Quote from @James E.:
After Browsing through many discussions that pricked my interest one stood out among the rest and that was "The 5 Biggest Mistakes New Investors Are Making Here In The Forums" by @Jonathan Greene
where he wrote about
1. Writing too little or too much in a post looking for answers
2. Asking for a mentor without having anything to give
3. Being fragile when you don't get the responses you want
4. Asking questions without researching how often the same question has been asked
5. Posting the same question in multiple forums.
After reading through, I learnt the lessons and applied it as regards questions I would normally ask about my interest in wholesaling as a strategy to starting in the Real Estate Industry, I realize a whole lot of persons had same questions and I learnt from the Responses on the various discussions.
It also changed my perspective in the way I approached the vets in the house, right now I just want to connect, I mean we are seeking financial freedom and for most of us that is time to do what we want and if I don't have regards for your time by being valuable to you, then I don't regard you enough. In that regards I would rather prefer to build a mutual beneficial connection rather than one that only benefits one side, even as a newbie there's something that can be offered that is of value.
And I would rather that you're blunt rather than sugar coat things, in several discussions I found instances where wholesalers took advantage of sellers through P&SA contracts, inspection clauses and closing dates and were unable to fulfill there obligations to the sellers and preventing the seller from getting other buyers during the validity of the contract, I means it's quite unfair.
But there where other instances where wholesalers had built credibility by the manner in which the death, I mean that is what builds a good relationship and make room for future referrals.
I would still like to know your thoughts on Wholesaling and wholesalers, please do not sugar coat, let it out just as you see it.
it.
--James E.
@James E.
Hi James,
I'm not a wholesaler... just an investor who has dealt with wholesale deals.
My broad perspective is that wholesaling is a marketing job - where the wholesaler (on the surface) is trying to help a seller, but ultimately is trying to do that in a way that ends up costing the seller more money than it should have, had the seller taken more traditional means to achieve that sale. In other words, a wholesaler needs to find a deal where they can get the property under contract for an amount that is low enough that they can not only cut themselves in on the deal (assignment fee, etc), but also pitch it to an investor who sees enough profit in the deal to be worth it to buy it from the wholesaler. This is often a losing proposition for the seller, unfortunately.
Granted - when a house in in disrepair and would be hard to market otherwise, it is a path forward for the seller. But usually wholesalers are preying on the desperate - the ones who had a loved one die and can no longer afford the house, or can no longer take care of the house, or who are behind on their mortgage and are about to go into foreclosure, etc. One could argue that the wholesaler is "helping those people out"... but I would suggest that the wholesaler is more exploiting the seller.
I have only seen the back end of this where we were the buyer - but I had to deal with the exiting tenant in the situations and truthfully it is usually a sad situation. Often the seller isn't really dealing with reality well - saying 'mentally challenged' is probably an over statement - but they are so desperate, or in such a bad way for whatever reason, they will grasp at any straw put in front of them.
I think almost any seller would be better off just listing their property on the market and would come out ahead financially as opposed to going through a wholesaler.
So that is some 'bluntness' on wholesaling from my perspective.
The other observation I have on the job itself is that it takes a lot of effort. As I said, it's a marketing job. You not only have to find your seller, you have to find your buyer. I've read where the response rate to wholesalers cold calling a leads list is some fraction of 1%. So for every 100 - 1000 phone calls you make, you may find 1 interested party. Then you have to try and put a deal together from there - which also has a fractional success rate. Most people call the "Non-Owner occupied home list". I happen to own 25 properties as an investor. I get 3-5 calls a day from people who think I would be interested in selling my 'non-occupied' home - but as an investor I have no interest. So imagine how many of me there are out there you will be calling where you are wasting both my and your time. I would guess 80%+ of the non-owner occupied homes are owned by investors - just a guess. And if I am getting 3-5 calls a day it gives you an idea of the competition that exists in the marketplace. What is the likelihood that you were the first person to reach someone to pitch them your offer? Pretty low. Many people outsource this effort to call centers - because they would rather pay to have someone else do that dirty work. There are other ways to do it - driving for dollars, snipe signs, mailers, etc. But at the end of the day you are one big marketing company - so you have to decide how interested (or dedicated) you are in putting in A LOT of effort for a very limited return. Yes, one deal can be worth $10,000... but it's definitely not as glamorous as it looks like on the surface.
Hope it helps!
Randy
