In Wholesale Everything: The Intermediate How to Guide 201, we expand on our previous guide. In Guide To Wholesaling Real Estate 101, we covered
In case you haven't noticed by now, trying to wholesale a deal is not as easy as you thought. If you want to do it right, make money, and really learn real estate, then you will have to put in a lot of work.
You can go full-time as a wholesaler. Understand that it’s very likely that you do NOT get a deal in your first 6 months.
So, you must have enough money put away to take care of your bills for at least a year.
Why a year?
Say you start working really hard by implementing the techniques we are sharing with you. But, it’s been a couple months and you finally get to wholesale a deal.
Say that deal makes you $5,000.
Now, what are you going to do with the money?
While options 1-4 may seem very appealing. You want to look at this as a business. If you start pulling every dime your business generates from day one it will never grow.
The issue is, people make $3K when they wholesale a deal and immediately go on vacation! Only to come back and realize they’re broke again and have to start back from ZERO.
By reinvesting it you start to cut down the amount of legwork you put in to generate your deals. It won't be by a large amount at first but it will definitely start compounding more and more. Best yet, your business starts to grow.
Because this business requires personal accountability and responsibility it can leave you feeling OVERWHELMED.
So, why would you feel overwhelmed?
Well, back when we started investing in real estate there really wasn’t too much competition for deals. So you didn’t need to get too creative with trying to generate a deal.
But now, there are so many new people coming and going that it has forced everyone to become a lot more creative and strategic with their marketing in order to stand out from everyone else.
In the MARKETING section, you will learn how to still wholesale a deal and NOT lose your mind.
The biggest way to overcome feelings of being overwhelmed is to stop overthinking and start doing. By doing, you will realize what works and what doesn’t and how to move forward. But, you can’t do this if you’re paralyzed.
In Guide To Wholesaling Real Estate 101, we covered overcoming the "what ifs", as well as being careful with gurus and "mentors". We also went over some of the languages you need to know.
In Wholesale Everything: The Intermediate How to Guide 201 we'll expand more on the networking side.
Step 2: Networking for success (expanded)
First, let's review the tools you will need.
The ONLY thing you need to get started is business cards. All they need to say is your Name, Email, Phone Number, and the title of Real Estate Investor. The title helps the person that received your card to remember what you do. On this note, you also want to make sure that the back of the card is white and blank. We used this a lot when starting off. This allows for your (or them) to make a note of what you talked about on the back of the card so they can remember why they should reach out to you.
Keep it Simple. You don’t need a business domain so your email looks “cool”, you don’t need a website, or a mailing address.
We know. You read this and said, "Really?! What's so hard about handing out a business card?"
Let us explain.
When handing out your business card don’t just give them to anyone, that’s just throwing them away.
Instead, make it a point to build up some form of a connection with the person. If you did a good enough job THEY will ask you for your card.
Remember, the goal is not to get rid of your business cards, it’s to build your network.
You want a dependable network when it's time to wholesale a deal.
You do this by building relationships.
One mistake many new investors make is they hang out with other new investors.
This is so WRONG.
Now, we get it. It's easier to connect with someone like you that doesn't know anything and/or hasn't done anything. But this does not help you reach your goals.
You need to level up. So, to do this you must network with people that are where you want to be. When you do this enough you will see that eventually, you start reaching their level.
When you wholesale a deal you want it to take you closer to your goal. You don't want it to just keep you as a wholesaler.
Many people go to a networking event, find a chair or corner and never move from there until they leave!
We get it, you’re nervous. GET OVER IT!
Everyone that goes to a networking event, guess what, they are there to network.
Everyone is there to talk to people they don’t know. So, if you don’t know everyone in the room then start talking to everyone.
If you know everyone in the room go to another room.
Stop being shy. This business revolves around networking. The sooner you get used to it the better you will get at it, the more success you will achieve.
Eventually, when you have attended enough of these events you will have people you know attending the same events. This is great but, don’t spend the whole time you’re there talking to them.
Even if they have something "REALLY" interesting to say simply tell them, "I would love to talk to you further about this, can we get together for coffee or a drink tomorrow?"
