How I Built a Wholesaling Business

Exactly one year ago today, I closed on my first wholesale deal. It was a deal I lucked into really. A month prior, I was introduced to the idea of wholesaling from one of my insurance clients (I owned an insurance agency for 8 years). This client operated a large wholesaling company that, at that time, did over 200 deals in 5 states. After researching the idea on Bigger Pockets, I wasn’t too excited about it. It seemed like wholesaling was a pretty polarizing topic. I liked the idea of getting into real estate investing without using my own money but it seemed like a bottom feeder position (my perception has since changed). I spent hours and hours reading about wholesaling and learning the logistics of how to put a deal together.

One late Sunday night while watching the football game, I was browsing through the FSBO ads on Craigslist. I saw this house that was partially rehabbed. I did a quick Zillow search to get an idea of the value and the asking price looked like it was a good start. I texted the owner that night to see if the house was available. He immediately responded and we met the next afternoon. Long story short, I got the house under contract and sold it to the larger wholesaler. It took about 3 weeks from contract to close and I made a quick $7250. During that time, I found another property on Craigslist which I got under contract and sold to the same investor (In 12 months, those are the only 2 deals I’ve found on CL and I look at all new property postings!). In November I had a contact I met here on BP bring me a deal which we JV’d and split 50/50.

At this time that I’m closing these 3 deals, I’m having a mid-life crisis with my insurance agency. I loved the product and working with the clients, but I was bored and did not enjoy the daily grind involved running the agency. I was ready for a switch. So last Nov-Dec as I’m running the agency, I’m also learning as much as I can about wholesaling. I started driving for dollars and trained 2 bird dogs to find vacant and/or run down houses. We got out over 600 hand written letters in those 2 months. I was getting a decent response rate and started booking appointments to view houses between my insurance appointments.

Around Christmas break, I decided I needed to devote my physical and mental energy into one business; both businesses were being cheated by not being focused 100% on either one. I made the decision that starting January, I was going full time into wholesaling. I did not know what the results would be but I figured that if I WORKED HARD, STUDIED HARD, and was super COACHABLE, I could succeed.

The first quarter was a grind! I purchase a small list of 250 absentee owners to mail. I hand wrote ALL those letters. I continued to drive for dollars and chase down the returned mail. In January, I closed on deal from driving for a huge $3,000 profit. My emotions were all over the place; doubt, fear, anxiety, wonder. Did I make the right decision? That 1 deal was a third of what I was used to taking home. I continued to grind, learn more about my trade, and networking with buyers and investors. I ended up doing 6 deals for $30K in the first quarter. Nothing crazy but it paid the bills.

As I continued to work hard, study hard, and learn from others, I got better at closing deals, finding the good prospects, and selling at higher spread to investors (yet still leaving plenty of equity in the deal for them). In mid March, I started spending a lot of time communicating with another wholesaler (Justin) in my area who was crushing it. We spent a lot of time communicating and I learned a lot from him. I found a monster deal but I had no access to the property and had to close on it before I could market it to an investor. Because of my track record, Justin believed in me and funded it without seeing it; it was a huge deal and he figured he couldn’t go wrong. It was a hoarder house that took 7 large dumpsters to clean out. After cleaning it out, I emailed it to my buyers and we had 5 full offers within hours. It closed a week later and we split a huge profit.

That money really got the ball rolling. I started closing on my properties instead of assigning them. This allowed me to clean them out if needed and increased my average profit significantly. I increased my marketing from 250 letters a month to 2000. Over the second and third quarters, I closed and resold an additional 15 houses.

Around the middle of the year, I started to envision what I wanted my business to look like. I wanted a business that was able to run without me so I could tackle larger real estate challenges. In order to achieve this vision, I needed people. One of my mentors in the insurance industry told me the key to growing is to hire people better than you. So I went after Justin. We were both at a point where we needed to hire someone to grow. My thought process merging with another wholesaler was that Instead of dealing with the hiring and training of someone hoping they catch on quickly, why not combine our skills and knowledge. We would be way ahead of the game putting our skills together.

So on October 1st, we officially combined out businesses. And it’s been one crazy month. When you work alone, you are free to do whatever you want and organize it whatever way works for you. As a team, we quickly realized we needed systems in place so we were on the same page. It took time and focused effort, but we put buying and selling systems in place. We have marketing systems and follow up systems. For the first two weeks, all we talked about were systems. Despite the mess of getting on the same page and merging the two businesses, we have 9 contracts in the pipeline in month one. Our goal is to do 100 in 2017 yet not being a slave to the business.

In summary, and this applies to someone who wants to be a sole-entrepreneur or someone who wants a large company, take these few keys to the bank with you:

• 1)Network and learn from local investors
• 2)Invest in your business; we just spent $15K for a mastermind and got our money’s worth after our first meeting
• 3)Market consistently and follow up regularly
• 4)Work harder than you know how to until you’ve built your dream
• 5)Believe you can do it and don’t give up
• 6) ACT- get out and do something!