Why are some wholesalers one hit wonders?

Question

I’ve heard a few times of certain wholesalers that only do one or two deals and that’s it.

Is it because they realize the amount of work involved and decide it’s not what they want to do or is something else going on?

Could it be that they ran out of prospects to call?

Could it be that their 5% contact rate careened down to a 2% contact rate?

Could it be that they thought they could get out of cold calling and did direct mail or hired a VA and spent their entire check and realized that they now had to keep cold calling or else give up?

Is it because they never got the momentum that they thought they were going to get and for it to take 4 months and 35,000 calls to get deal #1 and an additional 4 months and 35,000 calls to get deal #2 is what it’s going to take to get every single deal (or else ramp up the monthly call volume)?

Or is it because they don’t get the concept of momentum and if they keep at it, in 6 months to 2 years time, they’ll be at 5 deals per month?

I see what local professional (people that do deals all the time) wholesalers do in my market. I see it on Facebook. They average about a deal a month. Not sure if they also flip or do rentals or something else. I notice that many do. I’m not sure how many deals don’t close, but if it’s only 50%, you’re only closing a deal every other month. At $15k per deal average, that lowers you to $7.5K average per month. Maybe they figure it’s not worth the work. Otherwise, why don’t they all do 5 deals a month instead of 1 where only a couple of wholesalers are at 5 deals a month?

Brad Jacobson · Answer

It's the same for most sales positions.  Something like 75% of REALTORS only do less than two deals per year.  One to two deals fall in everyone's lap each year - sister, grandma, uncle, neighbor, etc.  It's the other 20-50 that require systems, constant work, and dedication.

Matthew Crivelli · Answer

This is similar to getting your R.E. license. Typically it takes time to build relationships in this bussiness. Very few come out of the gate red hot with sales. It takes consistent effort over the course of years to build up a good reputation. This is when referral bussiness typically kicks in. Most people never get to this point, not everyone has the time, drive, or even the desire to do what it takes. Many come into the game thinking it's a get rich quick scheme, then promptly exit once they realize the work involved. @Mike Schorah

Marc Maitre · Answer

First thing first, wholesaling is freaking hard, and those who do a deal in 30 days make a 10+k a month are unicorns God ordained that to be their blessing, so comparing yourself to do isn't a good thing to do trust me, I know. But the ones that get in thinking it's easy because those gurus make it seem so are the ones who will find out the hard way that it's not and quit for all the reasons you have listed above and many more. It's really funny watching certain people talk about wholesaling on IG " no money, no credit, just get you a house on Zillow that needs work, call the seller put it under contract, find a buyer and make 10k or more" lol there are about 20 steps in between each, but you have to pay $1k to find out lol smh

Lydia R. · Answer

@Mike Schorah I think that because the barrier to entry for wholesaling is set so low, and the gurus preach it as a get rich quick real estate move so there are a lot of people who jump in with incorrect expectations. They think for no money and with bad credit they are going to make 10K in 2 weeks. After a few months of making nothing they give up and try something else.

There are other wholesalers who do one or two deals but dont make enough on those deals to incentivize them to keep looking for deals. Wholesaling is hard. Especially if you dont have the capital to outsource the marketing tasks. It is definitely a beat down calling people all day and being hung up on and cursed at. I wouldnt do it for the $3k-5k fee most of them are making.

Andrew Syrios · Answer

From what I've seen with wholesalers, it's the Pareto's Principle on steroids. 20% (or less) get 80% of the deals. And 4% get 64% of the deals, if it's not more extreme.

The problem is that wholesaling is all about volume. Unless you get a really, really good deal, there's just not a huge amount of money in each deal. And there are a good amount of costs in marketing. Many think it's really easy money, but you have to do a lot of deals to make anything worth while. So I think a lot get disillusioned quickly and quit when they realize they aren't going to make tons of money quickly and it's actually a lot of hard work.

Account Closed · Answer

Sales People exaggerate their numbers, always have, always will. It's part of their spiel. “Fake it ‘til you make it. Very successful people don’t talk about it because they don’t need to for a variety of reasons.

