them to be excited to see what I have for them. In this business, your reputation is everything — you live or die by the way you run your business. It is important for me to be known as the person that has good deals. It’s no good for me to make money if they can’t make money too.
Why Work With a Wholesaler?
The answer is simple. Because they have good deals that they can pass on to you! These are deals that you didn’t have to spend your time and money on marketing to find.
Most rehabbers and landlords I know are always on the lookout for a good deal. If they run across one, they snap it up. Some folks hang out on the MLS. Others drive around and knock on doors. Whatever methods they are using, I can guarantee you that they don’t have a formal marketing plan they follow. These folks don’t want to do marketing. They just want to rehab, build their rental portfolio, or . . . you fill in the blanks. They are thrilled to have someone bring them good deals they didn’t have to look for.
In the same way that I nurture my relationship with those folks on my buyers list, I can tell you that they reciprocate. They do what they say they are going to do. Always! I never have to worry about these folks doing something unethical. That’s why they are on my “A list”. You see, this is a two way street that is designed so that everyone can make money — a lot of money over time. This also goes back to the proven theory that real estate investors that build good teams make more money than the “lone rangers” that try to outsmart the system.