Thinking About Real Estate Investing? Skip Wholesaling

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Wholesaling is the selling of merchandise to anyone other than a retail customer. The merchandise may be sold to a retailer, a wholesaler, or to an enterprise that will use it for business, rather than individual, purposes.*

With a few tweaks, we can cater this definition to describe real estate wholesaling.

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Real Estate Wholesaling

The selling of real estate (or the right to purchase real estate) to anyone other than the retail home buyer.  The properties may be sold to another real estate investor, rehabber or landlord that will use it to provide business profit rather than individual use.

Whenever I hear someone ask about how they should get started in real estate investing, the response is typically to become a wholesaler.  The classic “guru” pitch for perspective real estate investors is that you can get started in real estate quickly, easily and make huge checks from wholesaling houses for just a few hours worth of effort and no money.  Just like every other guru pitch, this sounds good in theory but is very different in reality.

I cringe every time I hear that advice.  Sure, there are people that get started with wholesaling and have success, but the vast majority do not.  So I was very happy when I listened to BP Podcast 037: Full Time Income, Part Time Lifestyle Real Estate Investing with Aaron Mazzrillo.  Aaron, who has done quite a few wholesale deals, also recommends that new investors do not start out with wholesaling.

Below are a few examples that I have seen of people who try to start wholesaling and fail.

Signs of a Newbie Wholesaler

  • They attend a local REIA (Real Estate Investors Association) and pass out a “buyer’s application” to investors.  This is part of building their buyer’s list, which they are told they need so when they get a good deal they have a large pool of people to purchase the property.  They focus on quantity over quality and just want a large buyers list.  Often times good wholesalers will only have a few buyers that they typically sell to, and these buyers will purchase most of their deals.
  • They become frustrated when they send 100 post cards or put out a bunch of bandit signs and don’t get any calls.  They say that it doesn’t work and quit on their real estate investing dreams.
  • They present properties to investors that are not good deals.  They have either not done analysis on the deal, or they have done the analysis incorrectly.  This very quickly turns away investors who understand what makes a good deal as they do not want to waste time sifting through garbage.
  • They don’t actually have rights to the property.  I have been added to a wholesalers list where he sent on multiple houses per day, all of which were listed on the MLS.

5 Reasons Wholesaling is Hard

In his interview, Aaron mentioned 5 key areas that you need to be great at in order to wholesale.

   1. You Need to Understand Marketing

Real estate investing is all about finding good deals.  Generally the best deals are not the ones that everyone has access to, such as those listed in the local newspaper or the MLS, so you will need to determine how to find these deals.  This generally means doing some form of marketing (and in reality multiple forms of marketing) and being persistent with that marketing.

   2. Negotiation

Real estate is a people business and negotiating is a fundamental concept.  As the common saying goes, “you make money with you buy, not when you sell”.  Most people believe their property is worth more than it really is, so being able to understand their motivations and needs are fundamental to creating a deal that works for the seller and yourself.  If you are a wholesaler, you need to be even better at this, since you will need to negotiate a good enough deal that you can take a cut of the profit and still leave enough in the deal for the person that you will sell the property to.

   3. Contracts

There are several different ways to wholesale real estate, some are more complicated than other.  On the simpler side, you write-up a contract to purchase the property and have the buyer be your name and/or assigns (ex. Tom Sylvester and/or assigns).  Then when you wholesale the deal, you add the person who will purchase the property at the end.  Another scenario is a double close, where you actually purchase the property and sell it right away.  Then there are more complicated methods such as purchasing a property in an entity such as an LLC and transferring ownership of the LLC.  Either way, there are different scenarios for different situations and you have to understand the proper route and paperwork for your situation.

   4. Estimating Rehab

In order to know if a property is a good deal, it is critical to understand what it will cost to rehab the property.  Unless you have a construction background, most new real estate investors will not have the understanding of how to properly estimate the rehab costs.

   5. Appraisal

Understanding the ARV (After Repair Value) is absolutely critical.  Finding a good deals means starting with the ARV, subtracting out the rehab costs as well as the profit for you and your buyer.  If you don’t understand how to get the ARV, then you will most likely struggle to find a good deal.  Even worse, you mat think something is a good deal, even when it is not.

My Recommendation

If you want to get started with real estate investing, skip over wholesaling and actually do a deal.  This could mean doing a rehab or becoming a landlord.  If you purchase your property from a successful wholesaler, they should have done most of the legwork for you.  You will obviously want to double check their numbers, but they will have found the property, negotiated with the seller, signed the contract, estimated the rehab and determined the ARV.  If you find the property yourself, you can work through all of the steps that I just listed and get experience with them.

Either way, once you have gone through the entire process of finding the deal through getting it rented or sold, you will be in a much better position to start wholesaling if you are still interested in it.

Do you agree? Leave a comment below and let’s talk.

*Source: http://www.britannica.com/EBchecked/topic/643010/wholesaling
Photo Credit: Jacob Bøtter

About Author

Tom Sylvester

Tom is a serial entrepreneur and real estate investor from Rochester, NY. His real estate investments primarily target multi-unit properties. Along with his wife Ariana, they run a blog called Entreprenewlyweds, which helps couples understand how to manage being real estate investors/entrepreneurs while also maintaining a great relationship and family life.

85 Comments

  1. That is so funny.. most wholesalers get into wholesaling because they don’t have the cash and/or credit to purchase homes to flip or rent!!!! How is being a landlord, and flipping a property easier when you don’t have the means to purchase property??? O_o That doesn’t really make sense to me..

    • Miguel G.

      Tom’s advice is basically get into something where may lose your shirt but “learn” o go try to learn as you go and don’t get screwed. I still prefer wholesaling over flipping even if I don’t know what I am doing since I won’t be losing my shirt

      If you’re an investor, you probably agree with Tom. But, if you’re a wholesaler with little money starting out, you’ll be getting screwed rehabbing a property with no experience and no $$ .

  2. I completely agree. I am a rehab investor and have had many frustrating experiences with “wholesalers” who clearly don’t have a grasp of what makes a good deal. It’s definitely not as easy as the gurus make it sound. To Nichole’s point, if a person doesn’t have the means, then I would say they should work on that…save up some funds, try to find private lenders, etc.

    • Ok! Then, I guess I’m not really understanding what makes a “New” rehabber any more experienced than a “New” wholesaler?? Aren’t they both learning as they go? Is there something magical about being a first time rehabber/landlord that makes that person any more knowledgeable than a first time wholesaler?? So people have only worked with new wholesalers that have no idea what they’re doing, but never a new flipper or landlord who knew nothing about what they were doing?

