Pushing Through Our First Wholesale Deal...

[Account Closed]

Who ever said wholesale real estate would be easy? 

A lot of people told us that (haha). When my partner Cameron and I first bought a Wholesale Real Estate program from a "guru", he made it sound like such an easy process. Find a deal, find a Buyer, then close! But in the 5 month quest for our first successful deal, we found out very quickly that there was lot more to the process than just those 3 steps haha. Luckily, I was a very driven person and entrepreneur before this new venture even began. We knew there would be bumps in the road, we just didn't know how many.

We began the search for our first deal in the most cost efficient way possible, Driving for Dollars (D4$). D4$ means driving around different neighborhoods looking for distressed properties and/or vacant properties, writing down their addresses, and skip-trace the address later. If there is no one living in a home, then SOMEBODY is losing money on it.

My partner and I drove around for days writing down address after address. Until we finally sat down and began to gather the owner's information for each property. After gathering their information, we were faced with the moment of truth... Cold Calling each homeowner! This was a scary thing to do in the beginning. Call someone out of the blue and ask them if they want to sell their house, knowing a barely had enough money in my pocket to pay my own rent (haha). 

Once i built the courage to finally make some calls, the Real Estate Gods tested my willpower on the first 4 leads. All of which were answered by "Who the f*** is this?!" "How'd you get my phone number?!" "Dont ever call me again!". I quickly realized that this "getting your first deal" thing would be more difficult I thought (haha). This reminded me of times in my life I've had to persevere through failure and doubt, so I knew that I could soon become a good cold caller, it was just going to take more time, practice, and effort. 

While practicing repeatedly on cold calls, I was also searching through Craigslist for more homes for sale. I came across a "For Sale by Owner" property that seemed to be at a price that wasn't too far off from a wholesale price. Youtube videos taught me that negotiations were a huge part of this business, so it was time to negotiate! The owner had the price set at $25,000, with an ARV of $48,000, with what seemed to be minimal repairs needed. After my appointment to visit to the home, I could confirm that the property didn't need much work done to be rent-ready; probably just $4,000 worth of repairs here and there.

Once I returned to my bedroom/office, I figured, if I could get the house under contract for around $20,000, it would be a good enough margin for me to wholesale the property. I got the seller on the phone and offered $19,000, she countered with $22,000 (right where i want her). I came with a final offer of $20,000...and she accepted!! Once I hung the phone up you would have thought I just closed a $1 million deal! It was my first major accomplishment in this long journey of wholesaling. But once I got my first property under contract, i remembered it's only half the battle. Now its time to sell the property to a Buyer. 

We built our buyers list to about 15 good buyers by that time, so we called and emailed all of them with pictures and information on the property. We received 3 Buyers interested enough to come out and take a look! On my first appointment, I brought the Buyer into the home and we walked around the first and second floor.Everything is going great! Then we walk down to take a look at the basement. I lead the way down the stairs, when I saw something that took my breath away. HALF OF THE BASEMENT WAS FLOODED WITH WATER! There was a rain storm that morning, but we had no idea there were major leaks coming into the basement. I didn't add this into my repair cost at all! Which made me look bad in front of the Buyers for not informing them of the major repair cost of a foundation issue.

The Buyers were understanding, but I was embarrassed, confused, and upset that the seller did not inform me of this issue. Long story short, we had to back out of that contract because the seller was not willing to go down on her price, although she knew there was a major issue with the foundation that she failed to tell us. I learned a few big lessons in that deal,

1. Do your due diligence THOROUGHLY when walking through a property.

2. Ask specific questions about any major repairs that need to be done.

3. NEVER....EVER...give someone as much as $1000 of earnest money in a residential wholesale deal. We learned that once we lost our money for backing out after our due diligence period (tragic!).

Life is never easy, and I'm too determined to be successful in this business. So I learned from my mistakes and moved on to next deal.

Back to Cold Calling!

After that deal fell through, I was determined to get the next deal as quickly as possible. I wasn't going to let that loss define me. I got back on the phones and called more vacant homes, becoming sharper with each call. Sounding and feeling more confident, going into calls with the mindset that I have $10 million dollars in my pocket, and I don't need your house...but I want it.

I called a man named Dan that seemed to be very old. I asked him if he was interested in selling his home, he said "Yes, and I also own the house next door. I want to sell that one as well". Jackpot. 

I went on to visit the properties-- one being the shell of a home that was half finished. He started doing work on it a while ago, but he never completed it. I was able to find his real motivation for selling; he was getting very old and his kids grew up and moved away, leaving him with no one to help take care of the homes. So he'd rather sell them and cash out to avoid further headache.

We went on to walk into the second property. It's a tenant occupied residence. But it had the worst...smell...EVER. It was a smell so pungent, that I didn't even want to see the entire house. But I knew I had to to get more pictures and a better idea of repair cost. I left the properties (nose still in tact haha) and told Dan I'd call him after I get home and run my numbers.

Once I got home, I calculated my numbers and knew that I wanted to get the properties under contract  for $20,000 total. It was going to be a challenge since Dan wanted $35,000 for both homes. After intense negotiations that felt like arguments, I was able to get the homes under contract for $17,800 total (read a few books on negotiations, I impressed myself with this one haha). Another big accomplishment, but instead of getting too excited, my partner and I immediately started searching for buyers.

We marketed the Purchase Contract for $26,000. Our Buyers List at the time liked the deal, but it was out of their target zones. After a few weeks of frustration, we contacted a few fellow wholesalers we met at previous Real Estate meetings to JV (Joint Venture) the properties with us. They marketed the deal to their buyers....and we got interest from 6 investors (WOW). We showed them the properties and ended up getting 3 offers. The lowest being $20,000, the highest being $22,000. Knowing that real estate is a negotiation game, we countered the highest buyer with $23,000, and he accepted! Definitely should have countered higher, but lesson learned! Closing the deal just a few weeks later after a long process of the seller finding his estranged wife-- her name was also on the title of the property. But WE DID IT!

It took 5 long months but we successfully closed our first deal. My partner and I had the biggest feeling of relief, satisfaction, and inspiration all at once. Not from the small $3000 we earned --which was the biggest pay day of my life at the time--, but because we saw that once we applied ourselves, stayed the course, and pushed through adversity, we accomplished what we set out to do! Plus we learned more in those 5 months than ANY guru course could teach us.

We re-invested the $3000 into our business and now we are able to push out marketing to bring the deals to us. It's been 8 months since we closed that first deal. We now walk around like feeling like real estate experts from all of the knowledge gained; yet still eager to learn more.

I encourage anyone looking to begin their journey in real estate to not just pick up this venture and assume things will be handed to you. It takes a lot of persistence, learning, failures, meetings, networking, hard work, and even more failures to be successful in this business. I learn from many different successful investors who provide insight every encounter we have.

I will continue to post my journey throughout time as I encounter more successes and even more failures. But know that I'm not stopping until I've exceeded my goals of being financially free, teaching others to do the same, and driving my BMW M850i (haha).

Thank you for tuning in, until next time,

Phillip Moreland, Filmore Holdings LLC