What would you do with $1,300 as a newb wholesaler?

Question

I have my LLC and I've dabbled in freedomsoft (not what this post is about), but I'm stuck on what direction to take with my funds.

I have a little over $1,300 in my bank for a down payment and marketing. Now, if you were me, what would you do with that as a newb wholesaler?

Should I find a good REO deal and plunk down the $1000 down payment to get my first deal underway...

OR

Invest around $1000 on advertising and networking (website + SEO, Adword, direct mail, freedomsoft/realquest/biggerpockets pro, REI club, BNI, etc...) to source out a bunch of new deals that aren't even listed on MLS that I can get with less money down?

What do you think?

Joel Owens · Answer

Michael with that amount of limited cash I would go to the bigger pockets convention. It's tax deductible if you set it up right..........

There you will learn unprecedented knowledge to do deals for wholesaling as well as learn what did an did not work to close deals.You can meet possible money partners on hot deals you find
etc.

Say you spend the thousand on mailings and get a bunch of calls- what then?? From inexperience somewhere in the process you will lose the deal and have nothing.

Then you will be broke and the wife will REALLY be on you.Trust me.

This is my opinion on what I would do in your situation.The convention isn't a hard sell for more products.it is other investors networking and sharing knowledge to help each other be financially independant and reach our goals.

Eric M. · Answer

Not bad mouthing the BP Summit but c'mon guys, wholesaling is not rocket science.
He doesn't need an $800 class to do his first deals.  There is nothing new in this area that hasn't been written in many books and on many websites.
He can learn everything he needs for $0 and then it is all hard work.  If he is willing to do the leg work and beat the bushes for deals he will find them.
No class is going to assure him success but a lack of marketing money will probably ensure his failure.

If you look at any RE seminar or boot camp, the VAST majority of attendees will never make their money back.  There are of course many reasons why not, but advising a seminar as the way to spend limited cash does not help this guy IMO.
I think you would be hard pressed to prove statistically that attending real estate seminars increases your probability of success in REI at all.

Stinson Bland · Answer

If I were in your position, I'd buy a decent printer, envelopes, and stamps.  I'd then start searching for free addresses to market your services too (driving for dollars, FSBO, talk to your title office avout absentee addresses, and For Rents on Craigslist).  Once I found those free leads, I’d set up marketing campaigns and hope to find a truly motivated seller.

You will also need to start networking with cash buyers; utilize all the free resources you can (call for rent signs, contact other wholesalers, work with your title office, join REIA groups, network).

Running a wholesale business takes time, money, and talent.  It sometimes takes months and thousands of dollars to get your first deal completed.  Here are some important questions to ask yourself:

Do you have resources to continue to pay for marketing?  
Are you talented enough to be creative with your marketing to get leads to call? 
Do you have the ability to close deals with sellers at a heavy enough discount?  
Do you have the time to invest into searching for a deal? 
Do you have the motivation to invest the time and money needed to be successful in this hard business?

Shannon M. · Answer

How about spending 800 and go to the Bigger Pockets Summit?

Joel Owens · Answer

Sure he can send mailers all day long but without the knowledge and how to close people he will lose every deal.

The question then becomes can he close a deal and not screw up enough before his money for mailers is gone.

The biggest reason for failure of any business is not being capitalized enough.

Michael if you are that broke go to a local investment meeting and try to network with others there.Local wholesalers in your market will have the knowledge of what buyers are looking for.

If you can't do that maybe save up some more money before starting this.

I may or may not go to the summit.I have a lot going on and many closings and that time is crazy for me.If I go it will be last minute.

Martin CS · Answer

I will definitely do a bunch of signs if your area permits it. That worlked for me. But make sure you are confident talking to sellers and know your contracts while looking for investors. Good luck!

Michael Lerch · Answer

Proposition:
Would someone be willing to invest/sponsor my way to the conference for $800 back + 50% cut of my first deal after the conference? We can negotiate the terms and get it in writing.

The way I see it is I'm going to be successful no matter what I do. The conference would definitely help act as a catalyst at the detriment of my marketing budget, but either way I see the outcome being the same with me getting my first deal. At least with my proposal someone can make some money off me and I get contacts and knowledge with my first deal under my belt.

I'd be interested in hearing about any deals or ways I can save some money on travel, hotel, or registration that might make it more affordable.

Thanks for your advice everyone! It's really been helpful! I'm going to get out there this week with bandit signs and starting the mailing campaigns.

Jeremy D. · Answer

Michael- we've exchange some messages.  Take a small portion of that $1000 plus legwork and find some deals.  I'm buying in the GR area.  You find me some strong rentals in 49503, 49506 and we will double...heck even quadruple your capital. :)

Nathan Emmert · Answer

So... first $500 on the divorce, next $800 on the summit :)

Curt Davis · Answer

Well,  you are correct that the REO earnest money is normally $1,000 but if you only have $1,300 where is your proof of funds when the REO agent needs it to submit to the bank if they accept your offer?  REO buying is not really for the new investor.  You should be driving for dollars in your neighborhood for houses to sell.

What would you do with $1,300 as a newb wholesaler?

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