Wholesaling Just Isn’t That Easy

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Funny, coming from someone who doesn’t wholesale. I do know the basics about it though- you find properties for other buyers, flippers most likely, and do the double-closing thing or whatever it’s called. You make your money by upcharging the buy price to the investor so you make the difference. Easy! That’s why everyone says it’s such the perfect start for a new investor; because it’s “easy”.

Wrong. There is nothing “easy” about wholesaling.

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Easy vs. Simple

I want to hold off on copying and pasting dictionary definitions of each word because I don’t want the differences between these two words to be the main focus, but if you look up the definitions, they will support what I’m saying.  I believe wholesaling is “simple”. Meaning, the process is simple and straight-forward, as I explained it above. I do agree with that. However, I don’t think there is anything “easy” about wholesaling. Just because the process is simple, doesn’t mean it is easy or doesn’t take a lot of work to do successfully.

I think that is where people misrepresent wholesaling. They imply that it is so easy that any idiot could do it, therefore, start there. Really? If any idiot could do it, why are there not more rich idiots out there?

Simple does not necessarily equate to Easy.

Don’t Be Fooled

This whole idea goes beyond just wholesaling. It happens everywhere. Wholesaling, being a real estate agent, buying 75 rental properties in 5 years, you name it. Ok, all my examples went back to real estate, but how often have you heard people try to convince you how easy something is? Like multi-level markets pyramid scheme setups. The reps will go on and on telling you how easy it is to make a gazillion dollars selling their stuff. They (almost) aren’t lying. You can make a lot of money selling that stuff, but the process is simple, it’s not easy. It’s a simple and straight-forward, hey hold presentations and talk to everyone you know and they will buy it, process, but it’s not easy because it takes a long time to build your buyer database, get to a point of continuous sales, constantly reach out to new people, handle such a small attrition rate, and in the case of products like those (whatever they are), small profit margins.

Everything someone presents to you that is so “easy” is really just a “simple” process. The process is simple, but building the foundation for success in that area is what is not easy. Building a foundation strong enough to succeed in wholesaling, or in any arena someone swears by, is a really difficult task. For one, you have to really resonate with that thing. If you try to wholesale and it’s just not you, you will never make all the money people swear by. Never! If you try to push Mary Kay makeup and you aren’t a natural makeup lover and believe in the product, you will sell nothing. Or, if wholesaling is totally up your alley and you truly love it, you may just make a ton of money from it. Or, if you are born with makeup style in your genes, you may do very well with Mary Kay and end up driving a pink car.

Related: 9 Reasons You Couldn’t Find A Buyer For Your Wholesale Deal

An actual example: I read in Rich Dad Poor Dad, or one of Robert Kiyosaki’s books I don’t remember, that if you are ever going to learn sales, it is imperative you try working for a multi-level marketing company. So of course being the avid Robert follower that I am, I jumped on. I had already been using Sunrider products, and I knew they are a huge multi-level marketing company. They are a holistic nutrition company and I’m a health-nut and still use their stuff every day. So at the time it seemed like the perfect opportunity, learn sales by selling something I actually whole-heartedly believe in. Maybe I could have done well with it, I have no idea. I accidentally got so into real estate investing that I never gave the job a chance much more than sending out the infamous email to my ‘friends and family’ telling them about the ‘new product I found that I just can’t live without’.

Here’s what I got from all that though. While I am huge in nutrition and will argue with anyone that Sunrider is the best company out there (be sure to sign up under me if you go check them out…lol), I know that nutrition isn’t what really resonates with me from a career perspective. How do I know? I know because never once in my time working with Sunrider did I ever meet anyone randomly who was as gung-ho about that type of product as I was. Whereas, since I got into real estate, it’s like I can’t turn a corner without running into someone new who is interested in what I am with real estate. It’s not because real estate is so much more popular than nutrition that it would make sense I’d run into more RE folks, it’s because there is a natural tendency for all of us to run into people we vibe with. It’s like we have magnets. Everyone attracts a certain person. In my case, I very naturally attract investors. I do not naturally attract nutrition-focused people. No idea why, but for one I’m not a yoga instructor or personal trainer or in any field where I’m around nutrition-focused folks on a regular basis.

