Do you think wholesaling is over saturated?

Question

Currently I've been wholesaling for a year and I see it does work if your diligent about it. But also I've come to my senses to further my education as far as real estate and get my brokers license. But I also am starting to think of a couple of strategies to make money besides just wholesaling. A lot of investors seem to stick with that business module and that one only. Which is fine but as I grow as an entrepreneur I see you have to have multiple sources of income in real estate and in business. Thoughts?

Ned Carey · Answer

The people who are most successful tend to focus on 1 thing and do it extremely well. The multiple streams of income concept works best by getting 1 stream mastered then moving on to others.

Wholesaling is a tough way to make money. That is what is not talked about enough. It is hard to find really good deals. It is even harder to find deals so good that both you and the next guy can make money on it. But it is EVEN HARDER to do this consistently enough to have a stream of income, not just the odd deal here and there.

PS is it over saturated? Well that depends on your market. I would say many markets are over saturated with new investors that do not really know what they are doing and do not understand the point I just  made above.

Jonathan C. · Answer

Wholesaling is awesome because you can make money in real estate with virtually no risk and comparatively little cost.  But as Ned said, it's very difficult to find good deals and find enough good deals consistently to make a living at it, and it alone.

My current opinion on this, and my plan, is to have 4 real estate investing income streams and add 2 additional real estate income streams that are not real estate investing related.

As Ned said, the key is to NOT try to do all of them at the same time, or it's not going to work.  Master 1 (I'd suggest in this order), then move onto the next.

How I see it is this:

1- wholesaling- this the lifeblood of all real estate investing- you're finding deeply discounted properties- whether you're buy and hold, actually wholesaling, renovating yourself, scrape and new build, condo conversions, whatever, buying deeply discounted properties is critical

2- renovating and reselling- picking off the best deals to renovate and resell yourself (I do this currently), then wholesaling the rest

3- rentals- using a portion of cash from rehabbing to purchase X number of rentals a year.  I've been trying to buy at least 2 rentals a year.

4- bigger development- 'swinging for the fences' by doing a couple higher price point, much more involved construction, and possibly much higher profit development deals.  For example, right now in permit process to dig out and build new foundation underneath existing DC row house, add new top floor, and make 2, 2 floor condo units that I'll hold as rentals for approx 5 year then sell as condos

Non investing income streams:

1- property management- you'd want to partner with someone most likely to do this.  In my case I helped my brother grow his property management business- he's running that.  At some point I'll bring him into development and he'll bring me into property management. This will be important next time market tanks and may not be able to do as many deals

2- real estate brokerage- through the direct mail you do from wholesaling, and through the clients you have as a property manager who decide to sell, you start to see opportunities to list houses.  We are currently in the midst of bringing on an employee who will get her Realtor license and we will make her the point person and get a portion of the commission with us doing the rest.  We hope to have it grow from there.

I like the multiple income streams approach to smooth on the super cyclical nature of real estate.  Developers- whether building a 300 unit apartment or flipping 4 or 5 houses a year- tend to do amazing when market is hot, and get crushed when market goes down (often going out of business entirely).  This diversified income stream approach seems to make most sense.

Start with wholesaling, get that where you are consistently getting deeply discounted properties, then do your first flip.  Get to the point where you're consistently renovating 10,15,20 houses a year, then peel off a wholesale deal that makes sense for a scrape and new build, small multi family development, or whatever larger scale development makes sense, etc.

Kortez Walker · Answer

@Ned Carey @Chaz Reid Excellent advice guys. I've heard this repeatedly the best way is to master one source and then go to the others and Chaz your definitely right as well appreciate the feed back.

Chaz Reid · Answer

I agree with 100% with @Ned Carey

I don't think the market is oversaturated with SUCCESSFUL investors. I think the wholesaling market is oversaturated with inexperienced wholesalers that mess things up or give us a bad wrap.

My advice is continue to focus on one niche, don't worry about the others until you've "mastered" your own. Trust me, I've been there, done that, lost money, wasted time, and learned my lesson. Laser point focus brings you the money and knowledge you need to have in this game @Kortez Walker

Kortez Walker · Answer

@Jonathan C. that's awesome and a great way to do it. I have a great brokerage that is going to help me with the multiple steams of income and is investor friendly. I'm excited about this new journey and the way you described it is perfect. I know as long as I'm consistent (which I have been) and diligent it'll all come full circle.

Do you think wholesaling is over saturated?

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