How to Set Goals as a Newbie Wholesaler (& Actually Achieve Them!)

by | BiggerPockets.com

What goals should a newbie wholesaler set?

That’s a great question — and a tough question, for sure.

I started four versions of this blog post and went back to delete each one.

This one was too specific, that one was assuming too much, the other one could have been as long as a book, and the last one was terrible.

Bin it, trash it, scrap it, burn it.

It’s a tough one since I’m speaking to a wide audience with varying levels of exposure to the subject, and here I am trying to tell them how to set goals. I don’t know your budget, your marketing methods, your time constraints, or even your name (say “hi” in the comments, so I can at least check this off the list).

Not to mention, it’s difficult to set goals for a brand new investor when wholesaling can be an unpredictable beast. It’s not just “Do X and Y, and you will get $ in 90 days.” There are many more moving parts here and other factors that can mess with consistent deal flow.

It’s much too long for a blog post, anyway!

So, I’ll go up to the 30,000 foot view and tie this in to my last blog post.

Deals, deals, and more deals. If wholesaling is all about finding deals, let’s set some immediate goals for a newbie to find deals and sell those deals to an end buyer (the very definition of wholesaling!). Then let’s reverse engineer a bigger goal down into monthly sized chunks!

Related: The #1 Reason Wholesalers Get a Terrible Reputation (& How to Change That!)

I’ll lean heavily on my last blog post and say that your goals are as follows:

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Month One

  1. Market Analysis: Identify 1-3 zip codes or neighborhoods to target.
  2. Find Some Buyers: You don’t need 100 people on your buyers list. The investors you talked to during your market analysis is a good start. Try for 5-10 QUALITY buyers who buy in your areas rather than a huge QUANTITY of buyers you have no idea about.
  3. Logistics: You’ll need a phone number, website, business cards — at the very minimum, a phone number, whether your cell phone or not, may be all you need in this first quarter.

This first part of the year is all about learning your market and lining up some potential buyers for when you start talking to sellers.

lease-cosigner

Month Two

Time to reach out and touch some potential motivated sellers — or entice them to reach out and touch you (sounds bad either way you say that).

There are a few marketing branches here, and the one you take is up to you, your budget, and your desire to market that way.  Like I said in my last blog post, make sure you have at least 6-8 months’ worth of a budget to consistently keep at your chosen marketing path.

Direct Mail

  1. Choose your targets. You chose your areas during the market analysis phase. Now pull lists from online sources (like ListSource.com), or go driving for dollars in your area. You need a list of names to send mail to, so go get it!
  2. Choose your medium (or what your words go on). Yellow letter, post card, professional letter, or crumpled up napkin from the pub up the street.
  3. Choose your message, those words that go on the postcard. (Or napkin — I think I’m on to something.) Make sure your message is clear, that you list what benefits you offer the seller, and that you include a call to action, such as “call me today! 555-555-5555.”
  4. Choose your frequency. How often will you be mailing your list? Every 4 weeks is a good rule of thumb frequency.
  5. Get your first mailer together and SEND IT!

Bandit Signs

  1. Locations! Pre-determine where you will be going, what target intersections or highly visible areas you will put those signs.
  2. Ordinance! Make sure you are complying with your local city/county codes. I don’t want to bail you out of jail any time soon. Many areas have rules on what can or cannot be posted publicly.
  3. Message! Choose your bandit sign message, make sure it’s clear and very concise. You only have so much room on that sign, and it has to be big enough for drivers to read and get the idea of what you are communicating. It will usually be something like:

ANSON BUYS HOUES
ANY CONDITION — FAST CASH
555-555-5555

  1. Get your bandit signs together and GO PUT THEM OUT!

Internet

This could be a whole blog post or book on its own, but let’s break down a few ways a newbie could get some deals rolling.

  1. Choose your platform.
    1. Post looking for motivated sellers on Craigslist. Keep your message clear and concise, and have that call to action!
    2. Respond to motivated sellers on Craigslist.
    3. Reach out to all of the “For Sale By Owner” ads you can find anywhere (Zillow, Redfin, Trulia, FSBO.com, etc.).
    4. Contact all of the “For Rent” ads you can find. Tired landlords may just want to sell rather than have another tenant from hell.
  2. Be consistent. No matter what you decide to do (many people do all of these things and more), make sure you are daily working these channels and leads.

