Getting started in wholesaling

[Grant Livingston]

Hello all, I have been listening to bp podcast among others, with an interest to build wealth through real estate investing. I currently have a job that I hate and I am looking for a way out of this job ASAP. With this in mind I feel that wholesaling would be a good starting point for me as I have little cash and would need to supplement my current income quickly. The plan that is floating around my head right now would be to drive for dollars and hammer the phones on my days off until I can get some deals under my belt and quit my job with confidence. In the past I feel like I have gotten excited over "get rich quick schemes", ex. Day trading stocks, Amazon FBA, etc. I understand that wholesaling will take alot of work and by no means is get rich quick, but I am still struggling with my mindset that maybe I'm just looking for another easy way out. Is wholesaling really a viable business for someone to support a young family? Are there any deals to be found in a crazy market like Denver? If wholesaling is so lucrative why isn't everyone doing it? I appreciate any input you have regarding all things wholesaling and getting started in it, or even why not to get started. I know this is very broad but I would like to hear many perspectives.

Thank you.

[James Carlson]

@Grant Livingston

Unless you go hard and with a solid plan for six months or more, wholesaling in Denver is a tough game. I know in the BP universe, it's a sexy strategy to get started, but that's mostly in lower-priced markets with more inventory. 

If I were starting out again and were single, the first step I'd take to get into real estate is house hacking. 

Step 1: Secure financing any way I could. With my own cash, selling my car, taking a loan from my brother or parents, whatever. Get that money and get it as quickly as you can (because prices are going up).

Step 2: I'd buy a moderate priced 4br home in the middle suburban rings (certain parts of Denver metro Lakewood, Aurora, Westminster, Thornton, etc.), and I'd rent out all the rooms I could for say $700-$750 each. Live for free, plus take a little cash. 

Step 3: Sock away what you would have paid in rent and the cashflow for a year and a half or so.

Step 4: Move out and buy another. Rinse, repeat.

Some quick back-of-the-napkin math on this. If you buy a 4br house for $400,000 at a 3% rate, your monthly PITI is roughly $1850. Take three roommates at $750 each and you're pulling in $2,250, or $400 more than your monthly payment. If you were paying $1,200 in rent before, now you're not paying that plus you're getting $400 in cash on top. So that's a $1,600 swing. Save that $1,600/mo for one year and you've got $19,200. That's a 5% down payment on a $385,000 house. Rinse and repeat.

There are some assumptions in there, and it ain't easy, but let's say it takes you a year and a half or two. After six years, you have three to four homes. That's a hell of a portfolio for a young age. 

In another world, if you can work elsewhere but want to stay in Colorado, give Colorado Springs a shot. You can get into a home for less here than in Denver. Anyway, those are my two cents. Good luck!