Experienced Investor Dives into Wholesaling in LA: Strategy Insights Requested

[Martin Forde]

Hello Biggerpockets,

I’m a moderately experienced and networked real estate investor looking to start exploring the wholesaling niche here in LA.

Looking for a gut check of my strategy, and to speak with anyone pursuing similar niches here in LA or other highly competitive markets.

Context and background

My first deal was a massive live-in flip. We purchased a hoarder house and gut renovated it, converting the downstairs space into an ADU. We now house hack the property to mid-term tenants. Long term aspirations for the lot is to use SB9 to split and add 1-2 additional units.

Learned a ton through this process - such as negotiation, deal underwriting, renovation estimates, contractor management, etc. Hosted a meetup and met a ton of local investors, I'm somewhat known in the local LA REI circles. Built out a small REI focused Instagram account as well (@ SB9LA)

I have a stable, corporate, remote W2 job with a ton of bandwidth. We have summer Fridays coming up, which gives me even more time to allocate towards this. No kids yet, just my wife. With weekends and afternoons - I could easily spend 20+ hours / week on advancing this.

Here’s why I like wholesaling and why I think I could break through:

1. Deep experience and familiarity with sales cycles and tools. I work in corporate sales as my W2. Prospecting, outreach, negotiation are things I do on a daily basis. I look forward to the absolute meat grinder of a sales cycle awaiting me.
2. Experienced investor. Seems like most people use wholesaling a starting point or a way to generate capital. I want to build this niche to be one of my primary income generators.
3. Already networked and known within local REI community. Looks like a major hurdle for newbies is simply knowing who to sell deals to once they lock them up. I have a solid established buyers list in place through my years of networking and building my Instagram.
4. First access to best deals in the marketplace. This is more mid-term, but I’d like to start flipping. I know that being able to get first crack at deals would be a massive competitive advantage. It would also allow me to wholesale skinnier deals or ones I don’t have bandwidth for.

My strategy framework is below:

1. Narrow focus on lead generation. I’d like to start with divorces and recent probate records as my primary lead targets. I recognize these are highly charged and emotional moments. I consider myself to be very empathetic and believe I could help solve problems to people needing to unload properties quickly.
   1. Would also “drive for dollars” by biking and running but only in my local neighborhood here in Northeast LA. This seems oversaturated and un-strategic, but I know my neighborhood well and believe I could differentiate here as well.
      
2. Engagement sequence would be a mailer with a handwritten address, cold call, text follow up, cold call, email, then qualify / disqualify leads.
3. Using my rental income, I have a ~$1k / month budget for marketing and tools. Goal is to find first deal defining the systems and KPIs, then scaling spend from there.

I appreciate any thoughts or constructive feedback!

[Don Konipol]

Quote from @Martin Forde:

Hello Biggerpockets,

I’m a moderately experienced and networked real estate investor looking to start exploring the wholesaling niche here in LA.

Looking for a gut check of my strategy, and to speak with anyone pursuing similar niches here in LA or other highly competitive markets.

Context and background

My first deal was a massive live-in flip. We purchased a hoarder house and gut renovated it, converting the downstairs space into an ADU. We now house hack the property to mid-term tenants. Long term aspirations for the lot is to use SB9 to split and add 1-2 additional units.

Learned a ton through this process - such as negotiation, deal underwriting, renovation estimates, contractor management, etc. Hosted a meetup and met a ton of local investors, I'm somewhat known in the local LA REI circles. Built out a small REI focused Instagram account as well (@ SB9LA)

I have a stable, corporate, remote W2 job with a ton of bandwidth. We have summer Fridays coming up, which gives me even more time to allocate towards this. No kids yet, just my wife. With weekends and afternoons - I could easily spend 20+ hours / week on advancing this.

Here’s why I like wholesaling and why I think I could break through:

1. Deep experience and familiarity with sales cycles and tools. I work in corporate sales as my W2. Prospecting, outreach, negotiation are things I do on a daily basis. I look forward to the absolute meat grinder of a sales cycle awaiting me.
2. Experienced investor. Seems like most people use wholesaling a starting point or a way to generate capital. I want to build this niche to be one of my primary income generators.
3. Already networked and known within local REI community. Looks like a major hurdle for newbies is simply knowing who to sell deals to once they lock them up. I have a solid established buyers list in place through my years of networking and building my Instagram.
4. First access to best deals in the marketplace. This is more mid-term, but I’d like to start flipping. I know that being able to get first crack at deals would be a massive competitive advantage. It would also allow me to wholesale skinnier deals or ones I don’t have bandwidth for.

My strategy framework is below:

1. Narrow focus on lead generation. I’d like to start with divorces and recent probate records as my primary lead targets. I recognize these are highly charged and emotional moments. I consider myself to be very empathetic and believe I could help solve problems to people needing to unload properties quickly.
   1. Would also “drive for dollars” by biking and running but only in my local neighborhood here in Northeast LA. This seems oversaturated and un-strategic, but I know my neighborhood well and believe I could differentiate here as well.
      
2. Engagement sequence would be a mailer with a handwritten address, cold call, text follow up, cold call, email, then qualify / disqualify leads.
3. Using my rental income, I have a ~$1k / month budget for marketing and tools. Goal is to find first deal defining the systems and KPIs, then scaling spend from there.

I appreciate any thoughts or constructive feedback!

Here’s my honest opinion; not trying to be overly critical, just hopefully constructive advice

Your plan sounds like a newbie with no money and experience trying to wholesale 

Look, wholesaling real estate is a BUSINESS.  As such it doesn’t earn a high enough LOI when done as a part time “hobby”.  Sure, you can find a few deals, probably close one or two.  But at the end of the year when you add up your income per hour, you won’t be happy.

I know some successful wholesalers.  They use various strategies, techniques, etc.  One guy I’ve known for 30 years completes the purchase in his own name for cash, and turns around and sells sometimes minutes later.  He calls this “real” wholesaling, and showed me his PFS with a net worth of $50 million. He started with $25k in 1983.

More conventional “wholesalers” I know try to “flip” the subject property before their purchase contract expires.  As a whole they have the following in common as per their operations
1. They spend $10,000 or more per month on SEO, SEM, direct mail, direct email, text, and call center 
2. They have admin people on payroll to handle tasks that can be handled by trained people and spend their time at higher level tasks
3. They have developed relationships with buyers and can usually “flip” a contract in hours
4. They manage their business full time

I’m any case, good luck in whatever way you decide to proceed