Related: 4 Ways to Generate New Wholesaling Leads That Actually Work
Months 3-8 are to remain consistent with your deal acquisition strategy. Get better at talking to sellers, learn to evaluate deals, and always be growing in the meantime.

hire-a-contractor

Let’s tie it into a longer term, big picture goal.

Your business needs to begin with the end in mind. Whether it is to close one deal, 100 deals, or use deal money to take your wife to Hawaii, the best part is that you can take that goal and then reverse-engineer it to see just how much action you will have to take to hit it. It keeps the goal within sight and shows exactly how your daily actions snowball into a much bigger goal.

Let me introduce you to a more specific formula than “I just want to make a crap-ton of money.” It’s a great way for a wholesaler to figure out how many deals they must close to meet their goal, as well as the marketing costs to meet those goals.

The below section is for a wholesaler who is using direct mail as a marketing channel.

This formula assumes many variables that you may not know at first, like response rate, conversion rate, etc. The more calls you get, the more deals you do, the more accurate you can make this formula. But in the meantime, figure out how much you want to make a year, and let’s roll with a 2.5% response rate (people who got your mail and responded) and a 5% conversion rate (out of those who responded, you turned into a deal).

Wholesaler Making $100,000 a Year

Your average wholesale deal might be $5,000 profit to you. You would have to do 20 wholesale deals for the year in order to hit the $100,000 mark:

($100,000/$5,000 = 20)

If your response rate is 2.5% and your conversion rate is 5%, that would mean for every deal, you need to send 800 letters to get 20 incoming calls from motivated sellers in order to close it:

((800 x 2.5) x 5%) = 1 deal

To get 20 deals, you will need to send 16,000 letters for the year. If your marketing cost is 80 cents per letter, those 16,000 letters will cost you $12,800 for the year.

Letters sent | Marketing Costs | Response Rate | Conversion Rate | Profit

Monthly this looks like:

800 letters = $640 marketing costs = 20 calls = 1 deal = $5,000 profit

And for the year:

16,000 letters = $12,800 marketing costs = 400 calls = 20 deals = $100,000 profit

So, I leave you with some immediate action goals and a way to reverse engineer your end of year goal down into bite-sized monthly chunks. Go out there, and get some deals!

Wholesalers: What’s your ultimate goal — and how do you plan on getting there?

Let me know your story with a comment!

About Author

Anson Young

Anson is a full time real estate investor and part time adventure-taker. He is a wholesaler and flipper currently who daydreams of landlording. Anson lives in Colorado with his wife and son (who join him on the aforementioned adventures), he plays in a band and is way too into cold showers.

30 Comments

  1. margaret smith on

    Hi Anson-
    This is a great checklist you have provided us, truly. Thank you! It is funny that you are coming from wholesaling on your way to buy and hold. I am coming at is from a hard money lender to possibly setting up my own wholesaling business. Why? Because I have to evaluate loans to rehabbers who buy from wholesalers, and I see what is wrong with their product, and it stops us from doing business.

    What do I see? Wholesalers giving little, often no, time for due diligence- doing nothing to enhance the property- then skimming pretty fat profits off the top in the exchange, and leaving the rehabber with ALL the risk and ALL the work! Most rehabbers here in SW Florida are sick of these deals, after having been caught with low or no profit on at least one deal. Wholesalers normally add stress and uncertainty to the deal, with a “buy it now, or lose out” pressure and a total lack of transparency. Snarky salesmen. I might as well go to to Vegas and have a good time at the slots, guys!

    As a Lender, this is normally not going to be a good investment for me.

    New idea for a wholesaler: Why not provide some of that due diligence to your potential buyers, reducing their risk and giving them the confidence to buy? As I consider becoming a wholesaler, I would love to put out my inspections on the kitchen counter (if there even IS one!) – home inspection, 4-point inspection (ie roof, elect, A/C, plumbing), termite/roof/mold/chimney- as seems to be called for with the individual property- then perhaps some quotes from contractors, insurance, etc. I would love to add a survey (new or existing), initial title search, muni-lien search, well/septic/pool pump eval- Well, you get the picture. These are the items that any buyer would want to do, and surely should do– but cannot afford to do with several properties s/he is considering purchasing, with very little access, often no water or electric, in no time flat, and often without an inspection period. Finally, I might do a quick “pre-hab” with hoarder or overgrown houses, so the buyer could actually see the property inside and out.

