There are many mistakes that can happen along your path of starting out as an investor in wholesaling, but there are 6 particular mistakes that immediately come to mind. I would like to preface this article by again informing you that there are many more than these 6 mistakes, and this list is not meant to be all encompassing.
If you noticed in the opening, I refrain from using the term “wholesaler” because if you are wholesaling, you are an investor using the technique of wholesaling as a means to an end. I hear investors identify themselves as “wholesaler,” and I cringe because this limits your capacity to become so much more. By identifying yourself as an investor, it gives you many options and psychologically removes the self imposed limits.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
6 Common Mistakes Investors Make While Wholesaling
Mistake #1: “I’ll Just Try This”
Wow, this is a fast way to make $5000-$10,000 a month. Some people hear this, and they believe this is easy money and a reliable source of income (or additional income). They have absolutely no intention of making real estate a career path. The pitch lured them in, and the market and hard work will spit them right back out.
If you are thinking this is an opportunity where little or no effort is acceptable to be successful… you are highly mistaken.
As with any profession, studying and mastering the craft is important, and there is no easy way to become a professional. Have you every heard a doctor say, “Hey, I will try and become a cardiologist and see how this will work for me?” Absolutely not. In order to build a sustainable business or career, you will need to have the passion that is required to help sustain you when times are difficult.
Mistake #2: Ambition Without Aim
This is the highly motivated, fresh-from-the-workshop crowd that is willing to do everything in the first 3-4 months, but after that the flame sizzles.
I enjoy talking with this crowd because they are highly motivated but need some direction and someone to hold them accountable. The fastest and easiest way to deflate motivation is a few telephone conversations with unmotivated sellers. The investors’ eyes go from seeing endless possibility to despair. This is the reason why ambition without aim can kill a dream within months.
I highly suggest developing a business plan. If you can stomach the time it takes to complete a business plan and you can visualize your business from conception to completion, then and only then you can find a way to channel that ambition.
Mistake #3: No Plan
The business plan is your GPS. Without clear direction you will continue to go in circles or a straight line to nowhere. This ties in with the ambition. I wrote an article in my member blog on BP on the importance of a business plan, and you may use this as a rubric if you run into difficulties.
A business plan, if done right, will provide you with the dos and don’ts of how to invest, where to invest, and with whom to invest.
Without a plan, an investor will chase everything they believe is a deal. This will lead to destruction. Take time to outline a plan. I’m not suggesting a Masters thesis on how you will structure your business, but you need to have some sense of direction. Along with my prior article on developing your plan, here are some additional questions you can ask yourself to get started:
- What is my philosophy?
- Why do I want to invest?
- How do I want to invest?
- Where do I want to invest?
- What do I need to invest?
- What are my benchmarks?
- How does these benchmarks get me to my goals?
- What am I willing to sacrifice?
- What does my goal (success) look like?
If you can answer these questions, remain true to your answers, and exercise discipline, you can become a successful investor.
Mistake #4: Remaining an Amateur
I have recently learned that the word “amateur” is derived from the word amour, which signifies love (Hebrew, guys). I know you’re wondering, what does this have to do with anything?
Here’s what: An amateur only does things that they love (amour), so if it’s not something they love to do, then it will not get done. Go figure — in a profession there are times you don’t want to do something. Professionals understand that it’s a part of what makes them a professional and they must respect their profession. So if it’s doing something they don’t like to do, i.e. cold calling, it will still get done to the best of their ability. This is what makes them successful in their profession: DISCIPLINE.
A professional does what they like and dislike and sets priorities for both.
Mistake #5: Fear of Asking Tough Questions
The fear of asking tough questions signifies one major flaw: lack of humility.
Asking questions places you in a position of vulnerability. Asking questions is an acknowledgment of ignorance. This is not as bad as it sounds. Ignorance means you are either uninformed or misinformed; either way, you do not have the information you need.
This is difficult for those with type-A personalities because they do not want to come from a position of assumed weakness. This was something that I’ve had to overcome personally.
Asking great questions will usually provide you with a great answers. Those who are fearful of asking tough questions limit their possibility to grow. Growing is uncomfortable; there is uncertainty and change to contend with. Once you begin to see the progress, it becomes exhilarating because of all the possibilities.
Put your ego aside and ask as many questions as you need until you receive all the answers you desire.
It’s good to be a student. You are expanding your possibilities and capabilities. Also, those who answer your questions normally are more willing to offer additional information.
Mistake #6: Goals Without Purpose
This really ties it all together. Don’t do anything without passion, purpose, and a goal. I am a firm believer of ensuring you have a personal mission statement. This is the blueprint or business plan for your life. This is your guiding principle. If you truly have no ambition of becoming a professional investor, please reconsider your efforts. Your goal is your One Big Thing, what do you want to achieve and accomplish.
I hope that after reading this, you will evaluate your purpose before becoming an investor. Make sure you evaluate your motives. If your motives are purely monetarily driven, your career will not be sustainable.
Use this time to make sure you are in it this for the long haul. Are you just trying this? Do you have ambition but no target? Where is your plan? Are you trying to be an amateur or a professional? Are you afraid of asking tough questions? Do your goals have a purpose?
Only you can answer these questions. Now are you really ready to be an investor.
What would you add to my list of mistakes?
Leave your comments below!