Should I Start With Wholeselling?

Question

Hello all!

I am a recent college grad and I'm trying to figure out the best way to get into REI. My wife and I both have student loan debt and pay more on student loans than any other debts combined. We have a mortgage on our house that we live in and purchased through a USDA loan. Due to our student loans, we don't have much money saved up and I would like to find a way to get into REI with no money down. Should I start with whole selling? Are there creative ways to buy RE as well with no money down?

Any and all advice is welcomed! As a background, I live in west central Indiana and there are several properties for sale through agents as well as by owner. I feel this could be a great time to get into RE as long as I can manage to do it with no money down.

Thanks guys!

Account Closed · Answer

In addition to the content listed by Shawn above, BP's own @Brandon Turner actually wrote a book on getting into REI with no/low money down. http://get.biggerpockets.com/nomoneydown/

Dev Horn · Answer

Hi Isaiah - welcome to BP and the exciting (& challenging) world of real estate investing!  Wholesaling is a good place to start, especially when you don't have funds to invest.  I have a wholesaling video course and sample contracts that I give free to BP members - click here to get the scoop on that.

Michael Grant · Answer

@Isaiah Foster Hello, and welcome to the BP community.  I am an upcoming Wholesaler myself and let me start by saying it is far from easy...

Set small goals make checklist start implementing what you have learned.  Get some generic business cards and key is answer your phone.  People that are going to help may only leave a message 1 time or dont leave one at all until you get started answer the phone.  You have to be aware that you have to spend money to make money.  I just did my second direct mail listing.  I choose to get everything in place first was lucky enough to find someone off BP that gave me my first 160 names for free and this got the ball rolling for me. (freedomsoft)

What I needed to get started:  was printer, Stamps $9.80 a book= 20 stamps, you can get yellow paper and envolopes to start out from dollar tree or a place where stuff isnt too expensive.  You can also get envelopes from post office for 62 cents with a stamp already on it.  Googlevoice or freedom voice account and Click2mail.  I mailed to the 160 names and got 3 call backs still no sale yet.  This was a week ago.   So im doing another mailing this week using freedomsoft 30day free trial of 120 names because of my current money situation and will be putting a list out every week if money permits.  In my yellow letter I also have a website that they can unsubscribe from my mailing list which is great because it can save me a few dollars if they really dont want mail from me.  Plus I have my click to mail set to hit them 1 more time in the beginning of the year just in case. My target audience at this time is Absentee owners probate and vacant homes in my immediate area.  I use two differnt yellow letters one for probate and 1 for absentee/vacant.  I hope this helps it does cost me time sweat descent friends and roughly 80 bucks a mailing and most of that is because stamps arent cheap.

Sorry for the long post,  but if you have any questions for me or dont understand hit me up.

Good Luck,

Mike

Jeff Copeland · Answer

First of all, it's Wholesaling (not Whole Selling). I'm not knocking you or making fun - but getting the lingo right is an important early step!

If you don't have any cash, wholesaling can be a great (and possibly your only) option. But it's not as easy as it sounds.

A lot of stars have to align for a wholesale deal to work: You have to find the the right property, at the right time, with the right seller who is willing to allow you to assign the contract, then find a real estate investor for whom that particular property is a good fit at the right time. That can take up a ton of your time.

That being said, work backwards - find a few local rehabbers/flippers who are active in your market and find out what exactly they are looking for first, let them know you want to "bird dog" (find properties) for them, and make sure they are interested in having you bring them deals - only then should you go out and try to find the deals that fit all the right criteria.

A good rule of thumb is to never put a house under contract with the intention of assigning it to another party unless you have that other party lined up (preferably with a backup or two) and are certain they will be interested in the deal - it doesn't take much to get a reputation as a wholesaler who signs the contract, but never assigns it and closes the deal - and in that scenario, you run the risk of local sellers and agents ignoring your offers.