    I just attended a panel of local wholesalers, and my question was whether anyone did this (“No”)- and whether anyone would consider doing this (“No”). They all agreed they needed to move fast, and that this would cut too badly into their profit margins. Their buyers ask no questions, do lots of deals, bring their own teams with them to do instant evals. Ok- My feeling is that if you as Wholeslaer have your regular team lined up, you should be able to be poised to get all this done very quickly, and at a minimum cost (maybe $1,000 total for quotes and inspections? Another $500 if you added a dumpster or tree trimming?). Many of these services/quotes are free, and most are very low in cost.

    As rehabber, and lender too, I would always choose to work with such a wholesaler. My risk eval is the biggest obstacle to doing more deals, faster, and if I can see the work that was done to reduce my risk, I am feeling so much more confident about bidding on the property.

    Anson- What do you think about such a business? And our fellow contributors out there- Would you prefer to deal with someone with such a business model? Would you be willing to pay a bit more to know so much more about what you would be getting? Would your lenders prefer to commit to loan to a rehabber who bought from such a wholesaler? Would you wholesalers be willing to beef up your services to be the only guy in town to offer a “pre-vetted” property? Might your list of buyers grow many-fold because you could reach the “mom and pop” rehabbers? Please- Be honest here!! And thanks so much for the feedback.

    • Anson Young

      I think you could be a full service wholesaler and get all of that done for sure. I dont know anyone doing it, and I think newer investors would sure appreciate this service. I think the value the wholesaler has, the main job they do is to find deals and pass them along to the next investor. Many ‘gurus’ teach to not even learn repairs or ARV (stupid advice, in my opinion), let alone inspections and extra services.

      Selling to experienced investors, they wouldnt care about these extras, but new fix and flippers would benefit greatly from the pre-inspections, etc.

    • Shawn Devoid

      I really like your idea Margaret. I’ve been reading a bunch of blog articles on marketing this morning and they pretty much all say you need to have a Unique Value Proposition (UVP). I think you have found your’s! Additionally, you have identified a niche market (new investors, out-of-state investors). I believe Anson is right. Established local investors will probably want to just do it themselves, but newer, younger investors (especially buy & holds) won’t be as familiar with the in’s and out’s of the various home components. I also appreciate that you come from a place of integrity. Let us know how it goes!

    • Dawna Brown

      Hi Margaret, Found your post and wondered if you’d discuss this with me a bit more? Hubby and I are a team and we’re moving in this direction for the reasons you specified. Would love to chat a bit more. Wasn’t sure how to contact you directly.

    • margaret smith on

      Hi Cabri- Yes, of course I would not go into this with the intention of LOSING money on the deal. In fact, my properties would be more competitive, even at a price that covered ALL my extra costs, as many more potential buyers would feel confident to bid and close quickly.

      In addition, if as a full service wholesaler I could hook up with a couple of good money lenders, I would always let the contract “go hard” and not back out on the seller if I had not sold it within the very short timelines that most wholesalers use. I would have the option to continue marketing it, pre-habbing it, or doing a complete rehab or “good enough” fix up for landlords on rentals, so there would be many exit possibilities on any given property. So – Integrity with sellers, Integrity with buyers, would be my brand. I believe that is the basis of a great business.

  2. Michele Redd

    Anson thank you for this awesome information and inspiration. My goal is to begin wholesaling at least 2 deals a month as a newbie. I’m using direct mail marketing and driving for $$. This is a challenge and a numbers game, but I am forgeing ahead. My ultimate goal is to sock away the profits to move onto flips and ultimately buy and holds.

    • Anson Young

      Awesome Michele! To do 2 deals a month, have you figured out how much direct mail you will roughly have to send to get enough leads to close 2 deals? And the monthly cost of sending however much mail?

      Sounds like a good plan, wholesaling is the gateway drug into the more long term profitable real estate endeavors!

  3. Jody Sims

    I have been resisting getting into wholesaling because I see the real estate market as a pie. Every slice of the pie I enable someone else to take advantage of in the form of a rehab/flip takes away an opportunity for ME to rehab it. Now, because I’ve connected someone else with this deal, that’s one less I can connect on in the future. But… recently my thinking changed. The average rehab/flip takes 5-6 months from finding the deal to closing the retail sale. How many wholesale connections can I do in the same time frame? If I totally focus on wholesaling, could I actually exceed the possible income I might land in rehab/flips? I think it’s possible. I will choose to use double-close.

