Wholesaling in Los Angeles County

[Cory Ratliffe]

Hello Bigger Pockets family, 

I just started investing and was wondering what type of marketing is working for you in LA County.

Please share your success stories of what works best and what i should stay away from. 

Thank you 

[David Faulkner]

Originally posted by @Sekelle O.:

David Faulkner Are you saying stay away from wholesaling in California or wholesaling in general? Why?

Good question. I'm saying that I believe there are better ways to go about things, especially in the beginning, than wholesaling, and this is true generally, not just CA. 

Wholesaling is billed by gurus as as a quick, easy, no money needed way to get started. It is not. To be a good wholesaler, first off you need to be able to navigate an incredibly slippery slope both morally and legally contacting desperate sellers off market, tying up a contract with them, and then often times attempting to resell that contract without proper licensing to do so and no ability or intent to close on the contract yourself within the time period allowable by the contract and with the intent to back out if you are unable to. Right off the bat, that last bit is really sketchy as it is described and most often practiced IMO, and the laws of most states would agree. Second, as if that weren't enough, in order to be a good wholesaler, you also need to be an expert in negotiations, rehab pricing, comparable market analysis to determine ARV, and have a network of all cash buyers already in place ... this is NOT the stuff of newbies. As much as I love BP, you can't just "google it" and learn that by reading about it online ... you are only going to learn through years of hands on experience and networking. And third, even if you are able to get all these things, then you need to invest heavy in both time and money into marketing, and become an expert in that as well, which takes time even in the best case scenario and that is time where money is flowing out the door without you getting paid, so it turns out that it is NOT something that can easily be done with no money either.

So, what typically happens with many newbies trying this approach, is they don't research the laws, ignore the morals, skip the part about learning about rehabs and comps, randomly reach out to folks on BP with no intro and immediately ask to sell them deals that they don't have, try to do the marketing with no money and no time, and then wonder why their reputation and that of other wholesalers is a bad one, why they can't find a mentor and no experienced investors want to talk or work with them, and why they are not able to succeed, and then they give up on RE all together. There are much better ways to go about it IMO. Such as get your license and work as a RE agent, who can do everything a wholesaler can do, just legally and under the guidance of an experienced broker ... I'm not saying that way will be a cake walk either, because starting a business (which is what getting started in REI REALLY IS) is difficult no matter which way you slice it, but this method would get you much more respect from the RE community and greatly increase your odds of success IMO. There are other good methods to get started if you have more capital and credit. A vast majority of folks I've seen become successful wholesalers started out doing something else, and gained a ton of experience first ... for example, it is more common for a flipper to work for a decade and ramp up their operations to the point that they have more deals in the pipeline than they themselves can handle, so they wholesale a few deals to their buddies on the side ... if they get really good at it and prefer that business they may go fulltime as a wholesaler, but they already had all the knowledge and network in place when they started, by that time they usually already have their RE license as part of their business operations anyhow, are familiar with the laws (whether they follow them or try to skirt them is another matter), and that was all obtained by starting somewhere else. This is the more common path to success as a wholesaler.