      • Tom Sylvester

        @Nichole – The point of this article is to explain to people that wholesaling is not as easy as gurus make it out to be, specifically for a new investor. Many new investors gravitate towards wholesaling because they hear that it is an easy way to get started without cash. You can get started without cash, but it is very difficult to find great deals without cash for marketing. And without knowledge of how to evaluate a deal, a new wholesaler risks trying to sell a non-deal and tarnishing their reputation among active investors. It’s not that a new landlord or rehabber is any more experienced than a new wholesaler, it is that most people understand what skills are needed for landlording or rehabbing, but do not appreciate the skills needed to be a wholesaler.

        • I understand YOUR point Tony! It’s one that all GOOD wholesalers understand and know! Any “wholesale Guru” worth a grain of salt will tell you just that! I haven’t come across any good ones who tell you otherwise! But that point is NOT being made in this article! From what I understand, wholesaling is the more difficult of the three options, and that just isn’t true! LOL! I’m sure plenty of new flippers and landlords got into the industry thinking that one of the 2 are an “easy” way to invest! They’re not easy, and neither is wholesaling! They are different! Period!

        • Hi Tom I am new to real estate investing and am just getting my toes wet for the first time. I agree with you that the internet “gurus” as every one calls them say it is a easy process for huge money. I saw through that with in the first 5 pages of any books i read on the topic. If i had the means and money to buy and flip i would or buy and hold for income. But im only going to live where i am for about two years. so i feel wholesaling is where i need to begin. I do have some experience being around work sites and construction. I am also really doing my homework before i begin with this. im still gathering information and laying out my structure to market and my process of conducting business. is there any things you could tell me i should know or good sources of information i could use. thanks Trevor

      • To really know how to value a deal ( thus coming up with a deal worth wholesaling for a flip or a rental property worth buying ) it helps to have gone through the process. It all sounds easy when the gurus talks about it from the front of the room, but actually doing it is another thing. Personally I wont even look a deal from a newbie just cause of the wasted time weeding through antics, like wholesaling MLS deals or trying to sell deals that I should be paid to take off their hands. It is not as easy as the gurus say but it is not as hard our minds may tell us sometimes. Yet make no mistake –experience, guts, and hard work counts. Ask your self are you willing to throw your pension fund on the line. So for a newbie- just do a small deal and take a risk. There is no get rich quick scheme but like most Americans I bet your pension fund is worth risking for a better retirement plan.

  3. I have to disagree with this article. There’s nothing wrong with a newbie starting in real estate wholesaling. Many experienced investors started in this niche as a newbie to generate extra income and/or get their feet wet in real estate investing. Of course you are not going to know marketing, contracts, negotiation, estimating rehab, and after repair value; these things you can learn as your skills develop learning to wholesale deals. Developing a team of people to help you were you are weak will help you until you become more knowledgeable and experienced. Everyone is not cut out to do rehabs and/or being a landlord; There have been many complaints in these two niches for newbies as well.

    • Tom Sylvester

      Thanks for the comment Sharon and I respect your opinion. If more people took the approach you recommend, we would probably see more successful wholesalers. Advice such as surrounding yourself with a team of people to help them gain knowledge and experience and truly took the time to learn the necessary skills to be a wholesaler are things that do lead to people being successful. People can definitely be successful by starting with wholesaling, I just no longer recommend it to most new investors.

  4. Dawn Anastasi on

    I have yet to find a wholesaler to sell me a deal. I have definitely gotten on some lists, however. I have gotten calls and/or emails and clearly outline my parameters on what I want. Then I never hear from any of them again. So I go about buying houses on my own that meet my parameters. So if I can find them, it’s not to say that someone else can’t find them — they either don’t know what they’re doing or not trying hard enough. Or don’t market correctly.

    • To Dawn: That might be your experience from newbie wholesalers you have dealt with; however, some wholesalers have done a good job finding cash buyer(s) deals that met their criteria and both made money from the deal. Also, some rehabbers and/or cash buyers say they want wholesalers to find deals, but when a deal is found-they do not answer phone, return calls, reply to emails, and/or give wholesalers the run-around. So you have both good and bad apples in the bunch on both sides….all of the above have been documented and discussed on many real estate forums.

        • Nichole,
          I can guarantee you that there are many serious buyers out in your market. My guess is that it was not really a deal. If it is really a legit deal you can sell it in 5 seconds.

        • I guarantee you that if you put a real deal out there, it’ll be bought in no time. There is in no way a shortage of buyers of good deals. It’s pretty simple, if you’ll can’t sell a property, it’s not a good deal.

  5. Melodee Lucido on

    REEEEEALLLLLLY?!?!?!

    Are you just going for sensationalism here. SUUUUUPER disappointing post. I pray that the new people do NOT follow your advice.

    sheesh!!!!!!!!!!!!!!

    • Tom Sylvester

      @Melodee – Thanks for the comment. Have you been successful in real estate investing by starting out wholesaling? If so, I would love to hear your story. Maybe you could provide some insight for new investors that do want to wholesale on how to become successful.

      I find that many (not all) new investors that gravitate towards wholesaling do it because they think it is quick, easy and requires no money; similar to a get rich quick scheme. Most successful wholesalers don’t view it this way. For new investors, you can see how committed they are by how much they will do to be successful. If someone won’t take the time to learn the business or to save some money to get started, they probably will not be in it for the long haul.

      • Melodee Lucido on

        Well said Tom. There is no easy way to succeed in crei. It takes a LOT of work, trial and error, success and frustration, just like any other business. As you have pointed out this industry does get a lot of hype along with the truth which misleads people into thinking this is easier than it is.

        I have been so blessed to have succeeded in wholesaling that I was able to give up a full time job that I didn’t enjoy within 8 months. Some months it’s like I have a magic lamp hidden in my office; other months it feels like I completely lost the knack of getting deals done.

        But the common thing in either of the above scenarios is I LOVE what I do . It was only when I could get out of my way and leave behind my expectations, put my head down and PLOW forward that I was able to start getting the traction I needed to succeed.

        I truly enjoy wholesaling. I love the teamwork that is an integral part of my business as I jv with people all over the USA (and other countries). A lot of days it seems surreal that I get paid for doing what I do.

        BUT for the new people reading this here is a disclaimer: This is a LOT of work. I worked a full time job for income and worked 40 hrs/week for months with NO money coming in from my efforts in crei. I didn’t have money to spend on marketing so it was all manual labor—mine—marketing through CL and networking.

