I want to wholesale. What should I NOT do?

Question

The wholesale industry is covered immensely by books, and podcasts. I want to know from all of you experienced investors; What do you expect to know from a wholesaler, What is your expectation of the package contents for said property, What common mistake do you encounter that jeopardizes the deal, What quirks  would you say wholesalers assume that are easily avoidable... Anyone that has "DO NOT EVER's"  or "horror stories" or of course any encouraging and positive experiences please share! Thanks in advance

Braden C. · Answer

Sam Harrington Let me preface this post with the fact that I wholesale several deals a month, so I know what I am doing when it comes to wholesaling.

About 6-8 months ago I really wanted to start some kind of coaching program to help new wholesalers get started. There is obviously a great deal of interest in wholesaling and it seems that there is a great need for proper instruction on how to get started. The "guru" programs are horrible and completely unrealistic, in my opinion. I spoke with several people, and I turned down several people. I didn't want to take their money. I knew they didn't have it in them to be successful in this area of business. It wasn't that they weren't hungry, willing, or eager, it was simply that they didn't have what it took.

I know my limitations in life. I know that even if I wanted to be a doctor, I probably couldn't do it. Same thing with being a professional athlete, I would love to play in the NFL but I've accepted that it will never happen. I know that I can only take my company so far and that there is someone out there who I can hire who will take it further than I can.

My point is this, if your abilities enable you to be successful in wholesaling, fixing-and-flipping, note buying, land lording, real estate agent, ect. then you will be able to do these things. I love this site, but every single day there are posts from "wholesalers" who have made a mountain out of a mole hill. If these small hurdles are going to hold them back then imagine what real mountains will do to them...

Your job as a wholesaler is to bring your end buyer a great deal. You also owe an ethical obligation to give a fair price to your seller. Your ability to do both of these things will make you successful or unsuccessful. Everything else is just fluff.

I am happy to give you any advice or guidance that you need.

Chris Clothier · Answer

Sam -

Good question and already you have some great insight.  But, when I read your post about what NOT to do, one thing jumped to mind.  NEVER advertise a ghost deal in hopes of generating calls from buyers to then build your buyers list.  Beyond the ethics, it really puts doubt into the minds of a buyer when they realize that they may have been duped into responding to an ad for a house that never existed.

It is definitely an example of building your business or your reputation on sand instead of bedrock.

Good luck -

Chris

J Scott · Answer

- Willing to work hard
- Knowledge of how to find deals
- Willing to work hard
- Knowledge of how to put together a deal
- Willing to work hard
- Ability to estimate rehab costs
- Willing to work hard
- Ability to analyze a rehab or buy-and-hold deal
- Willing to work hard

95% of wholesalers I've met underestimate the amount of work it takes to be successful in the business (even though they say, "I don't mind hard work!").  In reality, many wholesalers are looking for a quick and easy way to make a few extra bucks.  Unfortunately, it doesn't work that way.

Taylor Shapiro · Answer

Hi Sam

I completely agree with J Scott's entire response, especially his last paragraph. I'm a little embarrassed to admit it but looking back a few years ago when I first started focusing on REI, I thought I discovered "the secret" to making TONS of money on a CONSISTENT basis by flipping houses- just like the "guru's teach it. I was new and was focusing on all the wrong information, because just a few short years later I can tell you that it's NOT quick and easy- although it can most certainly be done!

As I mentioned, I am new at this but I have the privilege of apprenticing under an investor whose rehabbed over 125 houses. According to him there are "only half a dozen or so" others who rehab houses as consistently as he does. This goes without saying that the community is VERY small which leaves little room for mistakes if you or I or anyone else wishes to wholesale houses to them on a consistent basis.

The guy I work with is extremely busy too. He has rentals, rehabs, HMLs, personal life and much more to worry about on a daily basis which leads me to my point...

Make sure you know as much of the financials as you possibly can. J Scott said "work hard and find good deals". True, but obviously extremely vague. You need to know how much the house will sell for- the REAL ARV! What about repairs? How do you know that's all the house needs? We're half way through my first rehab and small things are popping up which have tacked on an additional 2K than previously estimated.

Bring these guys a good deal. Read the thread others have provided. I wanted to chime in because I've been where you are and remember how daunting of a task it was to understand it all. Again, I am new to this but finding good deals is always essential.

John Tman · Answer

I'm in the Tampa area as well and I've noticed a lot of the "coaching" in this area doesn't seem to care about your success. Is there a way I can get in touch with you outside of the forum?

Sam H. · Answer

Thank you to everyone for your thorough information and insights on this topic. I have started contacting land lords from for rent signs, land lords from craigslist, and also networking with some local PM's that know people that are actively investing. I have also found a high level of interest from just talking to people ( whom I know, and/or complete strangers), When I get to talking about REI people just seem to want to know more and more. I have generated i would say at least 1 solid lead in a couple days just talking about my new found addiction. I need to develop a system to store all of this info I'm getting so i can easily access it when I need to but I think I am getting the hang of this! I am spending a lot of time talking to people, and from what I can tell that is the only effective way to get anything done. Thanks again for all your words of advice. I cant get enough of this stuff!!

Tom Lafferty · Answer

So you knew somebody was going to ask.... What do you think are the top few qualities/strengths that are necessary to have success as a wholesaler?
It would also be great to hear from those of you that have seen many come and go what you think are the common qualities/weaknesses that promote failure?
I realize some of this is covered in the truth about wholesaling post but thought some concentrated feedback re strengths/weaknesses would be good.

Will Barnard · Answer

i also second Braden's comments regarding your need to have the ability to do wholesaling. Without the tools inside your mind, body, and heart, you will likely not go far, his pro athlete example is perfect.

Braden C. · Answer

Haha, why?

Arktavious Sally · Answer

Sam Harrington Don't spend alot of money on courses that promise to drop $ out of the sky. Wholesaling is simple, but not easy, there is a process. There is alot of free information here on BP and other websites that will help you threw your first deal. Good luck.

I want to wholesale. What should I NOT do?

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