The Hard Question Newbie Wholesalers Should Be Asking Before Jumping In

by | BiggerPockets.com

“If at first you don’t succeed, try, try again.”

“Don’t give up too easily; persistence pays off in the end.”

We’ve all heard these sayings. Many believe these mantras, but most can’t actually live them—especially new wholesalers.

We live in a society of quitters, and I’m here to challenge you to live a life of self-actualization. Do you actually believe you can be successful at wholesaling?

Many newbies quit before they start and my question to you is: Can you start and finish?

There are many reasons—or shall I say excuses—for quitting. Some are not willing to pay the price for the accomplishments they want to see. They don’t want to study their craft, they don’t care to spend time making mistakes, and they’re fearful of what others will say. They evaluate their possible success based on others failures.

So what does this have to do with real estate? I’ve done over 110 free hours of consultation to newbie wholesalers, and our conversations touch on many different aspects of wholesaling. I’ve come to realize that many people really don’t know what they’re doing, and that’s OK, but you have to be willing to go through the process.

newbie-first-deal

So let’s have a conversation, and I want the conversation to start like this:

You Really Don’t Know What You’re Doing, Do You?

During these free consultations, I ask a few questions, and normally, if the person on the other end cannot answer these questions, I say, “You really don’t know what you’re doing, do you?” I ask this question to see what response I receive. Are they being real with themselves, or are they trying to fake their way through?

Related: What Comes First for Wholesalers: The Buyers List or the Deal?

The intention of this question is not to belittle anyone, but to help these new investors think through whether they have a firm foundation so they don’t ruin their career before they get started.

Let’s Be Honest

Ask yourself the following questions, and remember, let’s be honest:

  • Can you accurately comp a property?
  • Do you actually know the price per square foot for a rehab?
  • How many active units are on the market? Are you familiar with local market trends?
  • Do you know where buyers are buying and why?
  • Why did you choose the market you did versus another?

Remember: If you can’t answer these questions or know where to get the answers, you need to do some more homework. I point this out because starting as a wholesaler is not difficult, but it’s the “…and finish” of “start and finish” that kills newbies.

Related: 5 Costly Pitfalls That Catch Wholesaling Newbies Off Guard

So I ask this questions again: You really don’t know what you’re doing, do you?

If you’re willing to be honest with yourself and you need some help answering theses questions, leave a comment below and let’s talk.

I’d rather you find a way to get the answers than set yourself up for failure.

About Author

Marcus Maloney

Marcus Maloney G+ is the Executive Officer of Equity Realty & Investments as well as 3rd Generation Management & Holding LLC, both are family owned and operated real estate investment firms. The firms’ goal is to provide affordable solutions in real estate while providing exceptional opportunities for community redevelopment for the residents of Phoenix, Arizona and Chicago, Illinois. You can follow Marcus on Twitter

21 Comments

  1. David Saldana

    I feel as if I have a vague idea as to what I’m to do. I know the procedure of comping a property but I haven’t actually done so, and once I do I’ll have a real estate agent double check it for me until I feel comfortable enough with comping on my own. I don’t know the price per sqft but I know investors that I can ask. As for market trends, I know the city I plan to invest in is becoming more and more popular and that the city keeps getting cleaner and growing and has been for the last 10-15 years and they have plans to continue expansion, upping property values. I can’t say I know where and why people are buying though. I also chose this market because it’s my backyard. Maybe I could use a bit more help.

  2. Christopher L Hall

    @Marcus Maloney
    Once again a great article! I have read just about everything you have posted on this subject. I cannot answer all 3 of them questions. The only one I can answer is why this market? the answer is simple and probley the same one you always hear, It’s where I live! I can tell just from what I have read of your’s that you know what you’re talkng about. I would love to connect with you and chat. Thank you for the wonderful knowlage yoy put out there for new Wholesalers. Look forward to conecting with you.

    Chris

  3. Brett Pointer

    I see tremendous opportunity for my market, yet I cannot answer these basic questions. I am anxious to speak to a seller, but have only been able to find properties owned by LLC’s or people who refuse to speak with me. I really believe there is potential, but I need a game plan.
    For now I will keep reading.
    Hope to hear from you soon.

    Brett

  4. Rob C. Lacey

    Prior to reading this blog I thought I had a fair sense of what I was doing, now i see clearly I have very , very little idea what I am actually doing. Although i am studying daily i am still swimming in a pool of foreign information.

    PLEASE HELP. Any assistance is greatly appreciated.

  5. Paul Cody

    This is a great article that really makes me think. I have done a ton of research. I am really unsure if the market I live in will be a successful market for a beginner. I don’t really know where to get the information on my market. I also am struggling to find information on how to comp and estimate rehab costs.

    Any help would be incredible. Thanks!

  6. Harold Avery

    I could not answer all the questions you asked but I think I have a idea of knowing how to comp. I have two rentals homes,one in which I did a lot of the work. But even with that opportunity, I still feel stuck and short of knowledge when it comes to whole selling the right way. NEEDLESS TO SAY I NEED HELP to move on in real estate whole selling.

  7. Dave Everett

    Right up front I can only answer the comp question and the cost to rehab question. We are trying to work an expensive market. We’re 30 miles down valley from Aspen CO. Most of our inventory is at or above $500k and will ARV in the high 6’s or low 7’s. Is this a reasonable area to find buyers for wholesale deals?

  8. mauricio davila

    Marcus,

    I am new to Bigger Pockets and especially new to the Real Estate Industry. I’ve been reading, listening, and consuming information lately.

    I admit there are a lot I still need to learn. I don’t have the answers to all the questions you asked. I am planning on attending the next local REI Meetups in my area in the next couple of weeks to network and learn.

  9. James Dyas

    Hey Marcus
    Thanks for being transparent , I’m glad you started with asking us to be honest with ourselves.
    Now that you have put us under the microscope , how can we get further instructions and build the right way!
    Looking forward to hearing from you
    Jay

  10. Julie Mitchell

    Hello I did my first wholesale deal on a rental property really didn’t have a clue of what I was doing but the deal closed I made $2000. I am having trouble finding properties would like a little kick in the A- – to get me started any input would be appreciated!!

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