I guess I need to become my own wholesaler?

Question

Okay, I feel like an idiot admitting this, but over the last few months that I've been researching and learning about rei, I assumed that marketing was only done by wholesalers.  I originally set out to buy several buy and hold rentals in crappy shape, rehab and rent them and end up with instant equity in the 100-130k ARV range.  Apparently I'm about six months late to the party in the Dallas area, and the deals everyone was scooping up all day long are not so plentiful now.   Then I decided I had to look into wholesaling, which does not really interest me.  I've even been talking to Homevestors for the last month regarding an associate franchise.  It seemed like that would be a great way to keep the best ones for rental or rehab and assign the rest.  
I've been scouring the marketing forums on BP and didn't even consider the fact that one could market just for their own deals.  I guess all the studying I've done on wholesaling and the consistency and volume necessary to be successful clouded my thinking.  
Finally my question.  Is it reasonable to think that smaller amounts of marketing would be effective enough to find a deal here and there to rehab and sell or hold for rentals?  I was listening to an interview with a successful wholesaler this week who does about 4 deals a month, and spends $10,000 a month on marketing to do so.  WOW.  While that is still a profitable endeavor, do I need to set my expectations accordingly?  I realize lots of factors affect the success of anyones marketing efforts, but I sure hate to start dropping thousands a month in yellow letters and postcards only to find that its not near enough.  
I'm working on cultivating some relationships with realtors and wholesalers in the area, but I'm thinking as a newbie, its gonna be tough to find deals with decent margins in such a tight market. 
Another possibility might be to find a rehabber in the area that has had some success but might be willing to partner with me using my capital, and let me learn along the way.  
I canNOT seem to write small posts so thank you if you read this far!  Any insight would be appreciated.

Jerry Puckett · Answer

Hi Tom Lafferty,
You see there what happens when you don't keep your appointments? We could have hashed this all out last week and I'd have been happy to give you the scoop on DFW in General and Plano in particular. But NOOoooo, you wanted to play with those HomeVestor guys!! Big Smiley Face, LOL

What you're wanting to do is very doable, and will not break the bank. You just need to be persistent and consistent, plan your work, then work your plan.

Dev Horn · Answer

Hey Tom Lafferty - you are asking excellent questions.  I bet you can find 2-3 deals per year just building and working your social network.  But you're right, finding deals on MLS is tuff when everyone else is getting the same info.  One of the biggest advantages to doing your own marketing is getting calls directly from motivated sellers who are NOT in the MLS; i.e., they're only talking to YOU.  My business is providing marketing systems for investors - I will refrain from pitching our services here - but just say that a small investor can look and act a lot bigger by licensing a great brand/system.  Wishing you much success!

Tom Lafferty · Answer

I would like to rephrase my original questions:

Is it likely that a beginner would be able to do 2 or 3 rehabs in their first year without doing any marketing?  ie, using MLS, creating relationships with wholesalers, and networking.   (Dont worry Jerry, this road is still leading to you, I just really want to be sure before I go down that road).
I'm debating starting up a marketing campaign, although I'm truly interested in rehabbing rather than wholesaling.  I'm sure the long time rehabbers have deals brought to them due to their reputation and experience.  I'm wondering if a small time person has any hope of finding a few deals without spending a ton on marketing.  I've attempted to get a few MLS properties, but they end up getting bid up way more than I think they're worth.  I've tracked several through purchase, rehab, and resale through MLS comps, tax records, etc, and I don't know how these guys are making money??  Granted, I'm no expert at estimating repairs at this point, but paint, flooring, and kitchen updating would eat up the whole margin between what they paid and the confirmed sale price!
I'm working on building some relationships with wholesalers, but so far it hasn't been terribly fruitful.  I don't know if they don't have deals, or if there just aren't enough left after they go to their "A list" of buyers.

Tom Lafferty · Answer

Ha!  Not busted, as we didn't officially have an appointment.  Played email tag for a while and just hadn't made contact yet.  The HV thing had been going on for a while.  
Thanks for the call Jerry, I appreciate your time!
Chuck, are you local or in Colorado?  I've got some good construction sources but it never hurts to have another.

Chuck Catchings · Answer

Tom, whoa, you got busted!!! You should have kept that appointment with Jerry, Oh well. Homevestors certainly has been around for ever and are everywhere but I read an article written by some guy looking to do a franchise and whoa that is not a cheap way to start out. If I had the $$ I wouldn't do it. Nothing against We Buy Ugly Houses, I think I read somewhere the other day they have bought and sold over 50 or 60K homes since they started, WOW !!! Kind of like Tupperware & Avon, would have been great to get in on the beginning !!!

You do know your in the middle of the shale oil boom going all over North central and West Texas don't you. It's going to get stated up in North Central Ok. & South Central Kansas as well. A buy to rent gold mine.

I usually do those long post as well. If you need a construction guy I have over 30 years in all phases andmaybe I can help somewhat if your interested or at least save you some time or $$. PM me if your interested in talking sometime. GOOD LUCK.

Ramon Jenkins · Answer

My current employer just purchased land in Plano
Most likely operating within next 5 years

Definitely keep us posted on your market and your development.

Marketing can be kind of tricky (costly)
You have to steadily keep adjusting your marketing techniques

I do not currently know the Texas market, but here a 
few names to search for threads on marketing and 
your local community environment Jon Klaus , Jerry Puckett, 
and Michael Quarles  ( just for starter )
You will find a lot of great expert philosophy on marketing

Utilize the Keyword Anlayzer 
– e.g. Texas, Plano, Dallas, Houston, marketing, yellow letter , absentee owners, etc –

www.biggerpockets.com/forums/87/topics/86081-envelope-and-printer-ink-recommendations

I guess I need to become my own wholesaler?

Most Popular Reply