        I honestly didn’t know if I would achieve my dream of replacing my job with working crei full time. But you know what they say, “Luck is when preparation meets opportunity”. This business works—if you work it.

        Best of success to all.

  6. Firstly, I don’t see wholesaling in the typical case as real estate investing in the true sense of it as there is no money being invested. I would rather think of it as real estate trading or arbitrage 🙂

    Comparing different forms of real estate ‘investing’ (i.e. wholesaling v rehabbing v land lording), each has its own required personality, resources, knowledge and/or skill set needed for a person to be successful at it.

    Which area a newbie should start off in will depend heavily on the specific circumstance of the person in question e.g. a person with significant income form a job may be better off being a landlord while one with a construction background may be better suited to rehabbing. But being great at rehabbing will not necessarily make you a good landlord nor wholesaler. Rather the individual should be aware of what his/her target field requires and set about acquiring such quickly and in the best way possible.

    • I agree with you @Tosin. I also think that those who got on the “defensive side” may have taken it personally. Though I can understand both points. But I think the point of the article is to shine some light on newbies to be aware that wholesaling isn’t as easy as it sounds, and requires quite a bit of money for marketing if you want to succeed. Of course, the good wholesalers know this point is true. But a newbie doesn’t. You can’t just mail out couple of mails and expect a deal, unless you are lucky.

      My advice, try it out…your risk is lower with wholesaling. But if you have the money to buy a property, then skip wholesaling.

    • I agree with you in that it depends on the person. I also agree with the article that wholesaling is harder than what some make it out to be. However, I disagree with the title of the article and the author’s recommendation that every newbie should skip wholesaling.

      —From my mobile phone

  7. Well I also disagree with the article. My goal is to become one of the best at wholesaling. It seems as though that that’s needed so why not me!!! #focusedtobethebest!!

    • Tom Sylvester

      @John – I wish you luck with your goal. If you haven’t read “Think and Grow Rich” by Napoleon Hill, I highly recommend it. People can do amazing things, but they need to be committed to doing whatever it takes to get there. If you want to be one of the best at wholesaling, you definitely can be. Make sure you understand your “why”, educate yourself on how to do it and surround yourself with successful people who have done what you want to do.

  8. Tom,

    I wholeheartedly agree with you on this one – I could not have said it better. I give the exact same advice to new investors who say they want to start with wholesaling. Obviously you are an experienced investor and I’m sure you have flipped and wholesaled your share of deals. Those arguing against your sound advice have probably never done more than a deal or two, if any, in their careers.

    I currently flip about 12 per year, wholesale about 50 per year and I am also a real estate broker. I started flipping and then cranked up my marketing to find the deals I needed for my flipping business. About 3 years and many tens of thousands of marketing dollars later I started wholesaling because I had more deals than I could handle myself – at one point we had 8 rehabs going on at the same time – and I was going crazy.

    As of 12/31/12, we were selling our flips at 99% of projected ARV and so far this year, because the market has improved dramatically, we are selling at about 110% of ARV. Yet, I am always amazed that new investors argue with me about the numbers and question my projected ARV and rehab estimate. What I have found is that there are many people that have gone to a seminar or watched a T-V show but have never done their first deal so they are really clueless. Or worse yet, they have successfully done a couple of deals and now they think they are experts. Unfortunately, most of them would not recognize a deal if it slapped them in the face.

    To those who are doubting Tom’s advice, let me explain it like this: if you want to wholesale, your customer is the rehabber. If you have never rehabbed and flipped a house, how would you know what your customer wants? If you call me (I am a serious buyer) and say you have a deal you want to wholesale to me and I ask a question about your ARV and you don’t even know what ARV is or quote Zillow, I will probably hang up on you because I know that you are clueless. That is why the person who wants to start out wholesaling fails – they don’t know what their customer is looking for or why.

    I buy with the intent of flipping the home myself if I don’t wholesale it so I have to be comfortable with the deal or I won’t buy it in the first place. Yet, I routinely hear things from novice investors who say they want a deal from me like “I want to know what you paid for it before I make a decision”, as if it is any of their business; or “I don’t think it will sell for that” or; “Will you take (25% less) for it?” etc, etc. Consequently, I don’t sell many wholesale deals to them. Let them go and get a little humility and then I will talk to them.

    I sell most of my wholesale deals in less than 5 minutes with one phone call because the real players recognize a good deal instantly and understand how difficult it is to find a legitimate deal. They also understand that a wholesaler must make sure the buyer has room to make money and therefore works on very thin margins so they don’t argue about the price. Besides, what good would it do for a wholesaler to pass on a bad deal? If the rehabber doesn’t make a profit they will not buy any more from him and there goes a good customer. That would be like the farmer eating his seed – not too wise.

    Great article. Thanks.

    • @Duane – Thanks for the detailed comment. You added many great points which will hopefully allow others to understand. I love seeing people who wholesale because they have more deals coming in than they can handle. It’s a great problem to have and means that you are doing multiple things right.

    • @duane,

      How would a rehabber/end buyer get the ARV? This is one most wholesalers struggle with…

      I see Redfin has “price this home” option that allows you to compare 4-5 properties within the same/similar criteria. What’s your take on using redfin to est. ARV?

        • Michael Dorovich on

          Nicole, what do you offer a new agent you are working with in return for comps?

          I can see if they bring you a listing and you close on it how they will get paid – any ideas for doing comps on properties they may not have found?

          Thanks,

          Michael

  9. Jerry Kisasonak on

    I want to start out by saying that I really enjoyed listening to podcast #37 with Aaron Mazzrillo. He made some good points about wholesaling.

    I always here new investors say something like, “I’m just going to start out by wholesaling.” They say this with a resigned tone, a tone that basically puts wholesaling at the bottom of the real estate barrel. I can immediately tell that they’re in for a big surprise. They think that with very little time, effort, skill or money they are going to make it work. They confuse “no risk” with easy. They’ve bought the guru’s BS… the proverbial magic beans.

    Having said this, I’m not really sure why most investors think things have to be so linear. Why not market for deals and out of those leads pick ones that would make great rental properties, ones that would make great rehab deals and ones that would make great wholesale deals? I know what you’re thinking: Well, what if you don’t have good credit? How can you buy rentals? Look for owner financed deals. Next question: How will you rehab deals if you have no money or credit? Find a partner that does have credit and money, offer to find the deals and do the legwork and split the profits with them. The only thing we lack is resourcefulness. In fact, the scenario I just described is exactly what I do (although I do have money and credit but prefer not to use it). Last Friday I closed on a wholesale deal. This Thursday I’m closing on an owner financed rental. And this Friday we’re (me and my partner) are closing on a rehab deal. I wouldn’t dare say that any one of these transactions is THE WAY. It’s all in the arena of real estate investing and they all make money if you do them correctly.

