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Updated over 8 years ago, 03/25/2016

User Stats

267
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144
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Joshua Howaniec
  • Contractor
  • Indianapolis, IN
144
Votes |
267
Posts

Systemizing a Wholesale Business

Joshua Howaniec
  • Contractor
  • Indianapolis, IN
Posted

I'm looking to learn how to structure my wholesaling business. I want to create it knowing what jobs need to be done or roles need to be filled. What parts, how much can I structure and turn to a system that only needs me to operate it from the top. I know it won't happen overnight but I need to know what to plan for. 

User Stats

35
Posts
11
Votes
Rudy Munoz
  • Real Estate Agent
  • El Paso, TX
11
Votes |
35
Posts
Rudy Munoz
  • Real Estate Agent
  • El Paso, TX
Replied

I see a lot of similarities between the both of us Josh! Both young and striving, and I've seen the opportunity behind wholesaling as well.  From what I've been reading, many people do not suggest wholesaling to start off in RE but if it's done correctly then there is a lot more room for growth. It's all in the marketing. 

User Stats

267
Posts
144
Votes
Joshua Howaniec
  • Contractor
  • Indianapolis, IN
144
Votes |
267
Posts
Joshua Howaniec
  • Contractor
  • Indianapolis, IN
Replied

Alright @RudyMunoz so then even in the marketing do you have suggestions on a system in every step? I am currently self employed as a flooring contractor but I realized that not having that kind of structure means I don't own a biz, a job owns me. I dont want to repeat that mistake. 

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User Stats

21,918
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12,874
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Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
12,874
Votes |
21,918
Posts
Bill Gulley#3 Guru, Book, & Course Reviews Contributor
  • Investor, Entrepreneur, Educator
  • Springfield, MO
Replied

Gentlemen, the issue is not being fully aware of the industry, you don't understand residential real estate and that just screams from the question relating to the business side of looking for some system or step by step "method". You're not trying to sell shoes or shovels or Personal Property.

Most of the "investors" on BP are in the same boat, the job owns them and they probably think they are in business. You won't find many entrepreneurs in real estate that are building a business delegating authority to others and coordinating activities as a manager and business owner. You're mixing oil  and water trying to establish systems as an assembly line, we aren't building cars. Real estate is unique, it's Real Property. 

When I began I was in your boat, I sold flooring at 17 and started my company at 18 in flooring, wholesaling to contractors and commercial construction. I was selling personal property, a product where I could broker te same product from a manufacturer to a customer who knew what the product was and sub-contracted layers to install the product. I was simply a flooring broker-sales guy that knew enough about flooring to check the quality of work. Pretty simple. Then the Army wanted to talk to me saying President Johnston needed soldiers for his war. 

Now, there is a process of sages we go through in dealing with residential property, locating possible profitable properties (or inventory), due diligence and acquisition, adding value to  the property, marketing and/or managing. Certain tasks need to be performed especially in your due diligence and acquisitions.

Learning the basics of real estate should open your eyes to  the socio-economic factors of real estate, especially residential, understanding you market, location, zoning, adding value which all ties into marketing to meet socio-economic demands.

Most assume someone will want the house, that can bankrupt you. You need to be aware of time in holding a property, you or your construction buyer, it means money that takes away from profits. You need to understand costs involved, even  in a quick flip. to understand these costs you should know the marketing time, and for the type and style of home in that location. That requires you to understand social influences, market demands, valuation of properties and this ll effects your financing. There is no simple step by step program that teaches these aspects.......and assuming is not good business. 

Most on BP have already spent more time listening to pod casts, reading forums and blogs than it would have taken them to begin and complete a real estate basics course, they are on-line and offered by colleges, real estate schools and business schools.......and I'm NOT talking about REI or guru classes!

You cannot make calculated decisions without an education, otherwise you are hoping to make the right choice relying on luck. 

My dad always tole me "you spend more time and effort trying to avoiding work than if you just did it right the first time!" Yes, I heard that as a kid, lots of aspects of that, most all relate to immaturity. While some things are easier than others, success never comes easy, in time investors will finally come to tat conclusion, success means work and it means an education. The basics or real estate is not on BP or in guru sites, neither are the basics of business, what we talk about is how we might deal in a situation. Know real estate before attempting to deal in real estate!  :)      

User Stats

506
Posts
331
Votes
Sean Cole
  • Investor
  • Cincinnati, OH
331
Votes |
506
Posts
Sean Cole
  • Investor
  • Cincinnati, OH
Replied

@Bill Gulley I wish I could give your post more than 1 vote.  

I have a successful wholesaling business, but it's still a job.  There's not enough acquisitions/sales talent or margin in deals to be the owner/manager of a wholesaling company in Cincinnati.  Between my role buying houses for us and owning the company, I retain 60-70% of our gross margin, but I work nearly 7 days a week.


I wouldn't have it any other way, by the way.  It's just not realistic to expect to sit on your rear-end and collect checks off of other people's work.  Especially in wholesaling.  There's not enough barriers to entry, as evidenced by the thousands of newbies on BP, to keep you working for the average wholesaler once you learn the business.

