It’s a classic question: which came first, the chicken or the egg?
In the wholesaling world, it’s “which comes first, the cash buyer or the deal?” After all, the deal is what will attract the cash buyer, but without the cash buyer, you can’t do anything with the deal. This question stops many new investors from ever taking action.
The problem is compounded because of all the wholesaling gurus out there. You sign up for a free seminar on wholesaling, get upsold to a weekend boot camp, and the only thing you get out of it is “how to build your cash buyers list.”
Here’s a little secret: finding cash buyers is the easiest part of the entire wholesaling process.
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
Don’t Be Fooled by the Chase for Cash Buyers
Seriously, you are about to be amazed at just how easy (and cheap) it is to find more cash buyers than you’ll ever be able to sell to. I believe this is why the gurus use the phrase “cash buyers” so frequently; they know that if they can convince you that finding cash buyers is the solution to all your problems, you’ll pay big money to find out that “secret,” and you’ll be convinced that you are a legit wholesaler—and that they are a god (they’re not!).
Every day, newbie wholesalers straight from the latest and greatest guru boot camp jump onto the BiggerPockets Real Estate Marketplace and place an ad saying, “I’m looking to build my cash buyers list!” However, after that initial post, we never hear from them again. They were duped into thinking that if they only had the cash buyers, everything else would fall into place. It’s very sad.
Finding the Deal is the Hard Part
The truth is, cash buyers are everywhere, but cash buyers do not mean anything if you don’t know how to get a good deal. So, we’re back to the original question: which comes first, the cash buyer or the deal?
Related: A 60-Day Action Guide to Wholesaling Your First Property
It doesn’t matter. You can find the deal first and easily find a cash buyer for it later or you can easily find the cash buyer first and then go find the deal. Either way, finding the deal is the hard part, and you need to understand that. Once you realize that locating cash buyers as a first step or last step doesn’t change your outcome, the issue becomes much less important.
So, do both. Find cash buyers while you are marketing for good deals. The one major benefit to finding cash buyers first is being able to gain some free education from them on what makes a good deal. Therefore, if you really need an answer to the question “which comes first?” go find one cash buyer who is willing to train you on what they want from a deal.
Then go out and find a perfect deal for them. You can build your business from there.
[This article is an excerpt from Brandon Turner’s The Book on Investing in Real Estate with No (and Low) Money Down.]
What do you look to find first—the cash buyer or the deal? Why?
Let me know your thoughts with a comment!