Ideally, you want to have multiple exit strategies: If you can't wholesale it to Investor A, then wholesale it to Investor B, and if that doesn't work out, maybe have hard money lined up to buy it yourself (which brings up another good rule of thumb: Never try to wholesale a property you wouldn't actually buy yourself).

Hope that helps a little!

Carol Martin · Answer

Agree with this answer :)

Brian P. · Answer

Isaiah

Yes the above people gave good advice, but there is so much more to give you. Wholesaling is the high school diploma of investing. It it a foundation you can use the rest of your life.

As for the supposed problem of not using wholesaling and using wholeselling no big deal. We had no trouble knowing what you meant. There are lots of things the people in this community often get wrong, like using advise when the proper form is advice and the opposite error. Grates on me because just after world war two my next door neighbor was an English war bride and a former professor of English at Oxford University and my siblings and I drove her crazy with our farm country English and improper use of the language.

At this point you don't know what you don't know and to smooth out the learning curve and actually maybe even make some money I suggest you pick one source of seller leads and start working them. Being on the job will let you know what you need to know. I also suggest you start two binders, one marked finding sellers and one marked finding buyers and use them, add info as you see and hear it.

The most important thing is to know that putting in the time is not the same as putting in the work. Actually doing the job makes you the money. As for the student loans just pay the minimum and I have seen some forgiveness programs so maybe something like that is around and your not aware of them yet. I worked full time and carried a full load when I went to college so didn't have any student loans, just a choice between dating and sleeping, gave up the sleep of course. One guy I met was working a part time job, he was single and had a decent full time job so I asked why the part time job, he said that money went towards his student loans. Too bad he wasn't the son of a congressman I understand that they passed a bill that they and their kids don't have to repay student loans. Thank god they passed that and avoided a future national disaster.

Suggest you and your wife spend an hour a  day together getting educated and planning your attack on the potential owner-sellers in town and then attack!!!

Isaiah Foster · Answer

@Natasha Marano

@Carol Martin

Thanks for the advice!

@Melissa Kilbourne

I'll definitely have to check that out. Thanks for the link :).

@Eric Johnson

Glad everything worked out for you for your first time. Hopefully I can learn the ropes so to say and work on doing my first property. I'm currently talking to a guy in my town right now who does a lot of real estate investing, so hopefully I can learn a lot from him along with everyone here.

Eric Johnson · Answer

Welcome to BP.  I'm a part-time wholesaler in Balimore, MD.  I've been doind it now for 2 years.  As mentioned above, wholesaling can be a lot of work.  If your funds are limited, and it sounds like they are, I would suggest, as was mentioned supra, finding deals (i.e. bird dogging) for other investors.  This way, you can quickly become versed in identifying what is and ins't a deal.  You also would benefit from hooking up with other wholesalers in your area via real estate clubs etc to see how they find deals - assuming they are willing to share.  I acutally learned most of what I know from a mentor I had online.  I paid this guy $97/month and got all that I needed in 3 months, canceled my membership and immediately took action.  Got my first deal about 3 months later - I was scared to death to talk to the seller on the phone - got the property under contract (the seller was reluctant at first), put out bandit signs advertising the deal (I didn't have a buyers list) and had a buyer 2 weeks later.  It was sweet!  Anyway, I hope this helps and good luck!

Natasha M. · Answer

@Isaiah Foster

Welcome to BP! You're in the right place at the right time. I agree with @Jeff Copeland

"Never try to wholesale a property you wouldn't actually buy yourself)."

As a credit analyst it shouldn't be a challenge for you but it's important to know your numbers and stick to them. Let the numbers determine your decisions, they don't lie.

Best of Luck :-)

Isaiah Foster · Answer

@Shawn Holsapple

Thank you. I have read 3/4ths of those prior to joining BP, but it looks like I have some new books to check out :).

I think one positive thing I have in favor for me is that I am a credit analyst at a local bank and see several REI deals daily. That is actually what peaked my interest to get more involved in RE despite being interested for several years. I see everything that goes into these deals except for the final product( be it fix to flip).

Should I Start With Wholeselling?

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