Two of the top wholesalers in Phoenix
AZ, home of the "Wholesaler Training Ivy League" said they believe there are about 75,000 wholesalers in the good ol' USA. Given the huge number of real estate agents at about 1,550,000, that number is reasonable. 

If even 10% of wholesalers were as successful as your examples, that would be 7,500 wholesalers you'd be hearing about and 67,500 frustrated wannabe's. I think on average we hear about 500 successful wholesalers and there may be more, but that is only 0.0067 % that are eating from wholesaling. The others just aren't making it. Most who actually try, use up their money advertising, don’t get a deal and can’t afford to continue. I know 3 wholesalers in Phoenix who each  send out 50,000 to 100,000 mailers monthly. Probably others doing the same numbers.

Do they ever talk about how much they spend on advertising and overhead and capital gains? Lol

I just found a fresh wholesale in mid town Phoenix, 4 bed 2 bath, pool with an ARV of $350,000 I’m letting go for $255,000 to the first taker on BP or locally. How’d I find it? I sent out 1,000 EFFECTIVE postcards to a select population.

They received NO other solicitations. With all that activity, they don’t know about the other 75,000 wholesalers. Imagine that. Is it hard work or is it effective use of seasoned knowledge?

Lydia R. · Answer

Its not about "sales are hard" its about how much effort people are willing to put in based on the information they were given at the outset. Perfect example, if I ask you to come over and help me move my couch from one side of the living room to the other, you would show up at my house with the expectation that you are moving a couch. You will, based on the information I provided you, make some reasonable assumptions with regards to the amount of work you signed up for and how long it will take. Now, when you get to my house and I say hey I actually need you to help me move all the furniture in my living room upstairs into my upstairs living room, you would say hey wait a minute, that is not what I signed up for. Wholesaling can be the same way. The gurus make it seem so easy to find and close your first deal in 30 days or less and then once the newbie wholesaler gets into the process they realize its not as easy as the gurus claimed it was. And unfortunately no one shares the failure stories. They only share the wins. Which creates an imbalance of anecdotal evidence supporting what the gurus say when the opposite is actually the truth. Lots of people set out to be wholesalers, spend a month or two marketing and never get any traction and eventually give up. Those people dont share their "I quit" stories. But the guy who made 5 calls and one of them turned into a deal, well of course he will share that story. And the girl who made thousands of calls, never got anywhere and decided to give up and do something else wont share that story. So all you see and hear are the success stories without realizing that for every person who finds and closes a deal there are 9 more who didnt.

I've been wholesaling for almost 8 years. I can tell you first hand how difficult it is when you are starting out with limited funds, not many resources and a weak knowledge base. Your example of a wholesaler who did 3 deals in 9 months, if the average wholesale deal is 10K thats 30K in basically a year. Factor in taxes and marketing costs and that wholesaler is making less in a year than someone working at McDonalds. How many people can afford to keep that up long enough to get momentum? Some, but not everyone. And those are the ones who quit and move on to something else that will keep the lights on.

Wholesaling is ridiculously easy when you have money to spend. Hire a few cold callers to make calls, skiptrace 10k+ leads per month, send out 10K+ direct mail pieces, drop 3K per month on FB ads. With enough money and outsourcing, its super easy to get wholesale deals. But most newbies are getting into wholesaling because they dont have the means to afford that kind of marketing.

Caleb Brown · Answer

Any sales position is this way. Low cost to get started makes a lot of people interested but a minority actually do anything and even a smaller amount do 80% of the deals/business. If you are seasoned and have systems you can do well. Wholesaling is also trendy now and with social media there are a vast amount of strategies. People hop on to each new thing or strategy before mastering or establishing systems. This makes people get frustrated and give up. Quick gratification is a killer in the sales business

Michael Mannino II · Answer

I think it's a solid mix of everything you listed. There's no one right answer for all wholesalers. It's a lot of work and same way with agents, it's easy to "start" but once the realization hits that to really be successful you must set systems in place, constantly updating your processes and learning new things, networking with more people, it's daunting. Building a business is more work than most people realize and I think that stops a majority before they even really ever get going!

Why are some wholesalers one hit wonders?

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