Related: Don’t Start Wholesaling Until You Read This: Wholesale Advice from a Fix and Flipper

The Actual Point

See where I’m going with this? If wholesaling isn’t deep within you, you won’t succeed. My problem with everyone screaming to the real estate newbies that wholesaling is the way to go is that yes, it is a ‘simple’ process, but it is still not easy to do and it may not even be that person’s thing. So in the case of a lot of people, they are going to try to wholesale because it’s what everyone says is so easy to do, and they don’t survive it (because it’s not them). Then, their only thought is that they just failed at something that is supposedly so easy. Thanks preachers, now you just discouraged someone from real estate investing! And most likely when you weren’t even succeeding very well in wholesaling yourself. Congratulations.

Don’t you think if I had a choice of what in real estate investing I best resonated with that it would be wholesaling or flipping, and not rental properties? I would love to make big chunks of capital to use to buy more!  Who wouldn’t love that? But I know that wholesaling and flipping just isn’t me. As much as I want to do it for the money, I know I’d be swimming against the current trying to do it. I have accepted what is me, which has been rentals and some other projects, and gone with that current. It works for me, and it is me.

For all you newbies out there, if wholesaling really is you, then go for it, enjoy it, and do well at it. There is nothing wrong with it. It’s an amazing way to make great money, and it really doesn’t take much capital to get started. It really can be a dream. However, if you’re having trouble getting started in it or have hesitations about it, understand that it may just not be you. Whereas some other area of real estate may very much be you.

Simple is different than easy. There are a lot of simple ways to invest and do well at it. But few ways are very easy. Concur?

Photo Credit: Pensiero via Compfight cc

About Author

Ali Boone

Ali Boone(G+) left her corporate job as an Aeronautical Engineer to work full-time in Real Estate Investing. She began as an investor in 2011 and managed to buy 5 properties in her first 18 months using only creative financing methods. Her focus is on rental properties, specifically turnkey rental properties, and has also invested out of the country in Nicaragua.

50 Comments

  1. i couldn’t disagree more to be honest, seems completely reasonable that maybe wholesaling isn’t a persons end goal. Rather a vehicle that might help them get to their true desires, we all have to do things that we don’t want to get places we have never been. If that makes someone uncomfortable along the road because their heart isn’t into it so be it. We have all had jobs we didn’t like, but ultimately if it would help propel them to where they want to be its worth doing. I usually like all the articles, but this is simply hyperbole

    • Sorry you feel it’s hyperbole, Rolando. I suppose you have a point… wholesaling could very easily just be a “job” as a means to an end. If that’s what someone wants to do, rock on. But even if someone treats it as ‘just a job’, that doesn’t make it any less difficult to succeed in. Or maybe they are really good at it, who knows.

  2. i think you are missing the point of directing newbies towards wholesaling, and you are making an easy process more complicated then it is.

    Wholesaling is a means to an end, the end should be raising cash to build a war chest that will be used to eventually hold or renovate and flip a property.

    The process is actually quite easy, but I wouldn’t say it involves no work. There should be no double closing involved, because the idea is to assign the purchase agreement to the next person up the food chain.

    Can you think of any other business where a person with no money, credit, or track record can get control of an asset as large as a house? The idea this same person, who for all intensive purposes could be a complete idiot in RE can then make a good buck for simply finding the end buyer is just amazing. Only in America.

    Boiled down wholesalers are just folks collecting a fee for putting two parties together.

    I don’t normally wholesale as part of my investing at this time, but on several occasions I have signed purchase agreements without ever seeing the property. When I eventually see the place I could walk away or put a for sale sign out getting rid of the place before needing to settle. Do I care if I sell my contract for $1000 or more? Better then just walking away, I think.

    Wholesaling on the surface seems to be the safest, easiest way to make a buck for a newbie, not to mention they will gain the experience needed to eventually pull the trigger on a decent property by see what a bad one looks like, and what it costs to put things right.

    I was thinking the other day what a total dead end it is to fix and flip, eventually most flippers get stuck with their highest priced property, also the one most leveraged, and hardest to liquidate or make cash-flow as a rental.
    I might be wrong about the above statement, I am only going from experience seeing a couple dozen flippers bite the dust in bankruptcy from the last RE cycle.

