Steps to get started in Wholesaling

[Jamier Hughes]

Hello BP Friends!

 My name is Jamier Hughes, I am a new member here on BiggerPockets. I currently live in Philadelphia. At this moment, I am interested in Wholesaling. I just wanted to know if anyone would be able to help me out with some pointers/Guidance on getting started with Wholesaling.

Thank you,

Jamier Hughes

[Michael Hayworth]

The first things you need to do to become an effective wholesaler, not in any particular order, are:

1. Get a thorough understanding of how to assess the value of a property. Ability to run proper comps is hugely important.

2. Get a thorough understand of the renovation process, and how to accurately assess renovation costs. You need to be able to spend 30 minutes in a property and be able to then calculate reno costs within a rough +/- 10% factor.

3. Learn to negotiate with sellers so you can negotiate terms that the seller feels good about, that allow the person who buys it from you to make a profit, and also makes you a profit.

4. Save up enough cash so that you can close on the properties yourself if you don't find a buyer, so you're not leaving the seller hanging if you don't find a buyer. Because that seller is counting on you to keep his house from foreclosure, or close in time for him to pay some pressing bills, or remove the emotional pain of dealing with a dead parent's house. And if you're falsely raising hopes and have a termination clause that lets you out with no penalty, and just leave that seller hanging, then you're really kinda low.

You may gather from the above list that this would take some time. Yeah, it does. Despite what the real estate seminars say, wholesaling is not an entry level job. After 8 years as a GC and 7 years as a real estate investor, I think I'm finally to the point where I'd make a good wholesaler. 

Of course, that's not what most people do. There are probably 500 "wholesalers" in my market sending me "deals." Maybe ten of them are worth a damn. Most of the rest are marketing shaky deals that leave newbie real estate investors full of hope, then bring that crashing down when they realize the wholesaler's ARV and reno-cost figures were both significantly off, and that deal that was going to generate $20K profit is actually going to be lucky to break even. And they're leaving both sellers and buyers with a bad impression of real estate investment in general.

Bluntly, people get into wholesaling because they don't have any money. If you don't have any money, real estate investing is not for you. Work a job (or two), get promotions and raises, live below your means (that means doing without), and build savings. It doesn't have to be huge - I started with $20K savings 7 years ago, and am sitting on $2.5MM in my portfolio today. You start slow, and it snowballs as you go. If you don't have any money, don't jump into wholesaling - find a way to build some savings.