User Stats

267
Posts
144
Votes
Joshua Howaniec
  • Contractor
  • Indianapolis, IN
144
Votes |
267
Posts
Joshua Howaniec
  • Contractor
  • Indianapolis, IN
Replied

I am learning real estate now Bill. Every night and every morning i am learning, reading, studying. And I will know the market, and I will build a business and not a job. 

Sean, while it may not be possible to build a deal like you make a burger, or a wholesaling biz like a mcdonalds. There are roles to be played, be it marketing, or in finances, management, reception or whatever. Nobody is in this to sit on thier rear or to work 7 days a week. And call them whatever you want, there are systems and structures done, or can be done at every damn step. Otherwise you juat fly by the seat of your pants. 

User Stats

674
Posts
444
Votes
Lee S.
  • Northern, CA
444
Votes |
674
Posts
Lee S.
  • Northern, CA
Replied

I think the best thing I did to finally get over the hump and get started was unfortunately to stop spending time on bigger pockets.    This is the first post I think I've made this year and only because I've got a little down time with nothing else to do.  I would recommend reading the E-myth if you haven't done so, it opened my eyes on how to scale a business.  I've got the big picture now mapped out.  I had not planned on wholesaling but I am now planning to do some of it, but I'm a licensed Realtor so no legal issues for me.  I have a house under contract now, I've run all the numbers and have the funds to purchase and rehab for a nice 40-60k profit.  While it's in escrow I've gone ahead and listed it on Zillow and shown it to a few people, I'll wholesale it if someone offers me enough for it otherwise I'll close and do it myself.  I've also sent a potential listing to another agent for a referral fee.  

The key to scaling the business is to hire people to do the mundane time consuming jobs that suck up your time like answering a phone.  I also plan to hire other Realtor's to work for me on a commission split to meet with sellers.  I'll then give them a cut of the net on the investment side and a split on the commission on the Listing side.  Win win.  Rinse and repeat.

I think I can make 6 figures a year just by referring listing to other agents, combine that with the potential legal issues with a license and the access and respect you get from others in the traditional real estate game, I would recommend everyone start by getting their license.

User Stats

267
Posts
144
Votes
Joshua Howaniec
  • Contractor
  • Indianapolis, IN
144
Votes |
267
Posts
Joshua Howaniec
  • Contractor
  • Indianapolis, IN
Replied
Hginally posted by @Lee S.:

I think the best thing I did to finally get over the hump and get started was unfortunately to stop spending time on bigger pockets.    This is the first post I think I've made this year and only because I've got a little down time with nothing else to do.  I would recommend reading the E-myth if you haven't done so, it opened my eyes on how to scale a business.  I've got the big picture now mapped out.  I had not planned on wholesaling but I am now planning to do some of it, but I'm a licensed Realtor so no legal issues for me.  I have a house under contract now, I've run all the numbers and have the funds to purchase and rehab for a nice 40-60k profit.  While it's in escrow I've gone ahead and listed it on Zillow and shown it to a few people, I'll wholesale it if someone offers me enough for it otherwise I'll close and do it myself.  I've also sent a potential listing to another agent for a referral fee.  

The key to scaling the business is to hire people to do the mundane time consuming jobs that suck up your time like answering a phone.  I also plan to hire other Realtor's to work for me on a commission split to meet with sellers.  I'll then give them a cut of the net on the investment side and a split on the commission on the Listing side.  Win win.  Rinse and repeat.

I think I can make 6 figures a year just by referring listing to other agents, combine that with the potential legal issues with a license and the access and respect you get from others in the traditional real estate game, I would recommend everyone start by getting their license.

 Thanks man for the helpful advice. I have read the E Myth and I am have been working on creating a structure. Typically I jump into things with little planning but i want this biz to be different. 

How do you suggest planning to scale? How do you know when you can?

User Stats

674
Posts
444
Votes
Lee S.
  • Northern, CA
444
Votes |
674
Posts
Lee S.
  • Northern, CA
Replied
Originally posted by @Joshua Howaniec:
Hginally posted by @Lee S.:

I think the best thing I did to finally get over the hump and get started was unfortunately to stop spending time on bigger pockets.    This is the first post I think I've made this year and only because I've got a little down time with nothing else to do.  I would recommend reading the E-myth if you haven't done so, it opened my eyes on how to scale a business.  I've got the big picture now mapped out.  I had not planned on wholesaling but I am now planning to do some of it, but I'm a licensed Realtor so no legal issues for me.  I have a house under contract now, I've run all the numbers and have the funds to purchase and rehab for a nice 40-60k profit.  While it's in escrow I've gone ahead and listed it on Zillow and shown it to a few people, I'll wholesale it if someone offers me enough for it otherwise I'll close and do it myself.  I've also sent a potential listing to another agent for a referral fee.  