    The music always stops before we have a guarantee place to sit down.

    • Hi Dennis. You have good points. I wasn’t trying to imply that wholesaling is a bad move, not at all. It is great for someone with little to no capital and it’s an excellent way to learn the biz. My point was to make sure people understand it isn’t so easy they can just succeed from day 1. It’s very easy for experienced investors, like yourself, to do a casual wholesale every now and then in random deals because it works out that way, but for someone brand new, they aren’t around any deals at all so it’s all fresh. They just need to understand it does require work to build that foundation and keep it going.

  3. This is why I love BP’s!

    The GOOD, the BAD, and the UGLY of REI.

    If all REIs were transaction engineers, they could profit with more deals. Wholesaling has easy parts, like submitting low offers to sellers thru agents. But few leads are great leads.

    If you are brave and want to go to motivated sellers for a purchase offer via a CFD, sub2, wrap, lease option, etc, in other words “buying on terms”, you have 3 times the deals of just wholesaling.

    But you need to be able to sell to the seller, not just create a low offer and have the agent offer it.

    Another good thing about not being a “One Trick Pony” is that many leads you can make offers on or multiple offers on. Wholesaling needs a ton of equity. Buying on terms does not. There are a ton of low equity pretty houses out there.

    Lastly, there is a downside to buying on terms, you need an exit strategy. 3 examples are selling on terms, renting out, or selling for cash.

    Nice article Ali! Keep those articles coming!

  4. “If it was easy, everyone would be doing it.”

    Real estate investing is pretty simple, buy low, sell high – or rent out for profits in the middle. Is it easy? No. (or everyone would be doing it…) It takes time, skill, and capital. But it is available to everyone.

    Wholesaling is only one arrow in the quiver. Most deals we run across don’t lend themselves to wholesaling which is the biggest problem I see for those who want to focus there – how do you focus there? How do you find enough wholesale deals to profit from?

    Great post, Ali. Once again, you stimulate thought and conversation.

    🙂

  5. As a full-time investor who primarily wholesales but also sometimes renovates and holds, I agree that it is simple but not easy. It is very very tough to negotiate a deal that will have enough space to support my fee and the end-buyer’s profit. I’m happy to say I’ve gotten fairly good at it but it’s taken years of on the ground practice and I’ve had several dry spells when I accidentally let my marketing lag.

    The bigger point in Ali’s post that speaks to me though is that newbies are told that wholesaling is *so easy*. I think we’re setting them up for failure because they’ll get in there and find it’s not, and think they’re bad because they can’t make it work. This is my main gripe with most training and mentoring programs, and probably why most who attend them never make a go of it.

    Just my .02 from someone who wholesales full-time.

  6. You are absolutely right Ali

    I would add that I recommend wholesaling to newbies for another reason. Many have no resources like cash reserves which pretty much rules out rehabbing or buy and hold. Or at least makes them much more risky. If you have nothing to start with wholesaling is one of the few places you can start.

    Just as importantly in order to wholesale you need to develop a key skill – finding bargain deals. That skill will pay off regardless of what type of real estate you eventually follow.

  7. Great article Ali!! I agree wholeheartedly having just started wholesaling and listening to the countless gurus tell you how easy it is! You hit the nail on the head though! The process is simple and not complicated (most of the time) but definitely not easy or free for that matter once you factor in marketing costs! I, for one, enjoy dealing with experienced investors and see wholesaling as a way to build capital to get to buy and hold multi-family properties so as much as I love it, I eventually want something more passive!

  8. Ali, I tell newbie investors that hear about wholesaling from some Information marketing guru, Wholesaling is so easy, that anyone can do it and they can make 5-10k in 30 days. REALLY…
    My reply to them is always the same, Wholesaling is simple, but not easy…
    Nothing in life worth while comes easy, there is a process and a price to be paid. Like sex, easiness sells…
    If wholesaling was truly so easy most gurus would be pushing paper instead of pushing their products. My exit strategy is wholesaling, that’s all I do. Wholesaling is a job. Its a real estate job, but a job none the less. It takes a high level of dedication, commitment and resiliency to even continue in the wholesale business. Wholesaling is definitely a tool every savvy investor should have in their tool box, even Donald Trump will flip a contract now and then.

