I’m 20 years old and I’m starting a wholesaling business. Advice?

Question

I’m 20 years old, and I am going to start a wholesaling business this summer. I have about $1000 in savings. Any advice on how to get this venture off the ground?

Jonathan Greene · Answer

Yes, what do you know about wholesaling? What is your plan for locating properties? How do you plan on finding buyers? What kind of capital do you have to spend on marketing and on deals more than the $1,000? Can you close a cash deal with a partner and if not, will you be telling the sellers that you will never close the deal and explain how the assignment works? What steps have you taken to "start a wholesaling business"? You see, wholesaling is very murky business because too many people just say they are going to do it and then flail into the space. Your first step is not to say you are starting a wholesaling business because you can't really do that with $1,000 and no contacts. Go to every REI meetup in the area, when the come back, and meet other young investors or investors-to-be and start to see if wholesaling is something you might like. If you are going into a wholesaling business to make money, without having any to put it, it's a failure waiting to happen.

David Reo · Answer

@Jonathan Greene Thank you! My plan is to start out driving for dollars using LandGlide. I have already located about 30 distressed properties. The next step would be to skip trace and start calling the owners to see if there is any motivation. I can access more capital ,but it could mean unnecessary debt. What are your thoughts on this? How much capital would you recommend for a system that would work? I have been frequenting REI meetups since the start of this year, and I have decided wholesaling is the best place to start. My reason is that everyone seems to have cash and skills, but there is always a need for deals. I have hustle, so I can find deals assuming I consistently implement the right systems. To answer some of your other questions, I plan on finding buyers by looking at recently transacted flips or bringing deals to BiggerPockets Marketplace/ REI meetups. My current knowledge is that wholesaling involves finding highly motivated sellers off-market. The next step would be to meet the seller, negotiate, and put the property under contract. After this, I would shop the deal around to cash buyers to fetch the highest price. I want to be as transparent as possible with sellers. I can even leverage my position as a middleman to build rapport. For example, I can say something like, “I work with a group of cash buyers who are interested in your property. They may not like *said price.* Can you do any better?”I believe that I will be successful, but it means lots of upfront work, consistency, and continuing my search for an experienced mentor. At this stage in the game, I want to know what systems I can implement. As soon as I have cash from a deal, I will reinvest it in marketing. Right now, I think the first list I will target is high equity absentee owners. Thoughts?

David Reo · Answer

Thank you for reaching out! I don't buy into the "get rich quick" BS. I do, however, buy into hard work, focus, consistency, networking, education, systems, and planning as a way to success. I look forward to future correspondence. @Paul Wakim

Paul Wakim · Answer

@David Reo I just sent you a PM. Generally, to reiterate Jonathan's points, you're definitely doing more than most people just starting out. If you have the drive to make this work my advice is to find a wholesaler who is willing to show you the ropes and trade your desire to work hard for their experience and resources. There are so many small details and moving pieces to any type of real estate investing that you will be hard-pressed to find a better way to learn quickly than to trade effort for knowledge/ resources. Today, finding people willing to work really hard is no small feat. You sound like what you have what it takes!

Jonathan Greene · Answer

@David Reo, nice job. A lot of people post on here and haven't done anything. The questions are to see. It looks like you have been working hard and figuring out what you want to do and that's great. You have done your research and are on a very good path. You do want to start to develop your buyer list and get to work on finding properties - do both at the same time. If you have that hustle, you will find that you can bridge a lot of relationships with other wholesalers and investors who don't have the hustle to grind out all the appointments. You want to be focused, but patient and it seems like you are. I would not take on any debt to do this, just use what you have and make connections and keep doing what you are doing.

Taylor E. · Answer

Hey there! Welcome to Steeler Country, haha! I'm a Pittsburgh native if you need some insight on which neighborhoods are the best, the trends, and the worst. Been here 23 years. I'm also getting licensed in PA and am more familiar with the local rules and regs. I'm in the planning stages too and I've drawn up contracts and scalable flowcharts to help with the logistics of wholesaling. Currently shopping my contracts to lawyers and title companies to see just how good they are.I also see you're in the Bay Area. I've been there a few times and loved it. :) Maybe we can trade local insight! Feel free to reach out to me whenever you can or tag me here.