Quote from @Chris Hayes:
Hey guys !!!
New to the space but obsessed with the wholesale game. Plan to start there and make my way to flipping property plus holding property as well in time. Any advice out there is much appreciated and I no networking is key so any meet ups or times for lunch with anyone that’s down to help. INBOX ME AND LETS GET TO WORK
You’re receiving misleading information that’s constantly out there regarding wholesaling as (1) a low or no cost entry into real estate investing and (2) that success is predicated on hard work which anyone can do.
First, the basics. Wholesaling is NOT investing. Some argue it’s a JOB, some say it’s being a real estate salesman/broker without a license, but in any case to make money at it it needs to be a business. After 42 years as a real estate investor, syndicator, fund manager, and private lender here’s what I can tell you about wholesaling, as the term is used today
1. 99% + of the people who decide to try to wholesale property never make a single deal
2. The amount of knowledge required to successfully run a wholesaling business is way beyond anything taught by gurus in their seminars and mentorship’s, what’s needed is knowledge of real estate law, real estate principles, and basic real estate practices, real estate finance, construction knowledge, contractor pricing, etc.
3. Specific skills are required, most of which everyone believes they possess when in actuality most don’t possess at all; negotiating skill, analytical ability, marketing and sales skills.
4. To run a wholesaling operation on a basis where your return hourly would exceed a job greeting customers at Wal Mart requires CAPITAL. First, you will need earnest money when you get a property under contract. $100 doesn’t cut it anymore; to be considered in the mix think $3,000 - 5,000 per property under contract. Secondly, you’ll need to pay contractors to give you estimates as to repair costs; the days of the “free estimate” are long gone. And most importantly youll need marketing dollars. ‘Driving for dollars’, foreclosure and divorce lists, etc. are way overworked in this internet era. The successful wholesale businesses I’m familiar with spend an average of $10,000 monthly on marketing and advertising. Let me break it down; first you need an SEO enhanced website. The generic $750 sites available pre package are worthless. You’ll pay $3,000 for a website worth a damn, and $500-1500 monthly for SEO. Then since half of each Google results page is paid for (SEM), you’ll need to enhance you results with SEM at another $2000 monthly. Any list of potential leads you obtain for free is worthless, quality lists of say 1,000 contacts cost around $1500. Whose going to make all those calls? Success rate here are 0.5%, so 200 calls to a high quality purchased list could result in 1 deal. Most use cold callers, who if they speak understandable English cost $15/ hour. You may try bulk email, text blasts etc, all requiring ongoing monthly fees. Of course if revenue starts rolling in you can cover marketing costs with revenue, but figure on spending $30,000 on marketing before seeing a dime in revenue. And I haven’t even priced social media marketing!
So why is it that all these people are claiming that they, or someone they know, is killing it in wholesaling? Two reasons, first there are some large wholesalers who started years ago, spend A LOT on marketing, are VERY experienced and knowledgeable, and are earning a VERY GOOD INCOME in the wholesale business. This is not surprising, as people are also earning a very good income in plumbing supplies, accounting services, and smoothies shops. Knowledge, capital ability equals profit. No big deal there. Second, many people LIE. Especially people wanting to sell you something. Ever notice how people in multi level marketing ( network marketing) are always doing great? Ever notice how they’re either gone from network marketing or part of a different networking system 3 months later? Same thing.