  9. Ali-

    This is a great topic to write about. I was a landlord for several years and I just hated every minute of it. Finally, I sold the property and moved on. We all know that holding real estate is the path to long term wealth, but if you are miserable it’s just no way to live your life.

    I really believe that most of the time a strategy “chooses you”. Most investors will several things and finally one will feel right; just like a pair of shoes.

    Sharon

    • I totally agree Sharon. Quite frankly I wish wholesaling or flipping would pick me! A lot more capital in my pocket sooner than with the rentals. But, they haven’t picked me yet so I go with what does choose me. Makes me a lot happier and less stressed!

      • So true, Sharon! I had no idea I’d be in the niche that I’m in. I think it’s the experiences where we learn the most and find out what we like and don’t like. Without these experiences, it’s hard to gain the knowledge that we have as investors.

        Nice article, Ali! It definitely sparks a lot of controversy. I think most come into real estate investing with hopes of making easy money overnight no matter what technique is used.

        I think the problem is the lack of personal finance and education — most people don’t take the time to educate themselves about money and finance. And, that is where the problem lies.

        Many get caught up in the “hype” treating real estate investing as a “get rich” opportunity just like the lottery. Having a solid foundation in personal finance and understanding how money works is key to being successful in any business endeavor. Without it, many may make a lot of money but lose a lot as well – wealth gets transferred to those who possess the knowledge.

        And, yes — becoming a master of anything takes a lot of dedication, persistence and hard work. Those who say otherwise haven’t been through the trials and tribulations that mark one as truly a master of their craft.

        Enjoying your articles, nice write-up!

    • True Sharron, I became wholesaler by default. I had several properties that I purchased needing rehab to rent or to retail. I was failing miserably as a rehabber so I just wholesaled them all felt great about it (and the money in my pocket).

  10. Great article, however I disagree with the last part. if you’re having trouble getting started in it or have hesitations about it, understand that it may just not be you. Whereas some other area of real estate may very much be you. <——- Wholesaling is rough for alot of people starting out but the key is to maintain the perseverance during the hard times to enjoy the good times You just cant give up everytime something gets hard.. That just my take on it by the way Ali love the Blog… 🙂

    • Oh yeah Nasar, I don’t disagree with you at all. There is definitely a difference between something being hard starting out and it not being you. Big difference, and good call to point that out. Yes, if wholesaling is you, or as Sharon says it “chooses” you, that is not to say it won’t be hard to start. With any new job or feat or whatever someone wants to do, they need to be willing to persevere through the initial hardships that come with it.

      But that just circles back to my original point- it’s not that easy! If it were, those hardships your point out wouldn’t be there 🙂

  11. Great article Ali!

    Since I am just starting out in real estate investing it is nice to hear that wholesaling may not be the right option for everyone. I’ve been struggling with this very topic lately! I thought I HAD to start wholesaling to get started even though I know it is not a good fit for me. Thank you for providing such insight.

    By chance, do you have suggestions for other ways to gain some start-up capital in the real estate investing business?

    • Great question, probably the best answer is look to the owner for financing, in the form of creating a note or taking property subject to the existing mortgage.

      Finding these folks is the hard part, a better idea is to create marketing that will have them find you.
      Or the one tried and true strategy to raise funds go ask family or friends, take on a partner (choice of last resort).

  12. Another great article. I agree with the points of view that one needs to settle into what works for them. I have only been doing the type of marketing and real estate deals I am doing now for a couple of years. When I started I thought I was going to rehab everything I can. Well some deals are not for me so I have ended up wholesaling them. I have even acquired two rental properties that I never thought I would do. We all evolve and grow as we move along in this business. And boy do i have a lot of growing to do 🙂

  13. Ralph Ramey on

    Ali….GREAT JOB!!
    Your right on the money. Having had several different ventures in my life time has taught me just what you are trying to say. Every body has a niche. The problem most people have is finding it. People can argue about wholesaling being “easy” or “simple” but they miss the point. If it’s what they are suited to then it’s for them. The fact remains one form of real estate investment (or any other form of investing) may not be for every Tom, Dick, and Harry that comes along. You have got to find your “niche” or you will at worst fail, and at best be semi successful as well as miserable. These are the facts of life. All truly successful people will tell you this. Determination, a sound course of action, and lots of lessons (even failures) will help you find your “niche”. This is far more important than the type of real estate investing you are doing.
    RR

