Why do so many new people want to wholesale?

[Jonathan W.]

Why do so many new people want to wholesale to get started in real estate? Is it because all the guru's talk about it making it seem great. To me, it looks like it sucks. I would rater get a 2nd job at a good rate to make more money. This would allow me to invest in more properties.

I just want to know everyones reason behind it.

I currenty have a w2 job, 2 side jobs, and own 2 triplexes and looking for more. I am really looking hard at buying other businesses using SBA loans instead of RE right now. I also have a wife and 5 kids to keep up with.

Look foreward to the discussion.

Jon

[John K.]

I feel that many that get into wholesaling because they do believe the hype that it is easy money. While on the surface this seems to be true, it is only easy if you put the work into it. You have to treat wholesaling like a business, not a hobby. This means you have to be willing to invest real money and real time. You have to create efficient and intelligent systems to handle all aspects of wholesaling properties. Without systems in place, you will spend an enormous of amount of time, wasting your time. 

1. Hands down the highest ROI of any form of real estate investing, and it's not even close.

On average, the ROI is around 5x, presuming your CAC is well managed and you average $5,000 in wholesale fees, on SFR. The very skilled negotiators, can reach 7-8X ROI.

2. In the right market, a 7 figure income is not unreachable. All you need is to average 16-17 properties per month, at $5,000 per, for a 7 figure income. In the right market, this is not hard to do, with systems in place.

3. Get in front of deals that many claim don't exist in certain markets, like Dallas.  So if you have multiple strategies in play, you open yourself to many more options. 

4. The strategy with the absolute least amount of risk involved. No contractors ripping you off. No appraisers having a bad day. No effect from a sudden drop in the market. No unexpected repairs. No property managers ripping you off. No tenants making your property look like a 12 month party zone. 

5. The cheapest form of education into Real Estate, that money can buy. By default, you will become a virtual expert in home repairs, with enough time. After you look at a few dozen homes, it all paints a picture. You then become capable of breaking down the cost of repairs, by simply looking at quality pictures. This is a rare gift, but in some scenarios, you don't have much time to pull the trigger on a property. Those with real house knowledge, will never sweat their decision, others simply walk from the deal.  

6. Build a very powerful networking team. When you become a name in your market, you will have access to everything you need to build upon your wholesaling business. Whether it is private money, brokers, insurance agents, contractors, title companies that can perform miracles with a complicated close, lenders and so on. All of this is valuable information, that take the traditional REI years to gather. A wholesaler can compile this data, in months.

7. In can be argued that high volume wholesalers have a better pulse on the market, than most RE agents. Why? Wholesaling is about crunching data, this is a daily task. The HV wholesaler can look at a 50+ properties a month, all over the city. We have a really good idea on ARV, without turning on the computer. You only get this comfortable with the market, by constantly being in the market.

8. Wholesalers seem to "fall" into those golden egg deals, regularly. For wholesalers, these are not a daily thing, but occur much more often than the traditional REI.

However, very little of this is possible, if you don't treat it like a business. It takes a considerable commitment in both time and money, to establish your systems. Once the systems are in place, you will need to become an expert at time management, to handle the volume. You have to constantly research the market to look for changes, both up and down. You have to be willing to either hire and train employees to assist you, or turn too VA to keep costs down. You have to have excellent organizational skills. You have to have enormous patience, as you will not always be dealing with the friendliest folks.

You need real knowledge to handle a multitude of scenarios (the chain of heirships, divorces, MIA person on title, family conflicts) to name a few. This knowledge helps you secure the deal, where those without it, stand no chance. This business is about solving a problem for that homeowner. Who stands a better chance at the table? Person A: Let me call my title company and see what they say, and I will get back to you.  Person B: Here is "exactly" what will happen in this scenario, you have nothing to worry about. 

The common misconception is that wholesaling is not investing or is less than the rest. The reality is quite the opposite. No traditional REI invests near as much time into marketing, market research, renovation costs, network building, dealing with complex title issues then that of a HV wholesaler.

John