    The challege that most new investors face is exactly this: Because the new investor meets an investor that has a certain business model that he or she is making good money with, that doesn’t mean that particular model is THE way to do it. In the same way, listening to a podcast and jumping ship because of what you just listened to is the same SOS (shinny object syndrome) that derails many would-be successes. Yes, learn, apply and refine in a perpetual motion. But don’t think that someone else holds the beans.

    So to answer back to the article’s title “Skip wholesaling,” I would change it to say “Incorporate wholesaling.” Skipping it would be the same as saying “Skip rehabbing” or “Skip rental properties.” They are all different aspects of the real estate world, which all require specialized skills.

    • @Jerry – Great points and I would agree with you. Wholesaling should be a tool in every real estate investors toolbox. It all starts with marketing, and once you have deals flowing then you can keep the ones you want and wholesale the others.

  10. @Duane: Well, you have the right to your opinion about this article as well as the rest of us who disagree with it. No one is really arguing….just simply leaving comments. For you to say the author is experienced and giving sound advice is bias. I’m an experienced wholesaler and have done my share of deals. So, I’m giving sound advice as well; Everyone can only go off their own experience.

    There are real estate newbie wholesalers who are doing deals successfully and learning the ropes as they go along. You can’t be around negative people, and of course it helps if you have a mentor to help you with your first few deals. Also, you can always go to Biggerpockets forum for advice and assistance to get help with deals.

    The following statement you made: If you have never rehabbed and flipped a house, how would you know what your customer wants? New wholesalers simply ask customers what they want-aka meaning what is their criteria and do some marketing to find those types of deals.

    All experienced real estate professionals had to crawl before they learn to walk in whatever niche they decide to pursue. No one gets into this arena knowing it all! If they wait to know it all, they’ll probably never get started in real estate wholesaling…

  11. Wow! (excuse any typos as I begin my rant!) O_o I am truly shocked at all of the “flipper” and “landlord” responses! Clearly they haven’t met the right wholesalers! .. and I think that that is part of the problem with the article, the authors assumption that ALL wholesalers are walking blindly, like idiots, into something they know nothing about!

    @Duane, I will have to disagree with you on the deals not being deals! My point was that the TRUE buyers stood up and spoke up, all of the many wannabe “buyers” either had disconnected numbers, failing emails, or no cash to buy a thing! Why? because they THOUGHT it would be easy, and it’s not! You’re just going to see that across any industry! Working for yourself is HARD! it always is, I can’t think of one industry where working for yourself is a cake walk! It takes discipline, initiative, tons of research and even more questions! I spent at least a solid YEAR studying, doing hours of research, reading books and buyers blogs, studying their criteria, asking questions, etc.. before even jumping in! Everything a wholesaler needs to know is readily available, from individual buyers criteria (some of mine actually have a page on their sites listing everything you need to know!) to contracts and how to fill them all out! .. and everything in between, if you do the research, and learn! Now will every wholesaler spend the time learning like I did, NO! But every so-called landlord and buyer won’t either!

    Buyers love to throw around real estate lingo like it’s some big woop! When in actuality, all it takes is a few key strokes and google has what you need! Not one thing you said is new to me, all old news and readily available if a wholesaler even TRIES to learn about their trade! The article is way too general to make any type of sense! As a journalist, I can tell you, he did NOT make the point he was trying to.. but then, everyone’s NOT a writer – people think it’s easy!!

  12. Great article Tom and you got quite the responses didn’t you??? 🙂

    I completely agree with you and Aaron’s point on his podcast really turned a light on for me!

    It makes total sense why you wouldn’t want to start with wholesales. Like he mentioned, if you can find a good, reputable wholesaler who actually knows what they are doing, they do most of the work for you. You just become a project manager and many times….make a bigger paycheck than the wholesaler!

    Before you and Aaron, I think I fell into the trap of thinking wholesaling to flipping is the natural progression but I was wrong.

    Thanks for the post!

    • Thanks for the comment Nick. Wholesaling can be a starting point, but as Aaron, myself and others have mentioned, we would recommend using a different starting point. I think wholesaling is a great option that every real estate investor should be aware of, but as mentioned, I don’t recommend that most new investors start with it.

      Good luck with your investing.

  13. Douglas Larson on

    Wow! – it’s getting hot in here!
    I have to agree that nothing in REI is as easy as the Gurus pretend it is. Finding the deals is always the key though. If the deal is sweet enough it will sell quick, wholesale or retail.
    I think some wholesalers send me their “deals” just to get me to tell them what it’s worth. They want me to do the math that they can’t or won’t do.

    That said, I probably looked like a total bozo in my first year of offers. I was literally reading from a Carlton Sheets script to potential sellers in the newspaper classifieds. Ya’ gotta start somewhere!

    I tell newbie investors with very little money to look at LEASE OPTIONS, especially a functional duplex or triplex.

    Have Fun and Make Your Own Luck!

  14. I follow Sharon and have worked with her closely! She is an amazing trainer, and her guidance in wholesaling is absolutely above par! I’m not sure how you can give the advice to NOT start with wholesaling, and mention her all on the same page!??

    • It’s actually an excellent idea to include Sharon in his comment, further proves his point that wholesaling isn’t easy and Sharon’s experiences also support that point. But easy, but possible. 😉

  15. Sharon Vornholt

    Hey Tom – I thought I would jump in and put my two cents in (when I felt it was safe).

    I am a full time wholesaler and have been since 2008. However I have been investing in real estate since 1998. I started out with rehabs and buy and holds. I agree with you that wholesaling can be tough for newbies to succeed at; tough but not impossible depending on their individual skills.

    I for one had a hard time wrapping my brain around wholesaling. It was only after the market changed in 2008 that I “accidentally” got into wholesaling. I had found a property and I really didn’t want to rehab it; they were just sitting on the market too long at that time. So I picked up the phone and called a rehabber friend of mine and asked him if he was in the market for a property. He said that he was and I picked up about $5k just like that. It was at that moment that I said, “Dang… that was easy. I can do this”. But if you will notice I said I knew someone to call. That is a big thing; having a buyer’s list.

    My original buyers list came entirely from my REIA group. I still find excellent, “real” cash buyers in that group. In theory anyone can wholesale houses. But in reality, it can be pretty hard if you don’t have some basic skills. If you are great at talking to people and you can negotiate great deals, then you will probably be able put together a good deal and sell it to someone in your REIA group. But if you don’t know what a good deal actually is, you can get burned pretty bad.