The key to scaling the business is to hire people to do the mundane time consuming jobs that suck up your time like answering a phone.  I also plan to hire other Realtor's to work for me on a commission split to meet with sellers.  I'll then give them a cut of the net on the investment side and a split on the commission on the Listing side.  Win win.  Rinse and repeat.

I think I can make 6 figures a year just by referring listing to other agents, combine that with the potential legal issues with a license and the access and respect you get from others in the traditional real estate game, I would recommend everyone start by getting their license.

 Thanks man for the helpful advice. I have read the E Myth and I am have been working on creating a structure. Typically I jump into things with little planning but i want this biz to be different. 

How do you suggest planning to scale? How do you know when you can?

 I would start by listing out all the jobs that need to be done in the business.  You can then group certain jobs under one title and hire someone for that position.  As far as hiring someone, My plan is to do it once I can compensate that person enough to make it a part time or preferably a full time job for them.  The main thing I'll wait for is consistency, you don't want to run out and hire people immediately and you don't want to hire them for a job that you haven't done yourself first so you can train them better.  The biggest time saver for me will be hiring someone to answer phone and help with data base and other "office" type work.  I plan to compensate them with a mix of hourly and a percentage of the net to motivate them and to keep costs down during slow times.

User Stats

506
Posts
331
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Sean Cole
  • Investor
  • Cincinnati, OH
331
Votes |
506
Posts
Sean Cole
  • Investor
  • Cincinnati, OH
Replied

I think you're putting the cart before the horse here, unfortunately.  There's no need to think about scaling a wholesaling business before you've even proven that you can wholesale!

Look, I have 1 other person that works with me and we've got 27 deals closed/pending this calendar year totaling over $250k in margin.  Think about that for a second.  Compare that with what my other post said about my retention of that margin.  I've been in this business full time for 4 years and have 1 other person working with me and we've done that.  In 3 months.  

We may expand our territory North into Middletown, Springboro and Dayton suburbs.  We may go across the river into KY.  Eventually.  When I was younger, I had an ego need to someday run a huge business employing dozens or hundreds of people.  Know what I realized, and what I think most realize at some point?  It's a hassle and you work a lot harder to make the same or less money when you obsess over you ego need for a big office building with a bunch of employees to tell you how great you are.  Me?  My ego says that I need to have more money in the bank than most any of the Sr. Executives at any of the Fortune 500 companies here in town.

Sorry if this comes across as bragging.  I'm just trying to prove the point that scaling a wholesaling business is a dumb goal.  Really dumb.  Know what it cost me to start my wholesaling business?  About $25k between legal fees and software/startup costs.  Maybe that sounds like a lot of money, but anybody working for your wholesaling business (if you guys are actually making an money) will easily have that saved and can compete against you in a heartbeat.

Stop worrying about scaling a non-existent business and get out a wholesale 1 deal.  Then 2.  Then 2 a month.  Then 5 a month.  When you're consistently doing 80 deals a year, go hire an admin.

User Stats

1,316
Posts
703
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Darrin Carey
Pro Member
  • Lender
  • Dayton, OH
703
Votes |
1,316
Posts
Darrin Carey
Pro Member
  • Lender
  • Dayton, OH
Replied

@Joshua Howaniec

First, take what @Bill Gulley said and learn the business correctly.

Second, recognize that @Sean Cole has nailed it. Go get a deal or two done. Then a few more.

Don't worry about building an entire business structure. In the beginning, that's an activity frequently used by people to justify (sometimes subconsciously) not doing anything yet.

There's one person I know that's been designing their business card, and website, and the perfect letter, FOR SEVEN YEARS. Still hasn't done a single deal. In the meantime, others have come along, learned how to do it, and are doing deals. 

Guess what. My "we buy houses" website is mediocre at best (ok, I admit it, it pretty much sucks). My business card took about 10 minutes to create online. My business plan is a couple of sticky notes misplaced somewhere. And yet we're buying 3-4 houses every month.

I focused on learning the business, and doing it correctly, and very personally.

Now, I have a very intimate understanding of what it takes to do the business. Now, I can make the right decisions on how I want to systematize parts of it, and make other parts better. I could never have done that as well without spending the time in the trenches.

  • Darrin Carey
  • User Stats

    18
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    9
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    John Latkovich
    • Specialist
    • New Jersey
    9
    Votes |
    18
    Posts
    John Latkovich
    • Specialist
    • New Jersey
    Replied

    Nice Posts....I actually took away some knowledge from this. Thanks. 

    User Stats

    352
    Posts
    136
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    Edgar U.
    Pro Member
    • Real Estate Agent
    • Miramar, FL
    136
    Votes |
    352
    Posts
    Edgar U.
    Pro Member
    • Real Estate Agent
    • Miramar, FL
    Replied

    @Darrin Carey excellent reply! I would agree start getting a deal or two first then worry about the systems/manuals later. 

    @Sean Cole you are killing it! 

    I would create a google site page with systems and jot down everything you do and put it into this website. This way when the time comes, you can just pass it along to your new hire and your done. Other than that, I would agree with everything that has been said already.

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