ATTENTION NEW WHOLESALERS - STOP BUILDING A BUYER'S LIST!

ATTENTION NEW WHOLESALERS - STOP BUILDING A BUYER'S LIST!

You can always tell when the guru circuit has passed through town because our phone starts blowing up with calls from wholesalers asking about our buy criteria. I have absolutely no problem with the guru's or paying for education. For many it provides some confidence, a system to fall back on, and some frame of reference to operate in. What I do have a problem with is that so many calories are burned building a buyers list and so few on actually finding deals.

We buy houses in Springfield, MA and we, along with every other rehabber or renter, are looking for a deal to buy everyday. Believe me I know that wholesaling is hard anywhere in the country, but when you have to deal with the highly skeptical, scam-wary, hardened New Englander it can seem even harder. To survive in this business you need to make money. To make money you need to collect assignment or wholesale fees. To collect those fees you need to have a deal to sell. (I personally think that the best professional development is to first fix and flip a property to sell or fix to rent for your own portfolio, but that is fodder for another blog.)

So why do new wholesalers spend their time building buyers lists? One is because the guru's say so. Two, because it provides a sense of accomplishment that you are actually doing work as a new real estate investor. Three, calling prospective sellers is damn scary!!

Full disclosure - I was scared too and often avoided answering the phone. I finally came to the realization that it is pretty hard to get a house under contract if you don't talk to sellers. Tucker Merrihew's RealDealz podcast has a Direct Mail Greatest Hits segment where he plays back some angry caller messages. That was a huge help for me to put everything in context and learn to laugh it off. You will get angry calls, but just have fun with it. I even contributed some calls to his podcast. Study sales from guys like Zig Ziglar, Brian Tracy and Jeffrey Gitomer. Or a hire a guy like Claude Diamond as a mentor who will do role plays and teach you effective techniques where you remain in control. Ultimately though it is about practice …. picking up the phone when it rings or dialing out and talking to at least five prospects a day. If you do at least that then you can go back to building your buyers list.

What is a Deal?

So what does a deal look like? For us, we subscribe to the 70% rule that is prevalent in a lot of real estate investor circles and on BiggerPockets. It is ARV (After Repair Value) multiplied by 70% minus the repairs. For example, if a fully rehabbed house could sell for $200k, then 70% of $200k is $140k and if our estimated repair costs are $50k, we want to buy for $90k or less. As a wholesaler you want to be getting this house under contract for as much under $90k as possible. You may want to subscribe to a 65% rule where you just sub 70% in the calculation for 65% to ensure you are factoring for your fee. You may just want a flat fee of $5k or $10k. BiggerPockets has a great Wholesaling Calculator on its Analyze tab that is quite helpful for this too.

How to find a deal?

How to find deals is also entirely another blog. There are so many different ways to source deals and you should be deploying multiple strategies. Some strategies are direct mail, auctions, website, social media, Craigslist, driving for dollars, networking, probate, FSBO (for sale by owner), and the list goes on. I don't recommend deploying all of these at once, but rather take one and get it set up, get good at it, and then add another strategy. BiggerPockets Podcast Episode 147 with Chad Carson was on "7 Ways to Find Incredible Real Estate Deals."

You have to make offers and a lot of them. 20 offers a month should be your absolute minimum. Learn to take rejection. A 'NO' is better than a 'MAYBE'. You will find that 'NO' can become a 'YES' in time if you remain professional, polite and persistent. Make those offers and follow up in a few weeks and again in a few months.

Co-wholesaling can be another option where you ask a fellow wholesaler if you can help market their property. If you find them a buyer you get a finders fee. Great way to use a real property with real numbers and develop buyer relationships.

How to Pitch a Deal?

NOW you can start building your buyer's list because you have a real property and real numbers to discuss. If you truly have a deal it won't take long to find a buyer. If your prospective buyer declines ask them what about the deal they don't like and get their buy criteria down in your notes. Ask for a referral for a buyer who may like this property. You can run the hypothetical scenarios all day long, but this is where you really learn with a real property and real numbers. Sometimes you have a true deal, but it requires a particular kind of buyer. Some other places to pitch your deals:

Local Real Estate Investor Associations: many will have a website or closed Facebook page that you can pitch deals on. Also announce your deals at their meetings or during the networking breakouts. Also think of your surrounding groups that may have some cross-over into your area.

postlets.com: great site do develop the marketing info and it hits a bunch of relevant partner sites. What is also nice is it is easily shared to social media platforms like Facebook.

craigslist.com: the Postlets site lets you copy the HTML to post to Craigslist

BiggerPockets.com: Marketplace is a great spot to cast a wider net

FlipNerd.com: has a wholesale deals section

Networking: finding rehabbers and flippers (or agents that work with them)

In summation, there is a lot more work required in finding a deal than building the buyers list. Unfortunately, most new investors spend so much time on the list and not enough time on the money maker - finding deals. Find the deals and the money will find you!!