The cost of starting a lean Wholesale Company

[Justin Hackney]

So I gave myself until the end of August to officially launch my real estate company in Raleigh, NC, where I'll be wholesaling and flipping houses. 

My next actionable step is to figure out the lean cost of the startup.

So far... this is what I got: 

Website: 1 for buyers and 1 for sellers = $25 

direct mail letters: 500 = $300

Bandit Signs: 50 = $175

Driving for Dollars: 4 hours per month = $80 

Online Marketing: Free 

Networking: Joining BP pro members and my local REA = $300

Purchasing/ Building sellers list: using Listsource.com for 500 listings = $125

Building buyers list: free

Transaction Fee: free ( I plan on selling my contract not double close ) 

Setting up the system: Using podio.com to track all leads and using ringcentral.com to manage my calls = $35

Total Cost of Startup = $1,040

MY ASSUMPTIONS: 

Average lead per marketing campaign = 3%

Average deal per lead ratio = 4%

Marketing budget = 15%

Average profit per deal = $5,000

*****

So If I don't completely blow it, I should close on one deal in September, making me at least $5,000 minus marketing budget which comes out to be $4,250.

That's a great ROI!

If you could, please share any tips on nailing down this price. My next actionable step is to write out my business plan so I'll follow up next week with that. 

Thanks BP! 

[Jon Holdman]

I think you need to significantly up your number of mailers.  Your numbers:

Imply you're going to send 833 mailers and get one deal.   833 * 3% = 25 "leads".  25 leads * 4% = 1 deal.

From what others write here (I'm not a wholesaler), you're more likely to need to send thousands of mailpieces to get one deal.  The 3% response rate seems about right.   But I don't think you'll get a deal out of every 25 responses.  Some of those are going to yell at you for having their personal information.  Many are going to want something close to retail for their property.  So, there's a lot of "sales funnel" between your responses to your mail pieces and an actual deal.