  14. Great Job Ali – Easy vs simple and the difference- you are so right. This is why I never wholesaled it just seemed like something I wouldn’t like and at the time I didn’t know but it is in my opinion more complicated and tougher than investing or flipping. This is why I buy from Good wholesalers. As a matter of fact one of the wholesalers I used to buy from is now working with me full time. So we are doing in house now. I have to help many newbie wholesalers because they just don’t get the business. I don’t mind doing it because we get first crack at any deals. win win
    We need more of them like Sharon Vornholt.

    • Haha, Michael. I love it. I’m with you tho… as much as wholesaling would be perfect for me and some great money, I just have no desire for it WHATsoever. It seems like way too much work for me. Lol.

  15. Love your articles Ali because most of them do come from a perspective not often heard on BP.

    Really wholesaling as everyone uses it around here is just finding a homeowner, negotiating a price for it, selling it for more.

    The benefits of wholesaling is that all or a combination of these three things are the fundamentals of any real estate deal regardless of what style of investing one eventually does.
    Therein lies the benefits to a total newbie in wholesaling. Is it a lot of work? You bet. A lot. A whole lot. But for me I think the lessons are worth it.

    Especially if you’re trying to build up starting capital. But even if I did have starting capital for other ventures I’m interested in, I think I’d wholesale to learn the fundamentals.

    • I totally agree Jonathan. I think wholesaling is an amazing start and really does teach the fundamentals. People just need to remember that learning those fundamentals takes an extensive amount of effort.

  16. Ali
    What I find the hardest about wholesaling is competing against some of the big companies whose business model is wholesaling. There are at least two companies in my city an this doesn’t include the number of other companies or individuals out there. These companies have a large number of staff and resources. One company spends $10,000 per month on marketing. Not impossible but hard to compete with.
    Thanks for the article.
    Con

  17. Haim Mamane Palman on

    This is a great article Ali. As a buy and hold investor I now try to do my first wholesale deal to generate capital for my next buy and hold deal…wholesaling is definitely not easy and especially when you try to do it out-of-state.

    I agree with others that wholesaling is a great way to learn the fundamentals of the business such as running marketing campaigns, running comps, estimating ARV, estimating repairs, researching rent, and learning the mechanics of a real estate transaction.

    It’s definitely a lot work but for me is it’s just one more step towards my goal which is to built portfolio of rental properties that generate enough passive income so I could quit my job.

    Keep up the good work.

    • Ali Boone

      Congrats, Haim! You’ve mastered the knowledge of what to do with all that wholesaling money once you get it 🙂 I heard someone say one time, and makes total sense, that the risk in having investors start out in wholesaling is that they lack the knowledge of what to do with the big chunks of money they end up making. Same with flippers, you hear all the time about the guys (or girls) who made a ton and then when the work stops, they have nothing left. Always best to have a plan of what to do with the money once you get it!

  18. Daniel Moctezuma

    Great article Ali. Most people expect 5-10K within a month after reading a book… truth is it is challenging for newbies like myself. “You don’t need money to wholesale”. Although is possible, it’s hard to wholesale without investing on marketing, books, a car and other miscellaneous expenses.

    In theory, it sounds very easy finding motivated sellers and finding an investor who wants to buy your property in a very short period of time. It takes a lot of time to understand ARV, Repair costs, negotiating with sellers, and getting familiar with different neighborhoods around your city.

  19. Johari Hughes

    Wow, unbelievable… I just have to state your articles are fantastic! I always had a very strong desire to get into Real Estate flipping, as far back as I can remember, but I have never been able to find enough information fro me to really educate myself enough to know exactly where to start or how to start. I am a recent graduate and am going through Real estate school now to learn more about the market and gain more knowledge on the matter. You provide all of this in easy to read and down to earth articles that are very in-depth. I’m reading all of your articles 1-by-1 right now, trying to decide between initially wholesaling or flipping homes and it’s incredible how many different posts you have on these matters. Thank you for your help, I will continue to tune in. It’s great to hear such in-depth experience from individuals already in Real Estate!

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