If they keep trying to hold you back to talk, which many do, we come out and just say "Hey, I don’t mean to be rude but I have a few people I need to meet tonight. So, is it cool if we catch up later?"
Most investors understand and will want to be doing the same thing.
Why are you in real estate?
Besides money, what is it about real estate that gets you excited?
The reason these questions are important is that they will help you in determining who to approach.
Say you want to flip a house. The best course of action is to find the most successful flippers in your market. We're talking about flippers that are regularly buying, renovating, and selling houses. This way when you wholesale a deal to them you'll also learn how to determine if it’s a good deal.
When you find the right people, you want to learn from them. But, it’s not that easy. You have to bring them value.
While we are all really nice people, you must understand our time is valuable. If you want it, what will you bring of value?
This is where being able to find great wholesale deals comes in to play. If you can bring a flipper a great deal, they will teach you A TON about flipping. The best part is all of these lessons will be learned while you're making money!
The best way to start up a conversation with someone you're interested in learning from is by getting them to talk about themselves. This is a great way to get them to share a lot.
The truth is, everyone likes to brag about themselves at these events. Use that to your advantage.
By having people talk about themselves we can determine if they truly know what they’re talking about or they’re pretending. The more you do this the better you will get at asking them questions that will show their expertise.
You essentially become an interviewer. You’re interviewing them to see if they fit in your network of buyers/partners/lenders etc.
Which should you do first? Find a deal or build a buyers list? A lot of gurus out there that have a preference depending on what they're selling. But to us, it doesn’t matter. They are both equally important and should be done at the same time. So for the purpose of needing to put them in order, we will start with building a list.
Now that you know how to network, the next thing is to build a list with all of the contacts that you get. After all, these are going to be the people you wholesale too.
Next, we qualify our buyers. The following is how we have built our list along with our belief system.
We know that if you’re new you may not know how to do this. This will come with time. Many investors ask to be in our buyers' list but we don’t add just anyone.
We add only the people that we know can actually take on a deal.
Once we gathered this info, we add them to our contacts list along with their information.
We tell each of our buyers the following, “We will never blast a property out to everyone. If it meets your criteria we will bring it directly to you. But, if you don’t buy because you lied to us and can’t actually afford it. We will move you to the bottom of the list for our future properties. If you do this again we will remove you!”
The reason we do this is that we are not like most wholesalers. All they’re looking for is the highest offer and they move on to the next one. Not that there’s anything wrong with that, but it’s just not us. We want to actually build relationships and help our investors grow.
We need our investors to be able to buy when we bring them deals that meet all of their criteria.
The investors we work with appreciate this so much that we have never lost a single investor!
If you don’t know or trust your buyers most wholesalers ask for a non-refundable deposit. This can be whatever amount makes you feel like they wouldn’t walk away. If they did, it would reimburse you for wasted time. Now, you may need to go find another buyer. You may even lose the deal because the seller is upset with you for not delivering.
But, if you qualify your buyers correctly you don’t need to ask for these fees. It makes it easier for buyers to work with you.
We don't like non-refundable deposits. We've never bought from a wholesaler that is asking for a non-refundable deposit. A non-refundable deposit forces us to put money down on a property that we haven’t done enough due diligence on. You should never be pressured into buying a house you haven't done proper due diligence on. Especially if you don’t have the experience. This is why we don’t rush any of our buyers and recommend you don't either.
Another thing we recommend doing is making sure the house is clean of any title issues. We will cover this later on in this guide.
You want to make sure your buyers are not buying a house that has liens or judgments on it.
We know many people claim ignorance but that really should not be your out.
Again, partnering with the right investor for your first couple of deals should make this process easier.
Now that we have covered the basics with language and building a Buyers List. Let's go over how to actually generate a lead.
In the Guide To Wholesaling Real Estate 101, we covered some basic DM marketing. We also went over potential List you can mail too.
In Wholesale Everything: The Intermediate How to Guide 201 we'll expand on doing this regardless of your budget.
Having a budget that you can stick to for 12-18 months is the most important thing.
