5 Tips To Create A Real Wholesaling Business And Not a Chop Shop

[Jonathan Greene]

I am generally not a fan of wholesalers. I find the majority of them to have low repair costs and high ARV. I see way too much daisy chaining. But...the good ones are fantastic. The good ones use some or all of these tips to run their business.

1. Realize you are in the people business, not the real estate business. Your job as a wholesaler is to provide the best solution for a seller's problem. Each problem is different and can't be solved with cash. People want you to solve their problems, not read them a script. If you build relationships with people, the real estate gets disposed of, but it won't always be by you.

2. Do not send the same message to every potential seller. An old person who just lost their spouse, a person in pre-foreclosure, someone going through a divorce, and an absentee landlord all have different levers to pull. You can't market to them all the same way.

3. Start micromarketing; stop spray-and-pray unless you have a marketing budget. Build different marketing for different lists instead of batching the same thing to everyone in a geographical area. That's a lousy spend of money. If you have the budget to do spray-and-pray and have the call receivers to handle the poor intake, it will work, but most wholesalers do not.

4. Run your business like a business. Have a good business name. A real business name. Have a face of the business. Have bank accounts. Have proof of funds or hard money letters readily available. Have a business address. Have a business profile. Most people don't want to do business with Bobby from out-of-state, they want to do business with a local homebuyer team who they are familiar with.

5. Be transparent. Yes, I'm serious. Explain how wholesaling works. Counter the objection to you earning income on finding them a secondary buyer in advance, not later when the deal fails because you withheld information or lied. You are a conduit to their best buyer because they don't know anyone and don't want to sell on the market. You get a fee for being the connector. They shouldn't worry about your spread if you've explained how it works as long as they get their number.

* The best wholesalers are usually real estate investors who are exceptional marketers and generate too many deals so they start wholesaling their overage to their friends.

** Use a contract that has been vetted by a local attorney who knows what wholesaling is.

*** Make sure you know how to estimate repair costs. Befriend a contractor. Make sure you have proper access to run ARV and make sure you know how to do it. Your numbers are the key to your sustained success.

Feel free to add your best tips or questions as well.