    That is where most new investors usually make a mistake. Almost all of us pay too much for our first couple of properties. Doing that when you are a wholesaler is much more dire than if you are a landlord or an rehabber. Landlords can hold the property and wait for the values go up. They at least have a shot at coming out ok. Rehabbers may be able to cut some costs, do some of the work themselves or find another way to not lose money. Wholesalers are going to be stuck with a deal they can’t sell which is never good for your reputation.

    I just posted my opinion about wholesaling over on Jimmy Moncrief’s article. Rather than to just write it all out again here is why I think everyone should incorporate wholesaling into their business no matter what their primary investing strategy is. Sorry for the length of this post.
    ______________

    “When I was just starting out my goal was to make $5000 on a deal. I wasn’t working in areas that had junk; just nice bread and butter houses that would sell easily. I mastered how to find houses and make offers from really motivated sellers that would net me that amount of money.

    Now the fee that I am looking to make on each house is about double that. Sometimes I make less, but I am more likely to make a little more. I do this while leaving a ton of money on the top for my rehabbers. That is another reason they buy from me time and time again. I know how to figure repairs, how to make offers and I have built a great reputation in my area. My end buyers always make money.

    The skills you absolutely must learn to be a great wholesaler are marketing and negotiation. I have been doing direct mail marketing for over 20 years in two different businesses. Direct mail is hands down my best source of leads. Some of these folks that I buy houses from will come as a result of marketing to them for a couple of years. I am still there when everyone else has thrown in the towel. These are the things that separate me from the others. Unfortunately not all wholesalers are created equally, and some of them have given the rest of us a bad reputation in some circles”.

    Thanks for letting me give my perspective.

    Sharon Vornholt

    • And thank YOU for all the guidance and excellent education you have given, and continue, to give us, Sharon!! You’re blog and wholesaling guides have been invaluable in my business! If not for you and other wholesale educators, there would be NO way for me to begin a Real Estate career, while homeschooling 3 kids under 11!! Thank you again!

    • Sharon Vornholt

      The entire comment I posted on Jimmy’s article was this. I left part of it off:

      I have to respectfully disagree with you about wholesaling. Wholesaling is a full time job if you do it as a business, and you can indeed make great money doing it. But you have to run it as a “wholesaling business”.

      First of all, I almost never do assignments. I have done one since 1998. I close on the deal, and I almost always do a double closing. I went over how to do this in detail in my BiggerPockets Podcast.

      Do I take any money to the closing? Never. But that is because I do double closings which are completely legal to do in my state. I have learned how to do this business ethically and I am good at it. I have also spent a lot of time building relationships, The same folks buy houses from me time and time again. My closing attorney has no qualms about giving me a good recommendation. Mortgage people at the local investor friendly banks know me and have no problem giving me the thumbs up if someone asks about me. Once again, it’s about taking the time to build a stellar reputation whether you are a rehabber, a buy and hold landlord, a wholesaler or work in another niche.

      You use the examples of working at cleaning houses and doing landscaping. And I’m sure you did work your butt off. Those are hard physical jobs. Why not take the same energy and build a wholesaling business where instead of making $8-$10 and hour (more or less) at an entry level job part-time for months, you can make big chunks of cash – $5000 to $10,000 at a clip? If you do just one deal a month and make that amount you will earn between 60k and 120k a year minus your expenses. That’s not too shabby. Want to work less? You can do that. Want to earn more? You can do that too.

      When I was just starting out my goal was to make $5000 on a deal. I wasn’t working in areas that had junk; just nice bread and butter houses that would sell easily. I mastered how to find houses and make offers from really motivated sellers that would net me that amount of money.
      Now the fee that I am looking to make on each house is about double that. Sometimes I make less, but I am more likely to make a little more. I do this while leaving a ton of money on the top for my rehabbers. That is another reason they buy from me time and time again. I know how to figure repairs, how to make offers and I have built a great reputation in my area. My end buyers always make money.
      The skills you absolutely must learn to be a great wholesaler are marketing and negotiation. I have been doing direct mail marketing for over 20 years in two different businesses. Direct mail is hands down my best source of leads. Some of these folks that I buy houses from will come as a result of marketing to them for a couple of years. I am still there when everyone else has thrown in the towel. These are the things that separate me from the others. Unfortunately not all wholesalers are created equally, and some of them have given the rest of us a bad reputation in some circles.
      Thanks for letting me give my perspective.
      Sharon

    • Just realized there is another Sharon in the comments, and another David. So my question is to Sharon Vornholt, and I am David White.

      Wow Sharon!! Marketing for two years is impressive. Tons of questions for you, which I am sure you have absolutely no time answering. So may I ask just a few?
      1. Does double closing change the tax implication of the deal, meaning, you actually took possession of the property, even if for a few minutes? Good, bad, none? Please share.
      2. Also, have you ever gone after obituaries? I know you are big on probates. I wait for 30 days and fire away. Oh, that sounded predator-like. Sorry… My letter shows respect to the heirs and my total understanding of the situation, while offering help. I plant the seeds before the actual probate is filed. And yes, it takes twice as much work for me to figure out who the letter needs to go to and whether the deceased had the real estate or not. I am alone though, no competitors at that stage. But, I could be offending the heirs while they are still in the state of sorrow and are not ready to deal with material things. What do you think?

      Thanks in advance,

      David

      • Sharon Vornholt

        David – You need to put a last name and upload a picture. There are a lot of Davids here.

        It doesn’t in my state; it’s all ordinary income.

        I personally don’t go after obituaries. It is simply too raw for folks at that particular time. I don’t think you will get any more business, but you stand the risk of offending someone so badly that when they are ready to sell they won’t call you because they find your method of doing business offensive.

        If you were to do anything, I would just send a generic postcard to that said something like “I am looking for property to buy in your neighborhood…” Just pretend that you sent them to everyone in the area. That shouldn’t bother anyone. Then you could follow up in 30 days with your regular marketing campaign.

        I have written a lot of articles on direct mail, probates, absentee owners etc. both here and on my blog. You should be able to find a wealth of information on these subjects on these sites.

        Sharon

        Sharon

        • All great points, as always. So your two-year marketing campaign, is that for absentee owners? Probates are all mostly done by then. Thank you again, David

  16. I am not a wholesaler, but I can see the value in wholesaling. I agree that it can be very difficult to get into, but so are most things worth while and profitable. I think maybe the pint of this should be, don’t expect to become a wholesaler overnight and be able to quit your job in a month. As Sharon said, it takes a long time for marketing to work and create results. Wholesaling should be part of a large Real Estate plan, not the only piece.

