What are your thoughts on co-wholesaling?

Question

Recently someone told me there was another option for wholesaling known as co-wholesaling. Is co-wholesaling the right thing to do? How do you prevent yourself from being "cut out" of a deal? Have you ever done it and was it a successful?

Lydia R. · Answer

@Sarah Sparks Co-wholesaling can work, however there are a lot of pitfalls to be aware of. First, getting paid. Personally I have always thought it was ridiculous for one wholesaler to spend a bunch of time and money getting a deal under contract and then giving 50% of their wholesale fee to someone with a big buyers list who essentially just sends out an email and gets the property sold. When I was new I had people who were always offering to “partner” with me, which I soon learned they actually meant that I would do the heavy (and expensive) lifting and they would take the ball on the 2 yard line (my first sports reference😬🏈). So the first thing to agree on is who contributes what and how the money gets split. Inevitably there will be some that say 50% of something is better than 100% of nothing which makes me roll my eyes.

The second most important thing is how to structure the deal. Whoever has the contract has the control. I dont do JV agreements. If you are going to co-wholesale then it goes one way. Wholesaler A has contract with seller. Wholesaler A assigns contract to wholesaler B for $X (previously agreed upon amount) and wholesaler B assigns contract to end buyer for $Y.  Everyone gets a separate check at the closing.

Third thing to consider is the level of experience your co-wholesaler has. How reputable are they? I dont recommend trying to partner/co-wholesale with someone who has no idea what they are doing. Its a blind person trying to help a deaf and blind person cross a busy intersection. Bad news.

Last thing, decide who you will be in the co-wholesaling setup. Are you the one with the deal? Have you knocked on doors, made cold calls, sent direct mail and finally have a contract? Or are you the one with the buyers list? Have you networked, attended meetups, solicited shamelessly, created a database with all the pertinent details so that if someone had a deal you know exactly which 5 guys on your list to call?  Which are you in the equation? Once you figure that out, go find your other half. Like I said it can work, as long as everyone is on the same page and has agreed in advance (and preferably in writing) on how things will go.

Hope this helps!

Jerryll Noorden · Answer

Be careful what you say there. I know PLENTY of people with millions that actively and ONLY wholesale. Wholesaling is NOT some lower level niche that people do to upgrade to "better" niches later. Not at all!

Wholesaling is easy, fast, minimal risk and you can do 44 deals in a month if you wanted. Now this can not be said for flipping!

Jerryll Noorden · Answer

I don't believe in Co-wholesaling for the exact reason others agree with it.

"If your skills compliment each other". No! Sorry, I just don't swallow that.

Why not just get the skills you need? This is the right way of thinking and becoming successful Really do not start thinking that way and already find others to help you become successful. No one will help you become successful if you can't do it on your own.

You HAVE to step up, seriously!

There is ABSOLUTELY no need to  divide the skills. If you are running an empire and numerous complex skills are needed yes,  mix and match skills so it is manageable.

But wholesaling? Nope sorry... not me, I don't buy it! See, all there is to it is get a contract, get seller leads, wave said leads around and buyers will flock to you.

There is ONLY one skill you need when it comes to wholesaling. Finding seller leads. If YOU can find a ton of motivated sellers would YOU want to split your profits with anyone else? Of course not. You did the hard part already. All that is left is the easy part.

Now when would anyone like to co wholesale? I tell you when, when you can not get rid of the contract. Then they desperately try to find a co wholesaler. BY DEFINITION that is a BAD wholesaler. They didn't sign the contract at the right price.

You know what most wholesalers do? They negotiate and negotiate and then they sign the contract for the lowest number a seller is willing to accept. WRONG!!!

You sign the contract based on the numbers that WORK FOR YOU!! NOT the seller. If the seller doesn't like these numbers, you shake hands and wish them a wonderful day. Sure do not take advantage of the seller but don't screw yourself over either!

No:

Let me ask you something and answer honestly.

If you had an inbox like this:

Would YOU co-wholesale?

NO you would simply HIRE someone to do the dirty work in case you are too busy to deal with all the leads. You create a wholesale empire. You GROW, you SCALE, you make MORE money... not less. Co-Wholesaling IS making less money!

Having said all this...

The ONLY scenario where co-wholesaling makes sense to me... is if you do virtual wholesaling. Boots on the ground.

Seriously, it is a mindset thing. Convince yourself you can do it. Then look at it again and you will suddly see how simple and easy it is. If you want to do this right get a website, make it credible and take it head on!

You can do this. This is not a peptalk you really CAN do this.

Barry Pekin · Answer

I think I have to remain on the fence at this point.

I'm not against teaming up when it makes sense, but I am against it when it doesn't.  There are some good points to consider in this post.  (And some bad ones.... after all, middle men are often necessary!)

I do NOT agree in the whole daisy chain thing where there are several wholesalers in the middle.  That's just nuts.  But if you can find someone who you really meld with, then maybe.

Jay Hinrichs · Answer

its quite popular in the lower value tougher neighborhoods out east .. I see this all the time on the HUDS when I am funding a deal there will be 3 to 5 of them on there  LOL.. I just call them hustlers.. just hustling for a grand here and a grand there..

Dustin P. · Answer

Co-wholesaling is the dumbest thing I've ever heard of. You're taking a (probably) already tight / marginal deal, and then trying to squeeze more out of it by doing absolutely nothing.

The person who acquired the deal likely had to invest a lot to get it. Whether that's marketing dollars on letter campaigns / online marketing, meeting with the owner, getting it under contract, or by building relationships with agents / probate attorneys for the lead, it takes a combination of time and money.

And then you want to make an extra $5k by just blasting that person's deal out to the masses and hoping that you get a bite. Now maybe it's a sensitive family situation and one of the random people you blasted the deal out to is knocking the door, maybe now the seller refuses to close because they are being harassed, maybe now you just blew the deal up for someone.

The larger a blast list, the worse the deals IMO. If you have a good deal you don't need to send it out to 20,000+ people for it to sell

Barry Pekin · Answer

@Sarah Sparks,

At the risk of just adding a "me, too" post agreeing with Armoni, I can't help myself.

I've been hesitant to collaborate with anyone else.  I see wholesaling as an individual effort.  But, I've been re-thinking that position.  Exactly as Armoni said, when you have skills and/or resources that compliment each other, that can be truly beneficial.  For example, one of you might have money available for marketing where the other doesn't.  And maybe one of you is great at finding and connecting with cash buyers.  Perhaps one of you is great at negotiations.  I could probably go on and on, but you get the point.

I just think it's important for both people to have skills that complement each other rather than just adding to what each one has.  If you're both marketing like a banshee, but no one has a clue as to how to find a buyer, that's probably not a good match.

Armani Emon · Answer

I think that co-wholesaling is a good thing to do If your skills compliment eachother.

Meaning you dont have a large cash buyers list but your partner does.

Or you have buyers but no properties and your partner has properties but no buyers.

I think co-wholesaling is a great thing to do bc you're building your network and someone can help you in the area you lack.

To help yourself from getting scammed I think you should make a contract addressing your concerns and have both parties sign it before doing business together and If they go back on thier end SUEEEEE haha

What are your thoughts on co-wholesaling?

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