Many people spend it all in the first 2-3 months and then their real estate career is over!
So, first thing’s first. Is there a certain amount of money you can count on every month?
You can do this one of two ways.
Say you know you can set aside $100 every month for marketing. That’ll probably get somewhere between 250 postcards or close to 175 letters per month.
Obviously the more you can spend the more homes you can target.
You can get better pricing when you buy in bulk. We would suggest your first month’s marketing budget be spent on just buying material. This way one month of marketing capital can get you 3-4 months worth of marketing materials. Now you know that in 4 months you will need another month's budget to buy another 3-4 months worth of materials for the next 3-4 months. Make sure you always project ahead. You NEVER want to stop marketing.
If you’re doing $1000 budget then do the same. But, in this case, you can afford to buy your years worth of marketing up front to save money.
We buy roughly 2000 postcards from Vistaprint for about $0.05 each. They are in full-color front and back.
Then you add $0.35 for postcard stamps or $0.49 for letter stamps.
Now, we add $0.0083 for every 100 address labels which we buy a box of 3000 for roughly $25.
This equals roughly $0.40 per postcard mailed out.
$0.57 for every letter. The extra pennies here are for a pen, paper, and envelopes.
The only thing we don’t buy in bulk are the stamps because it doesn’t really matter.
There's a reason for doing marketing for 12-18 months. This is so you make sure to at least get one deal that you can use to replenish your marketing. This will help to extend from 12 months to indefinite. Of course, this is IF you didn't use the money to vacation!
You should never, ever, ever, ever, ever, stop your marketing. The only time to stop is if you’re throwing in the towel and you’re done with real estate.
There are so many times we have received calls from a marketing campaign we ran over a year ago!
NOTE: Oh, before we move on you have to include the cost of the list you’re using also. This is usually a one time cost and doesn't amount to much.
EXERCISE: Before you keep reading, set your budget. Even if it’s zero go through the process to understand it better. Pick a number like $100/mo and go to different sites like Vistaprint and start seeing how much everything will cost. Stop reading now and set your budget! You better not have read this line until you set your budget!!
There's not much more to add to DK other than what was mentioned in Guide To Wholesaling Real Estate 101
You can go over to our Podcast and listen to the episode on DK. We cover how we do it.
In the Guide To Wholesaling Real Estate 101, we talked about getting an appointment.
First, you also want to make sure the homeowner is motivated to sell. Simply ask, "What's your reason for wanting to sell?"
The following reasons usually indicate they have a real need to sell:
What you don't want to hear is, "I’m just looking to see what I could get for my home". Not that these can’t turn out to be deals, but there’s a small chance since they don’t really need to sell their home.
If they mentioned one of the top reasons, then set the appointment. Now you can now reach out to an investor to help you.
In Texas, you should use the TREC One to Four Family Residential Contract (Resale).
This a very standard contract that is understood by any title company.
If you choose to do this on your own make sure you've reviewed it beforehand. Filling out a contract is easy. You read it and fill out the blanks. It's that simple. Now, the biggest fear people have is, "what if I screw it up?". It’s fine. There are addendums you can use to correct/change anything on a contract. Once you have the contract filled out, you send it to title. At title you will find out of there are any liens or judgments on the property.
But, in Guide To Wholesaling Real Estate 101, we recommended going with someone at first.
In Guide To Wholesaling Real Estate 101, we went over tapping into your buyers' list.
When you reach out to a potential buyer make sure you have the deal ready.
You need the following info:
This fee is the difference between what the homeowner is getting and what makes sense for the buyer. If it's $20,000 or $200 then that's what it is.
Do NOT always add a minimum of $5K or $10K just because that's what you want. You will either screw someone over or lose the deal. Neither is a good business model.
Do you want to make more money? Get better deals!
The contract has been reviewed at the title company to make sure everything is fine. Once you have your buyer ready you proceed with closing. The title company will tell you when and where to get everyone will meet to close.
This was the Intermediate Guide to Wholesaling. Next up, will be the Wholesaling Strategies: The Advance How-To Guide 301.