First off, I'm amazed that this post generated so many responses. I was just venting. I'm way over that deal by now. Our group has closed two since then so you've got to just move on.
Second, people seem to ask what wholesalers do? The answer is quite simple. Real estate wholesalers do exactly what wholesalers do in every other industry in the world. They provide a large quantity of goods at very low prices. If you are a flipper and aren't working with a good wholesaler you are not making as much money as you should be. Simple as that. This is a side job for almost all wholesalers. Very few do it with an eye of getting into flipping or furthering their real estate careers and the ones that go that route take a big risk. Good wholesalers/flipper teams are visionaries. A wholesaler will go into war zones that are entirely undesirable because they envision potential. They will team with a good group of flippers to turn over a neighborhood. The gentrification process starts with visionary wholesaling. A wholesaler sees potential, teams with a group of flippers and a financier and go into the ghetto, buys 12 properties at a time and turns the whole damn neighborhood around. But a wholesaler also has to get his hands dirty. This includes what some of you will consider ethically questionable behavior. For example, in the deal that started this post everyone is accusing us of taking advantage of an elderly widower. Some facts may have been lost in the translation. First, he called us. Second, he said he wanted $95,000 for his house. Third, his daughter had POA and signed on the deal if we could close in 7 days because she wanted to move him into her house immediately.
Also, I've had acquisitions guys who are the ones who actually go into the ghettos and have been threatened, gotten stuff thrown at them and one was even mugged. So the wholesalers do the dirty work. But it is a necessary step in real estate as it is with every other business. Any idiot can go to nice areas, find a derelict house, fix it up, and turn a small profit. How many small time flippers that are doing two to three deals at a time are willing to go into dangerous neighborhoods and fix up a house without ever knowing if the area will actually improve. Wholesalers take that risk all the time.
Third, this is a side job and real estate is all about money. My actual day job exists so that I can do good things for good people. If you are in real estate to make everyone happy, you're in the wrong business. That's why you shouldn't do it full time. The supplemental income I earn from this allows me to work my low salaried day job because there I get to do actual important things that better my community. Speaking of my day job, I am a licensed attorney working in public employment while overseeing two non-profits. I didn't want my career to be about money or I would have gone into the private sector. I needed extra income so a group of friends and I launched a virtual wholesaling business. It's maybe 5 hours of work a week and provides enough income that I don't have to think about the private sector of law, which is just as much a money hungry business as real estate.
Finally, wholesalers work for flippers. We do not work for the seller. If we cannot find a seller willing to sell at a discount for the benefit of a very fast close and hassle-free, commission-free, closing-cost free, and moving-cost free selling experience, we move on. We spend about $10,000 a month in marketing in 8 different markets throughout the country. When a market changes, as obviously the market that started this post has changed, due to seller education and overabundance of competition, it's time to find a new market. I was pissed because that market was so good for a full year. The selling prices were consistently between $80-110. Flippers all wanted the properties, the ARVs were very high compared to the selling price. So now more and more startup flippers and wholesalers have flooded it and the market is more or less dead. The marketing campaigns, direct mail, IP targeting, direct phone calls, will all stop in that area and we'll look for another area to develop. Move on and advance while continuing to grow. That's the goal.