    It takes money and patience to create the leads and then get the deals done. I personally think there are easier and quicker routes to getting started, like getting your RE license and selling. But, that takes money and time as well unless you can get hooked up with another successful agent who will take you on and use you as an assistant. It’s a little tougher to find any operation that will teach you wholesaling and investing and pay you are the same time.

    Way to make people think!

    • Sharon Vornholt

      Mark –

      Wholesaling is not for everyone and as you said, it is not easy like the guru’s would have you to believe. You need a particular skill set for wholesaling like you do with most of the other strategies.

      One of the reason’s real estate is such an awesome business is because there are so many different strategies and so many different paths to get you to your goals. There is no “right way” to do this business.

      I am big on creating lifestyle businesses, and wholesaling ultimately will not be the right business model for the lifestyle I want to create for myself. But for now, it allows me to reach the goals I have in front of me at this time. This was another thought provoking article.

      Sharon

  17. @Sharon – Thank you for adding several of your thoughts to this post. Among all of the great advice/experience, you really hit the nail on the head with this one.

    “That is where most new investors usually make a mistake. Almost all of us pay too much for our first couple of properties. Doing that when you are a wholesaler is much more dire than if you are a landlord or an rehabber. Landlords can hold the property and wait for the values go up. They at least have a shot at coming out ok. Rehabbers may be able to cut some costs, do some of the work themselves or find another way to not lose money. Wholesalers are going to be stuck with a deal they can’t sell which is never good for your reputation.”

    For anyone that has not listened to it, I’d recommend listening to Sharon’s podcast (https://www.biggerpockets.com/renewsblog/2013/04/04/wholesaling-podcast/).

  18. Yeah, don’t really agree with this post. However, you basically mentioned everything in this article to do a good wholesale. Getting into rehabs and becoming a landlord is a lot harder than wholesaling. If a newbie doesn’t know anything about fixing a home, that can be disastrous, expensive, and time consuming. Being a landlord might be easier if somehow, if the newbie investor finds a subject-to deal. But usually, if a newbie does a wholesale correctly, it’s way easier.

    • @Danny – They key is really to understand what it takes to be a good wholesaler. If someone has or has the dedication to truly take the time to learn them, then I may direct them towards wholesaling, but most people do not have those skills when they start. Sharon Vornholt did a great job at explaining why I think there is often less risk with wholesaling or flipping.

      “That is where most new investors usually make a mistake. Almost all of us pay too much for our first couple of properties. Doing that when you are a wholesaler is much more dire than if you are a landlord or an rehabber. Landlords can hold the property and wait for the values go up. They at least have a shot at coming out ok. Rehabbers may be able to cut some costs, do some of the work themselves or find another way to not lose money. Wholesalers are going to be stuck with a deal they can’t sell which is never good for your reputation.”

      Any type of investing can be disastrous if you jump in without understanding what you are doing. That is why most of us recommend finding an experienced mentor that is doing what you are doing, educating one’s self and spending plenty of time on BiggerPockets.

  19. The title of the post is a little misleading to “skip” wholesaling, but i look at it as just an opinion.

    However, the way i see it…if you only have 5+ months total in RE in general….i’d say to just listen and absorb from someone with years of experience and proven success.

    Myself, when i meet successful investors and they give advice, i’ve learned not to rebut everything they say, and just take in the knowledge and tips….even if i have my doubts…they are successful for a reason.

  20. For me and my situation, I agree. I did what is recommended above–got a good deal, did a good rehab and now making over 8% return. It was a lot of work and I learned a lot. Would not have done it without a mentor guiding me. I was fortunate. I am now on a wholesaling adventure! It’s a wild ride. I would not discourage ANYONE from wholesaling. You will be successful, eventually, if you are willing to take your licks, improve and always get up. The author is right. Not a lot of people are willing to go through such difficult learning. But you can do if you really want to. Lots of reward requires lots of work.

  21. Wow Sharon!! Marketing for two years is impressive. Tons of questions for you, which I am sure you have absolutely no time answering. So may I ask just a few?
    1. Does double closing change the tax implication of the deal, meaning, you actually took possession of the property, even if for a few minutes? Good, bad, none? Please share.
    2. Also, have you ever gone after obituaries? I know you are big on probates. I wait for 30 days and fire away. Oh, that sounded predator-like. Sorry… My letter shows respect to the heirs and my total understanding of the situation, while offering help. I plant the seeds before the actual probate is filed. And yes, it takes twice as much work for me to figure out who the letter needs to go to and whether the deceased had the real estate or not. I am alone though, no competitors at that stage. But, I could be offending the heirs while they are still in the state of sorrow and are not ready to deal with material things. What do you think?

    Thanks in advance,

    David

  22. Hi Tony,

    Your article was very interesting to read. I just wanted to say that most newbies don’t have lots of cash or the credit to start rehabbing or landlording. This is why most gurus were able to sell their systems successfully. I have always recommended Bird-Dogging 101 to newbies so that they can learn the real estate investing industry by talking with sellers and buyers about their properties. As a seasoned bird-dogger you usually upgrade to become one of three investors– landlord, rehabber, or wholesaler. Doing your “due-diligence” is the key to any real estate investor’s success. At the end of the day, wholesalers find solutions to MANY real estate investors needs. Maybe the title should have read like this: Have Good Credit or Cash To Invest? Skip Wholesaling!

  23. For the wholesalers that seem to have been offended, go beyond the eye catching title.
    In reality he is saying that wholesaling isn’t some simple throw away job, it is a skilled profession and a heck of a lot of work to get established and get good at.

    New people very often say they want to get into land lording of rehabbing, but will start by wholesaling. Like it is some super easy thing to be a good wholesaler and once they make some money they will do the real stuff.

    It is also crazy to think someone can be a good wholesaler without having most of the same skills the other types of investors will have. Can’t wholesale to a land lord if you don’t now rents and how to figure out holding expenses. You will also need to have some idea about repair expenses if the places need work. To wholesale to a rehabber you need to know repair estimates well enough to make sure it is in the deal range.

    Really a wholesaler that doesn’t know about repairs is like someone opening up a fancy hair salon and buying Flowbees in bulk.

  24. Shuan, I think that is a popular misconception! I Don’t think most wholesalers get into wholesaling first because they think it’s “easy”… I think they get into it first, because it’s what they can AFFORD! LOL! I would venture to guess that with MOST, if they have the financial means to Rehab and flip, they do it! They don’t sit on their investment cash and wholesale!

