In business there are some overarching areas of importance that transcend any industry, cover all regions, and are not confined by time. These areas are critical elements that have to be monitored while investing.
The 4 critical elements that encompass all industries are:
- Data Valuation
- Customer Service
When speaking with anyone in business, it is understood that you have to know what you’re selling, how you’re going to get what you’re selling to the masses, how much time and money will be needed to get your product out the door, and finally how will you entice customers to become repeat buyers. This is definitely true when using wholesaling as an investment strategy.
Here are a few things to consider when starting as a wholesaler and what you will need to be conscientious of.
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4 Critical Elements to Master for a Top-Notch Wholesaling Business
Marketing, marketing, marketing. This is highly essential, as this is how you will be able to find your first deal and your first buyer. There are many forms of marketing for motivated sellers. To name a few, there’s direct mail, Facebook, Craigslist, pay per click, bandit signs, door hangers, and much more.
You need to make sure you have this area mastered or have someone on your team who is a master marketer. This is the lifeblood of a wholesaler; it’s better to go without food than go without mailing.
The marketing aspect of the business can be tricky. You have to decide what message you want to communicate. For example, do you want your mailer to be personal and have the impression it’s being sent from someone locally in the area, or do you want to have your message branded with your company logo? This may seem to be a minute thought, but you have to remember that the key is to have your mail piece read.
Another consideration in direct mail besides the message is the presentation. Should you use a colored envelope or a standard white envelope, should it be handwritten or computer generated? Your target audience will determine which format to use. By no means am I a professional at this; I outsource all my mailing to ensure it’s being done correctly.
Here is where a lot of newbies miss the mark. If you know your numbers, you will be able to somewhat put a strong plan together that will help you create a sustainable business.
One thing you should know: What is your response rate?
Your response rate is the number of calls received compared to the number of marketing pieces mailed. For example, if the number of mail pieces sent is 1,000, the number of calls received will be close to 10; if it’s more, that is great; if it’s less, then you should possibly re-evaluate your message.
This is just one example of numbers. Naturally, you should know the rehab cost, after repair value, and comps, to name a few.
It is highly important that you track everything.
This is the magic. There are numerous systems that are vital to the success of your business. If you are not automating your business, you are limiting yourself tremendously.
I recently wrote an article titled “8 Killer Resources for Savvy Low-Budget Wholesalers.” In this article I discuss some of the systems that can help you automate your business. This article only scratches the surface of what can be done to help streamline functions. If you are really serious about becoming successful in wholesaling or any other real estate investing strategy, then making sure you are working on your business versus working in your business is how you will maximize opportunities.
In my personal opinion this is the second most important component (after marketing) to create a sustainable wholesaling business. I try and inform newbies when starting out that it imperative that you solve the proper solution for the seller. Many newbies and seasoned investors fall into the dichotomy of just focusing on the bottom line and minimizing the importance of the client. This is the fastest way to make money — but also the fastest way to lose money.
Arrogance plays a huge factor in such a philosophy. Real estate investing is more than dollars and cents; it’s about the people as well. I once spoke with a seller and after a few conversations, he stated that “the last guy I talked to had such an cocky personality that I didn’t want to deal with him, and I thought that you would have the same persona, but after speaking with you, I understand that there is a genuine concern.” Not only did that confirm that this is a service oriented industry, but I was able to get the deals as well. So to all you cocky, arrogant wholesalers, continue on that path and you will find yourself the only one headed in that direction.
Wholesalers are taught to find out the seller’s motivation, which is not wrong. But you need to use that motivation to help them and not just help yourself. It is good to get a property under contract and know that you are helping a seller in return. It is easy to look at sellers as just deals or opportunities, but you have to remember the majority of the time there is an unfortunate situation that has them in their current position.
So stop thinking about what your needs are and begin to think about what is best for both parties.
What area do you think you need to improve in and why?
I’d love to hear your comments!