​3 Reasons Why Wholesaling is the #1 Way to Start in Real Estate

In my opinion, everyone entering residential real estate should first began sourcing property for other investors. Since most people start out with little to no capital, this is the easiest method of entry and it also steepens one’s learning curve tremendously. By no means is it easy like a lot of gurus portray, but it is well worth it to master these critical skills. While you could start off going right into rehabs or rentals, your foundation will not be as strong as it would if you started wholesaling real estate.

Here’s why:

1. You Learn Real Estate Marketing

Wholesalers are not investors - they are real estate marketers. They test out the markets using different strategies to find motivated sellers, uncovering tons of deeply discounted properties. Most know that the money in real estate is made on the buy, and you never want to bank on appreciation as the profit for any deal. That’s simply the icing on the cake. Therefore, you MUST know how to find discounted property and understanding the basics of real estate marketing can greatly increase your chances of doing this.

All of the top players I know in my target areas are excellent marketers and they know how to get properties for pennies on the dollar with little effort in finding them. If you start out going directly into other forms of investing, you may not get all the knowledge you need in this department. Real estate marketing is key and essential for a thriving real estate business.

2. You Learn How to Analyze a Deal

Some people are probably going to read this and say that a lot of wholesalers they know do not have a clue what they are talking about in terms of deal analysis. They present their buyers with undervalued repair costs and overvalued after repair values. This is very true and unfortunately, it portrays wholesalers as being pretty incompetent and sketchy. So, I’ll say that the good wholesalers are the ones who really learn how to analyze a deal. Once you get good at wholesaling and complete a few deals, you will have a better grasp on how to properly do this and it will be huge for your investing business. If you don’t take the time to study and learn this, you will forever have issues in your business and probably have a pretty short-lived investing career. I speak more about deal analysis in a similar post here.

3. You Build Your Team

From the first time I sent out a marketing campaign and began going to REIA meetings around town, I have always been focused on perfecting my craft and building a team for the future. Over the course of about a year, I have built a Power Team (as Robert Kiyosaki calls it) including an attorney, insurance agent, realtors, contractors, accountants, inspectors, appraisers, virtual assistants, etc. I’ve assembled this team to expand my business for when I begin actually acquiring these sweet deals that I find. Without this team in place, my business would not be very profitable. This is definitely the most important point because without a team, you will not grow. You need to leverage to skills and talents of others. The relationships should be mutually beneficial; everyone should win and your successes will compound over time.

Conclusion

Hopefully these points have helped you to see why wholesaling real estate sets a phenomenal foundation for your investing career and why it’s important to master those skills. The most successful real estate investors I know personally have started their career wholesaling property and I’m glad I learned from them to do the same. It gives you the time and resources to build momentum and expand your business into rentals and rehabs if that’s the route you want to go. It opens the door to tons of discounted property and a lot more value to potentially add to your business. Thanks for reading and stay tuned for next week's post.