    • Well first I want to be clear I’m not making a distinction between real wholesalers and the 50 people that give me a card at every REIA meeting that say they are wholesalers that I never see or here from again.

      It is true that if they look at the options being needing 20-30% down to get a rental (If they can qualify for a bank mortgage) or self funding a flip (Since they don’t know how to get a private loan) the only strategy that seems attainable is wholesaling.

      Then most will spend little or no money on marketing and will mostly work with an agent or maybe just search online with Zillow, Trulia or realtor.com for places. Most will never find anything and give up, a small percentage will actually get one under contract but won’t ever sell it since it isn’t close to being a great deal, a handful will find something good and will sell it.

      The barrier to entry is very low so that is why lots of newbies are attracted to the idea. It is also why so many people say they are getting into it and disappear because while there can be pretty much no monetary investment up front they realize that there is a time and effort component they aren’t willing to do (And this will be that much higher when you aren’t spending any marketing dollars).

      • Tom Sylvester

        @Shaun – Great points on all level. With the low barrier of entry and the hype about it being easy, the mentality of many new wholesalers is to do it until they can do the “real investing”. Although it can be a stepping stone for some, it could also be the full time job for others, and unfortunately for many it is the first barrier that discourages many people from continuing in real estate.

        @Nichole – I somewhat disagree that many people don’t get into wholesaling because they thing it is easy. The #1 pitch from guru training courses is that wholesaling is easy and they recommend that everyone start with it. You “just” find a good deal, kick it over to some investors and you can make $5,000-$10,000 in a few hours. Yes, some people can do this, but the real wholesalers have the skills in the article above and have spent time working on their business so get it to that point. Someone could very easily listen to Aaron Mazzrillo say that he wanted to go on a fishing trip, so he wholesaled a deal for $10,000 and went. They could miss/forget the rest of the podcast where Aaron tells how he built his business up to that level to allow that and all of the skills involved.

        Also, this is where I think goals come in and understanding your “why”. It is ok to use wholesaling as a stepping stone, but if your goal is to make passive income in real estate, it might not be the best way. It is difficult to be good at wholesaling without money and experience. I wrote a blog “Getting Started in Real Estate with $100” ( https://www.biggerpockets.com/blogs/4317/blog_posts/30055-getting-started-in-real-estate-with-100), which is how I recommend people start out in real estate. For $100, they can get in, learn, meet people and gain a ton of experience. With that little money spent, they can then make sure that they understand their “why” and create their goals. Once people create their goals, they can then work backwards to figure out how to achieve them. For some, they may learn the skills mentioned above and become successful wholesalers. For others, they may decide to cut some expenses to save for investing. Others may pick up a second job, or partner with another investor and do a lot of the legwork while the other investor bring the money. There are a ton of way to invest in this business. The ones that succeed or more than likely the ones that take time to learn, understand their goals and and logically work towards achieving them.

  25. No matter what are you doing, there are NO simple ways!!!! Never! you should always read a lot, find new useful information to get more experience in wholesaling! No one can be successful at work without a huge bundle of knowledge in his sphere!

  26. Tom,

    I agree and disagree with you. It’s not that a newbie shouldn’t get started in this space, it’s that you need to learn to filter these people out of your networking cycle. Wholesaling is very difficult, and in my market finding a wholesaler who has a deal is hard. So hard in fact that I’m going from being a Landlord to becoming a wholesaler. Just to get the deals flowing.

    Here’s what we’ve started doing at some of the better Investment clubs that I attend: We tell new wholesalers to bring their deals to the next meeting and a couple of us would sit down and walk through the deals with them. Guess what happens?

    As a corporate trainer it’s a teachable moment. I’m not going to spend my time trying to teach you something that you don’t want to learn, but if you’ve found something and are spending the time (A whole MONTH from meeting to meeting!) to be active, then I’ll spend 10 minutes and walk you through why or why not this is a deal. And you know what? My buddy over there? He’ll do the same thing, and that lady over there? If it’s a good deal it’ll be sold before you walk out the door.

  27. Please name another niche of REI where the barrier to entry is so low?

    Lets take a $100K property and the out of pocket costs associated with acquisition in the disciplines you mentioned.

    Wholesaling – $0

    Rehabbing – 100k + 8-10% interest (15% + interest + points if its hard money…correct?)

    Rental – 20% down = 20k + $150 – $200 ( in Rochester) inspection fees.

    As Nichole stated why would starting as a rehabber or a landlord be easier or carry less risk than wholesaling?

    The wholesaling and rehabbing disciplines cross the same paths in certain respects so to be good rehabber you need the same 5 skills…no?

    Are you suggesting a newbie purchase a $100k rehab property and make all the estimating and appraisal mistakes he could have made as a wholesaler and maybe break even or lose money?

    A rehabber called me 2 weeks ago because he was trying to get rid of a property that he rehabbed just before the market tanked and he couldn’t sell it. He rented it and the renter stopped paying rent. He’s trying to sell it for 20K less than what he paid for it but it’s not even worth that in this market. He was into it for the purchase price + 45K in repairs. Maybe his estimates were a bit off but most of his loss was due to circumstance.

    I’m not sure suggesting that rehabbing is a better way to gain experience in REI than wholesaling is a good idea…

    I’m a wholesaler. I do business with rehabbers all the time. Make sure you tell the whole story from a rehabbers perspective. Rehabbers LOSE money and big chunks of it if they miscalculate repairs or there analysis is wrong or the equation on that day just for some reason invoked Murphys Law.

    I’m not making this stuff up. This was told to me by rehabbers. Don’t get me started on landlording because some of the same inherent risks apply. Are you rehabbers posting replies to this article saying you never lost money on a rehab?

    How many newbie landlord’s bought properties doing bad analysis and had to go foreclosure or short sale to get back above water?

    Listen man…bad analysis is bad analysis is bad analysis no matter what investing discipline you choose to master. The price you pay for the bad analysis in some disciplines is much higher than others and you can take that to the bank…OR NOT.

    • Tom Sylvester

      Mike – I agree, bad analysis is bad analysis, but I think Sharon Vornholt put it best above.

      “That is where most new investors usually make a mistake. Almost all of us pay too much for our first couple of properties. Doing that when you are a wholesaler is much more dire than if you are a landlord or an rehabber. Landlords can hold the property and wait for the values go up. They at least have a shot at coming out ok. Rehabbers may be able to cut some costs, do some of the work themselves or find another way to not lose money. Wholesalers are going to be stuck with a deal they can’t sell which is never good for your reputation.”

