All Forum Posts by: Gustavo Munoz Castro

I have never been a wholesaler but I work with many wholesalers and are friends with a few wholesaler who run a successful wholesaling team in town so I might fit in the category of "I don't have to have eaten pork to have seen a pig run." 

In my opinion, many traits that would make a successful real estate agent can translate to being a successful wholesaler. Real estate agent transacts mostly retail properties where wholesalers mostly transact distress properties or vacant land. Their target buyers are flippers and investors. 

Here is the process (keep in mind, you can be the one person whom does these all, or outsource or have in house employees to do these):

1. Lead Gen: most successful wholesaler I know outsource lead generation. There are companies who will offer lead gen services at a far more efficiency than a single person. For instance, direct mailing. It may take a person average $0.5 material cost (card or paper and envelope, ink and postage) and plus whatever cost they view their labor cost is to send one mail out. And there are companies out there to help you send one mail out for $0.4-$0.5 and all you have to do is give them the parameters (zip code, city, etc.). They usually start out at 500 minimum per batch. Other lead gen methods are cold calling, social media, SEO (direct people who google "sell my house fast" to your website), signs and bill boards, and whatever methods you can use to let people know, YOU ARE BUYING PROPERTIES AT A DISCOUNT BUT WILL CLOSE FAST WITH CASH. The successful wholesalers I know spend about $10k to $30k a month to generate leads for their sales team to work the leads. Typically they need to do one or two deals a month just to breakeven from their marketing expenses. The successful ones do somewhere between 6 to 12 deals a month. 

2. Offer, the pitch. So once you get the lead, make contact with the lead, be prepare the lead can suck. Qualify the seller quickly on the phone and schedule an appointment to see the property. I think for someone who's starting out, that person can expect 12 to 1 appointment to closing conversion ratio and someone who's expert at it maybe 6-8 to 1 lead to closing ratio. You basically go see the properties, use the formula: ARV x 0.7 - improvement cost - assignment fee would be your offer. Now here is the battle, usually that number comes out to be around 30-40% of ARV. To many sellers, that could be a sticker shock. There are many scenarios can played out from here but a good wholesaler would negotiate respectfully and still stand firm on their ground. If it's unrealistic and not a good fit, they would not be hesitant to end the conversation on a good note and move on to the next lead/appointment. You would think, who in the right mind would take a 30-40% of ARV offer? The answer is more than you think. Many people are in all kinds of situation where some quick cash is way more important than hold on to a destress property that's not doing anything for them but causing pain.

3. Closing the transaction and exit. Once you and the seller sign a contract, now you have the options to either keep the property yourself, do flip or long term hold, or assign it to someone else if you don't have the capital to flip the property. You need to have a person to dispose the property for you, someone who has a connection to cash buyers and flippers. 

That covers the wholesaling process, besides sales skills, the successful wholesalers in town always value their reputation and relationship over anything else. This is not a regulated industry, so anybody can be a wholesaler. If a wholesaler screws around town, the big players will learn that very quickly and will stop dealing with the person. A good wholesaler that never runs out of buyers are the one who always disclose everything and do what they say. 

From my perspective as a potential buyer or a real estate agent who represents a buyer, what I am looking for from my wholesaler partners is that they bring me deals that fit our buy box consistently, always disclose everything they know and can close deals on time. The wholesaler usually understand construction and development so they know what potential issues we might run into for a property and they make sure to check those out for themselves or they let us know that this could be an issue. I typically let my wholesalers make $15k-20k assignment fee per property. 

 @Les Jean-Pierre I would recommend using direct mail and even cold calling properties right when they enter pre-foreclosure. This way, you are one of the first to contact them and offer a solution. What has also been successful is creating a list for likely foreclosure homeowners like high LTV or no equity lists and marketing to them

@Jon Mekeel - I'll give you two-in-one answer: get on the list of all wholesalers you can find and watch their emails - periodically, one will make the mistake of sending one with their whole list of recipients in the TO field. You'll be able to get your hands on hundreds of email addresses in one swoop. Hint: learn to use the BCC field or a CRM so you don't make the same mistake. 

Bonus #2: if you send cards or do cold calling and use VA, have a script for people who are not looking to sell, but to buy more - those are also cash buyers often. I get cards (and call them back) and calls to sell my investment properties, and I tell them "I'm not looking to sell, but to buy more and to add me to their buyers list", ...and they don't know what to do, don't collect info, etc. Wasted opportunity for the wholesaler.

Hey Ben,

Congratulations on getting started! I took a BP bootcamp and am part of a Mastermind with Henry Washington; What I've been doing is downloading lists (I create them based on my criteria) from DealMachine or Propstream. I take those lists and import them to Batch Dialer or Need To Skip and cold call. If you want to do postcards, DealMachine has a way that you can send post cards directly from the app/site. However, it's not the best in terms of editing the postcard. 

I have the opportunity to hire an appt setter on a commission basis. Compensation would be based on the successful closing of flip properties. what would be fair compensation in this case? any ideas?

@Gustavo Munoz Castro
Those are good points! Thank you for sharing that with me. I'll steer away from that then with the COLD (Broad) leads.
I find that my dialer app I use has a hard time reaching the VM. It rings for 31 seconds and disconnects id say about 75% of the time and I double tap each number and still wont get through to the VM box sometimes haha

Cold calling and getting wholesale deals under contract is really the only thing to do to get started. Buyers come out of the woodwork once you get the deals under contract in Metro Detroit (assuming that's where you will be working). Selling your wholesale deal is the easiest part. Putting the hours in to get those deals under contract is a bit harder. Don't, I repeat DO NOT, start by trying to find the buyers and building a buyers list. Also, until you make the first 100 cold calls don't bother trying to outsource it to a VA in the Phillipines, there are too many moving parts at the beginning.

In order:

1.  Cold call (order Propstream and start there)

2. Letter write, manually without typos

3. Drive for Dollars - then implement 1 and 2 above.

4. Collaborate with other wholesalers at local meetups.  Meet the guys and gals doing it, copy them ruthlessly.  You can find them by signing up for wholesaler lists near you.  STAY LOCAL.