    • Anson Young

      You absolutely *could* exceed your income from flips, but of course you would have to one of two things:
      1. get more volume – to replace those flips you will have to sell more houses wholesale if your profit margin is $5-10k
      2. find higher profit wholesale deals – I’ve seen $100,000 wholesale checks and MORE! Explore other niches than wholesaling entry level properties to fix and flippers. Look at developement opportunities, commercial deals, apartment buildings, etc. Almost anything can be wholesaled, you could easily make more than you do fix and flipping if you find them right!

  4. Joseph Cahill

    Hi Anson – I greatly appreciate your article and the depth you went into when writing it. My question is – can anyone wholesale? Do I need to be licensed? I am 23 and looking to get into wholesaling properties but am first learning as much as I can about this (I have read books on rental properties, landlording, etc.) because it interests me the most. Could I theoretically go out tomorrow and start sending direct mail?

    Than you for the advice. I am just looking for the best way to get into the business this route and it seems to be a great learning process which I am very excited about.

    • Anson Young

      1. ANYONE can wholesale, absolutely!
      2. NO, you dont have to be licensed
      3. Your grandma could go wholesale, an 18 year old kid who dropped out of high school can wholesale, and everyone inbetween.

      You could absolutely lock up deals TOMORROW, no needing to get licensed. It is a learning process, a steep learning curve, but well worth it for the way wholesaling can setup your entire REI career. If you know how to find deals better than the next guy, you win!

  5. Brandon Comer

    This is exactly what I did starting off. I will say, consistency is KEY! Deals will come, deals will close, but be aware that some deals may fall through. Don’t count your chickens till they hatch and always work and push towards your goals!

    This article is the perfect (semi-)breakdown for beginners. Take his points and research further and TAKE ACTION!

    • Anson Young

      “dont count your chickens before they hatch” is perfect, so many times I relied on ‘that closing next week, I need that $5,000’ only for the deal to blow up. I now never, ever count my money until its safely in the bank… because with real estate, you never know when something out of your control will happen and detonate your deal!

  6. Jesse Holshouser

    My primary objective is to build a large rental portfolio. Starting out this looks a lot like buying a property, then saving for 6 month. buying a property then saving 5-6 months, etc.. it will snowball eventually, but I’ve decided to pursue wholesaling in the meantime to fund my rentals quickly. Still have a ton to learn so thanks for writing this! Quick questions: What happens if you’re unable to find a buyer? Can you back out of the sale like when normally buying a property? Have you typically put money down for due diligence or in escrow? Thanks Anson!

    • Anson Young

      Jesse, if you cant find a buyer, hopefully its within your contract contingencies. If you have a 14 day inspection window, you better find someone in 14 days, or you may have to cancel to get your deposit back. You can back out as long as your contract protects you for sure, so its all up to your contract and what you and the seller negotiate for (some sellers dont want to see many, or any contingencies in exchange for the discount they likely gave you on the property). I always put some earnest money down in escrow (NEVER to the seller…), from $100 to $10,000 depending on what we negotiate for. The largest deposits were on home run deals, that I wanted the seller to know I was serious and I knew I had a buyer lined up.

  7. Michael Lopez

    Hello and my God it finally makes sense to have some goals, I forget to do this and never took the time to actually sit down and right some goals for my self, also I’m still a Newby investor so this helps out a lot especially a 18 year teenager who just works a lot at a coffee shops. Its always good to have goals and keep on checking these goals and I’m working on my first deal, but the seller thinks I’m going behind his back by working with am man that is against him right now, only thing is I never meet the guy who is against him, so it’s funny in a way, but I just keep on telling myself that I will close this deal whether I like it or not, also I just realize that I have to wake up early in order to kill the game before anyone else does! But Thank you for this post I needed this Mr. Anson Young!

    • Anson Young

      You are most welcome Michael! I’m really glad it resonated with you, I have to kick myself in the middle of the day sometimes and review what I’m working on and why. Checking your goals multiple times a day reminds you WHY you are doing what you are doing. IF the reason is big, the results are usually just as BIG!

      • Michael Lopez

        Thanks Anson, It does help a lot trust me, Only thing is I also have trouble with doubt, Doubt is not my fear but it is also my enemy. It always stays in my mind but I don’t know why it’s even there to begin with, How did you overcome your doubt as a person and a Investor?

        • Anson Young

          Michael,

          Great question for sure! Overcoming doubt came from taking action, the more action I took, the more results I got. The more results I got, the closer I got to feeling confident about what I was doing. After I got my first check, it was off to the races!

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