The TRUTH About Real Estate Wholesaling
Thinking about real estate investing?
Maybe you should skip Wholesaling!
Huh? Yeah, I know … that goes against the grain of what every “guru” out there says to do, right?
They’ll tell you that if you want to get into real estate, you should start out by wholesaling, which is the business of finding and securing properties at well below market value, then passing them along to rehab investors who take over your position for a fee or small markup.
And the typical pitch goes something like … “You can do this business even if you have little little to no cash … bad credit … no job … and little to no experience!”
Well … I would say PARTLY.
It’s true that you can do wholesaling with little to no resources or experience. But there’s a couple of things you DO need a lot of that’s simply not being mentioned …
- Knowledge, and …
- a very ‘Business-Like’ approach
Yup, you have to treat this business … just like a real business. Which means you need a system, an operating budget, and consistency in implementing your plan.
Yes, you can create a thriving 6 (or even 7) figure business as a wholesaler, but in order to do that, here are the 4 areas you must become proficient at:
#1) Marketing – This is a biggie … and where the rubber meets the road – in this business or any other business, for that matter. In my opinion, marketing and lead generation is at least 80% responsible for the success or failure of your business … it’s darn near the whole enchilada!
Ignore this area, or be half-ass about it, and you virtually have zero chance of ongoing success.
#2) Negotiation – All business is a people business, and real estate investing is no different. The most successful wholesalers and real estate entrepreneurs I know have the ability to “connect” and develop “instant rapport” with people.
If you already have this ability, then great … you have a leg up on the competition. If you feel like you don’t, the good news is it can easily be developed with some training and practice.
#3) Estimating Repairs – Coming up with a Repair Estimate is absolutely mandatory if you really want to excel at wholesaling. Unfortunately though, it’s an area that many beginning investors either totally botch … or get totally intimidated by so it stops them ‘dead in their tracks’.
It really doesn’t have to be that way. With just a few specific questions and application of a simple formula, you can easily estimate repairs – right from the comfort of your own home!
#4) Determining After-Repair Value (ARV) – I would say this is the most important number in the whole process … what the property will be worth AFTER it’s all fixed up. I would also say it’s the most miscalculated number in the whole process, as well!
Can you rely on online services like Zillow, Redfin, and Trulia? Sometimes.
They’ll at least put you in the ballpark. And sometimes, their valuations are spot on. But can you rely on them? Not really.
In this game, you need a little more precision … so being in the ballpark is not good enough. And the most precise source of comps these days is the MLS (Multiple Listing Service), hands down. That’s why it’s important to have a least one reliable, ‘investor-oriented’ realtor on your team who can get you timely comps.
Anyway, those are the 4 major areas you MUST get good at if you want a thriving wholesaling business. Not impossible, right?
All it takes is gaining some knowledge … applying a proven system ... sticking with the plan … along with some determination and commitment.
If this sounds like a game you’d like to master, click here for our current recommendations on what we feel are the best wholesaling courses on the market.