Wholesaling for $256 an hour.

[Douglas Larson]

When I learned about "wholesaling" a few years ago my first thought was, "Why would anyone give up a great deal for a few thousand bucks?"

Really great deals can be hard to find when you rehab-to-rent or fix&flip, so I just couldn't see the intelligence in handing over a great spread to someone else for a little quick cash. There are tax implications and ongoing marketing costs, as well as just leaving lots of money on the table! However, after listening to BP podcasts all year and reading some great success stories, I have had a paradigm shift. Some great recent podcasts on wholesaling include SHOW 37 and SHOW 42, but there have been many others. When BP interviewees described the process, it just sounded so clean and tidy, compared to some of the big, messy rehab projects I've done.

So, just over 2 weeks ago, I made a very low-ball bid ($40k plus fees) to a bank on a small house in an area where I would never look for a rehab project for myself. It's not a "war zone" by any means but it's more than an hour from my house and it's an older, working-class neighborhood. (ARV $95K) The bank took 5 days to respond but they accepted my offer. I immediately put on the and also on a few local websites. I made up 2 dozen flyers and handed them out at a local REIA networking lunch. By the next day I had an earnest money check from a local investor (and BP member). Within a week I had 4 cash back-up offers and about 8 people to add to a future buyer's list.

My Net was $7,700 and my total time spent was about 30 hours, including two trips to the property and two trips to Kinko's. Most of the time was spent in my home-office with phone calls and emails. That's about $256 per hour and No swinging a hammer... No sawdust... No babysitting subcontractors. I think I could get used to this. I just hope I can repeat it. Now, I just have to find some tax strategies that help reduce active income tax liabilities.

[Douglas Larson]

@Jeff Fairchild

I'm glad to see my old post getting some new interest. I wanted some of these answers too when I first considered wholesaling. Several podcasts, especially in the first 60 or so episodes, had great info on daily tasks, specific marketing campaigns, how to answer calls, etc. Those interviews got me interested in wholesaling in the first place. However, asking, "How much do wholesalers make?" is like asking, "How much do stock day traders make?' The potential is huge but very few people learn the business, apply the strategies and keep at it long enough to make it work.

I am NOT a traditional wholesaler. I do not have a marketing campaign or weekly mailings or a phone answering funnel. Like @Steve Vaughan said above, it's just another tool in the belt when deals find me that are not my niche. I have been investing in real estate since 1999. (Feel free to listen to my  when you have an hour to kill.) My investing strategy has mostly been SFR rentals, a few fix & flips and lots of land deals. Honestly, the land deals have been the easiest and have made me the most money. It's not for beginners though because it's a buy and hold game and requires lots of cash and patience.

Wholesaling and co-wholesaling are strategies that BEGINNERS CAN DO, but it does require education and hard work. I work with several young investors in the Salt Lake City area of Utah. I always tell them that the less money you have, the more you have to work. It is rarely physical labor but most often it includes driving neighborhoods, looking up ownership records, making uncomfortable calls, etc.

A couple months ago I bought a wholesale deal from a newbie. It was his first real estate deal of any kind and I had to coach him through it with the motivated seller. I wrote him a check for $5,000 the day we closed. He found that motivated seller after posting a few ads on Craigslist over a month's time. He said it was the easiest money he ever made. That said, he is still posting ads and hasn't found another deal since then. It sounds like "luck" more than skill but you always find that the "luckiest" people are often the ones that work the hardest.