      Real estate in general is a difficult business. There are lots of ways to make (and lose) money. Being a wholesaler means that you have to have all of the skills that a rehabber/landlord has, plus be even better so that you have room in the deal to make a profit as well as have the investor that you are passing the deal to make a profit. People can definitely be successful at wholesaling (as you are), but most people get into wholesaling thinking it is easy and doesn’t cost any money. It is a little far fetched to say that wholesaling costs someone $0. Can someone stumble on a deal without spending any money? Probably, but that is a rare case. If it wasn’t, then everyone would have great deals and not need wholesalers. You mention that you are a wholesaler, do you spend $0 wholesaling? Or do you have a budget that you use to help you find good properties? Even driving for dollars costs money in gas.

  28. I agree with tom. I got my first deal under contract the 1st of this year. I wanted to wholesale to make money to buy rentals. But this first deal has been nothing but a headache. On top of that I have hand written over 300 yellow letters. It seemed I had to tell one lie after another. I’m buying your house. I need to bring the contractors over. My investors want to see it …and so on. Then the buyers were flaky. And yeah, it probably was not the best deal….but I started to realize it may take me 6 months to a year to get good at this. And in that time I could have learned ways to buy rentals with little to no money. I could have learned about creative financing. I could have tried and tried again to get passive income instead of writing hundreds of letters and showing houses to people I don’t know for just one deal. I mean time is money. I think I may come back to wholesaling if I don’t have to trick people, with yellow letters. If I actually bought the property I’d feel better about it.

  29. Jorge Caicedo on

    Great article and one I pretty much agree with…Now if someone could tell that to certain gurus who talk about wholesaling like it’s the easiest thing since basic addition…I know of one but I won’t name names to be respectful, even though he comes off as a twerp

  30. Jorge Caicedo on

    Tom, well the “course” in this case was a book which the guru had the gall to charge almost $30 for…It was an e-book and a friend had sent it to me so I wouldn’t have to put money in the twerp’s pocket and when I read it, it prompted me to do an e-book on wholesaling rebutting a lot of what he said and emphasizing a lot of what you said…so i send it to him and he e-mails me back telling me I’m doing a, get this, DISSERVICE to would be wholesalers!…what a twerp

    the book and website i had w/ it are no longer available but i made some good cash selling it and it took me quite some time to realize that these guys are only out to sell their and their associate’s coursses..

    P.S My e-book was a mere $7…:)

  31. Jorge Caicedo on

    and the guy’s book was so skimpy on details and necessary knowledge, your article alone gives more info then his book did…and he actually sold that drivel for close to $30…amazing

    Tom, you’re the man

  32. Rehabbing a house is a better start then getting into wholesaling? How could that possibly be true?

    I did over 40 wholesale deals my 1st year, starting with almost 0 budget.

    • Tom Sylvester

      Tom – Rehabbing a house will put you through the process, so you know what you consumer (the rehabber) really needs when you present them a wholesale deal.

      I would love to hear how you were able to accomplish doing 40 deals your first year with no budget.

  33. As a newbie, how much time (hours per day) on average would it take to “learn” or start real estate investing? My husband and I own a homebased construction services business mostly in the area of repairs, HVAC servicing and install, we also maintain a couple properties for friends on an as needed basis, we have a network of a few skilled workers as well so we are not unfamiliar to real estate. Ideally our goal is to own our own income property but we just bought our first home under two years ago, so we don’t have the money for a second property. We are considering some type of real estate investing to help us get some cash to reach our ultimate goal, but, we are also running our business and homeschooking three young kids. Could we do investing on a weekend basis?

  34. Randy Phillips on

    I’m a novice wholesaler. My first deal however was a rehab duplex project that turned into a 3 month ordeal from you know where. Can you imagine a newbie dealing with a big project, with materials, employees, renters, repairs etc? I didn’t lose any money but I sure didn’t make any.
    My next deals were Sub to’s and Lease Options that were incredibly easier than rehabbing, much faster and profitable.
    I stumbled into a wholesale deal from my marketing and made 15 Grand on a junky abandoned house flip that I never even seen, and I’ve been hooked ever since.
    I recruit bird dogs, and use direct mail to absentee owners and have made some really good money in the last few years. Do I want to try rehabbing again? Maybe, I hate to admit defeat, or maybe I’ll let others deal with the risks.
    And yes, wholesaling is work, and takes some education, not just the process itself but also people skills. I dont estimate repair and rehab costs, or even fair market value.
    I concentrate on getting the lowest price and then I send it to my buyers or market it online. My buyers do their own due diligence. If nobody wants it, I re-negotiate with my seller or I walk away, there is absolutely no risk cept maybe a few dollars earnest deposit.
    Would I recommend to a newbie he start with rehabbing and landlording? Yea maybe, if it was my worst enemy. My marketing has turned up other opportunities, buy and holds, sub to’s and LO’s Wholesaling has given me the confidence and experience to grab a few of these.
    To tell a newbie to jump into a rehab project, you could be liable for malpractice, haha.
    Let’s make some money….Rando

  35. Hi Tom. Newbie here who’s still trying to figure out where to begin, and am considering wholesaling and flipping. I had always assumed I would start with wholesaling, but then I saw this post and listened to the podcast by Aaron Mazzrillo you link to (and will ask this question on that page as well). However, I also just read the J Scott book on flipping, which did make me a question a bit what you say here.

    Basically, you argue that wholesaling is a tough way to get started because it requires skills such as marketing, negotiation, and the ability to estimate rehab costs and determine ARV. I agree 100% that those things would likely be difficult for a beginner, but here’s the thing: after reading the J Scott book, it seems pretty clear that those skills are required for flipping/rehabbing as well — he devotes entire chapters to these subjects. That is, it seems to me as if for that argument to be true (that wholesaling is tougher for a beginner because it requires those skills), it would also have to NOT be true for other forms of real estate investing, such as rehabbing. But, it seems like those skills ARE, in fact, required for rehabbing. That being the case, I’m just curious — why do you say that wholesaling is a tougher way for a newbie to get started?

    Thanks.

  36. Bart H.

    This is an awesome article. I was just thinking about the wholesaling opportunity, then when I thought about it more, I came to the conclusion that ‘wholesaling is not investing’. I am an investor at heart, so wholesaling would not be a fit for me. Wholesaling is earned income whereas investing is passive. I’m more interested in passive income as I already work a W-2 job. Good insight and I fully agree that it is best to do a deal as a rehabber or landlord first. Thanks.

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