Wholesaling in the Houston area?

Question

Hello all.  This is my first BP post.  I've been a real estate investor for a while (buy & hold) but I'm trying really hard to get my wholesaling business off the ground.  I've been at it for over 3 months full time but I haven't snagged my first deal yet.  I've advertised on craigslist, bandit signs, direct mail (post cards) and the Greensheet.  I networked with a local wholesaler who said he'll walk me through deals and we'll split the profits 50/50 but I have to spend all the $ and time advertising and bring him the leads.  We've looked at about a dozen properties but the sellers are never motivated enough or the properties are not work getting under contract.

I've been marketing to sellers with direct mail (post cards) from leads generated from a local company "Real Aquisitions."  I've increased my mailings to 1000 per week several weeks ago and have only received a hand full of calls as of yet.  I keep listening to podcasts and reading on forums about pushing through and keeping at it but I feel like I'm near my tipping point.  I'm thinking about getting my real estate license and giving that a go.  I don't want to chase every new opportunity that comes along but getting people to agree to sell their house for dirt cheap has thus far been quite daunting.

Any ideas, tips, advice, etc would greatly be appreciated from this newbie!

Dev Horn · Answer

I think the issue is finding MOTIVATED SELLERS with DISTRESSED PROPERTIES.  For people in those situations, we are not trying to get them to "sell us their house dirt cheap".  We are, in effect, offering them fair value.  The houses we look at are NOT worth the "ARV" estimate because they generally need significant repairs.  We're not buying $100K houses for $60K - we're buying houses that COULD be worth $100K for $60K.  Distressed condition is a KEY FACTOR in this business.

MOTIVATION is as well.  If someone is in a hurry, there is a time value to money.  They will take a discount today rather than wait months (or more!) for "full value".  Again, this is not "low-balling" - it's saying, "How much would you take if I could pay you cash in 2 weeks?".  Time is money, as the old saying goes.

Luke I don't mean to talk down to you in any way - I'm just hoping to affect your MINDSET a little.  If you internally feel that your offers are "dirt cheap", that may come off in the way you talk to people.  Instead, realize that - for the people we typically work with - our solution is their BEST solution.  Many have no idea how they are going to get out of a distressed property without making repairs.

Now, all that said, my mentor (CEO of our company) once told me -  "If you are not embarrassed by your offer, you have offered too much."  This is not about low-balling; it's more about taking emotion out of the situation.  While we want to help people get out of their situation, it still needs to be a profitable deal.  And in real estate investing, your profit is made at the purchase, not at the sale of the property.  You have to get it at the right price or this is not a business but rather a hobby.  For most investors, that "right price" feels a little embarrassing!

Renee Stewart · Answer

Welcome to BP!  Yes, trying to find motivated sellers can be frustrating but you have to try and set yourself apart from other investors.  Do you mind sharing which lists you've sent postcards?

You might want to partner with other experienced wholesalers and either provide the deal or the buyer.  I'm in a wholesaling coaching class if you're interested in hearing more about it.

I too, use RealAcquisitions and think it's a great list source provider.  However, there is a lot of competition that creates a challenge as well as low inventory but it can be done.

You will get great feedback on BP from experienced investors.

Hang in there and stay positive!

Paul Timmins · Answer

@Luke Moses

Don't give up your one contact away from a deal I just cannot tell you when it will happen.

A buddy does wholesaling he goes door to door in a neighborhood talking to people on behalf of a local politician. At the end he says he has a friend who wants to buy in the area do they know anyone selling or any vancants. He gets leads.

You might ask the local wholesalers at the REIA meetings when they present a deal where they found it.

Good luck

Paul

Luke Moses · Answer

@ Dev Horn -thanks for the advice.  I'm willing to take all I can get.  I understand what you are saying about providing a solution... Some things are lost a little when trying to paraphrase everything to text. I'm just not getting in front of enough people.  I really think its a numbers game and I'm just not speaking with enough people that have a urgent problem to  be solved.

@ Renee Stewart - I haven't made any offers on MLS properties.  I understand that people create a successful wholesaling career out of chasing down these kinds of deals but it seems like you would need to find a new/inexperienced realtor to submit numerous low ball offers or be busy enough to keep them busy 24/7 doing deals.

I appreciate all the feedback!

Renee Stewart · Answer

@Luke Moses, yes RA was a game changer for a lot of investors but finding motivated sellers can be done.  Have you tried Out-of-State Absentee Owners, expired listings, probate?

Try partnering with other successful wholesalers.  Establish a good relationship with a realtor, provide him/her with your buying criteria and have them submit your offers on properties found on MLS.

Stay motivated because you are doing the things that need to be done.  It's just a matter of time!

Luke Moses · Answer

@ Paul - I've considered that but it seems highly time intensive.  I need some way to put systems in place so that I can actually make this a business.  I forgot to mention I have done quite a bit of driving for $.  I guess I need to perfect skip tracing because most of my mailers directed to vacant looking properties come right back to me.

@ Renee - I'm just wandering if Real Aquisitions was the game changer locally and now everyone can mail to everyone.  I talked with a "Representative" of one of my targeted sellers, who turned out to be a lawyer, and he said they have received 11 such post cards.  I have mailed to tax delinquents, tax suits, tax foreclosure, probate and most recently trustee foreclosure.

Wholesaling in the Houston area?

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