Getting Started As A Wholesaler For Beginners
Copyright © 2017 Lex Levinrad, Distressed Real Estate Institute ™
When you start out as a new wholesaler, the first thing that you need to do is find other local wholesalers in your market.
Wholesalers are quite easy to spot. You will find them at your local REIA meetings advertising themselves to new investors. Introduce yourself to them, and sign up for their wholesale deals email blasts. That way you can learn what other wholesalers are marketing. Learn how to recognize the experienced wholesalers from the beginners. Notice the “cut and pasters” that only market other peoples deals versus the wholesalers who seem to constantly have new deals. Google “wholesale deal” and the name of your city or town and find out who the players are in your target market. Visit their websites and blogs and sign up for their email blasts. Observe and learn from their deals where they post them and how they market them. Follow them on Facebook, Linked in, Instagram, Pinterest and You Tube. Find out where and how they post their deals.
Go on Craigslist and look for wholesalers who are posting properties for sale. While you are on Craigslist, look for motivated sellers too. Use keywords like “investor special”, “must sell”, “handyman special”, “need to sell”, “motivated seller”, “needs TLC”, “fixer upper”. Call these sellers and see if you can make an offer to buy their property. Notice how many of those people posting ads are other wholesalers. Learn from the phone call, learn from the conversation. See what they say when you call them. Learn how to sound like a wholesaler who talks to investors.
Look for bandit signs in your target market. Drive around your target market and learn your target market well. Know where the zip codes change, where the subdivisions change. Know how many properties are abandoned or vacant or boarded up. Know how many are for sale and at what price. And know which houses are for rent and the price. Look for lockboxes on doors. Look for stickers on windows which could indicate new bank owned properties coming on the market. Know what cash buyers pay in your target market and know what you could sell a house fixed up for in your target market.
Notice the motivated seller bandit signs that say things like “we buy houses for cash”. Also notice the handwritten bandit signs that say, “investor special” or “handyman special” or something to that effect. Call these wholesalers and introduce yourself. Tell them that you are an investor and you also wholesale. Ask them if they are okay with you marketing their deals to your cash buyers and finding a buyer for their deals. Ask them if they would be willing to help you sell your deals by advertising your deals to their buyers. A typical deal split is 50/50 although many wholesalers won’t want to give up 50% of the deal. We split our deals 50/50 and we fund them for free in our Partnership Program.
On Google, type in “sell my house” or “need to sell my house” or “sell my house fast” and the name of your city or town. See what results display and who is paying for pay per click advertising. That is your major competition. Those companies usually already have big buyers lists (they wouldn’t pay for advertising if they didn’t). Don’t call them. Just learn from their websites how they market for sellers. And then do the same. Remember that these companies are buying houses from motivated sellers and then flipping these houses to cash buyers. You want to be them so watch what they do and learn so that one day your phone rings like theirs with motivated seller leads too.
Build up your cash buyers list. Take your wholesale deals or other wholesale deals in your target market and post them for sale on Craigslist. List them on your site or blog for sale. The more properties you list on your site and the more properties you list on Craigslist the more likely you will get a phone call from a cash investor. The more bandit signs you put out with “investor special” or “handyman special” the more cash buyers will call you. Strive to get 5 new cash buyers per day. Make sure you are saving their info in a CRM. If you can get 5 new buyers a day then know that after one year you will have over 1,800 cash buyers. At that point you will be able to move wholesale deals relatively easily (and make good money doing so).
Be patient. It takes time to build a list of cash buyers. If you want to make the learning curve shorter then place ads on Ebay Classifieds, Backpage and Classified Ads in the newspaper. Old timers still read the newspaper. And some of them have lots of cash to buy a rental property. If you want to grow your list exponentially (and you have cash to spend on marketing) then add Facebook Marketing and Google Pay Per Click. Your cash buyer list will grow like it is on steroids. However the quality of your cash buyers will not be nearly as good as building your list the old fashioned way. If you take the time to have 5 meaningful conversations with cash buyers every day and you take notes on what properties they are looking for including city, price, condition etc. then it will be much easier for you to sell a house. If you rely only on pay per click marketing then your list will grow but many people in your database will be newbies who may never buy a house from you.
For advertising and pay per click You will need to spend some money to make this happen though. Figure $10 a day for a Facebook Ad and $10 a day for A Google Pay Per Click Ad and you will be spending $600 a month. If you don’t have the budget then stick to Facebook marketing without spending money on ads. Post deals on every wholesale deal site you can find on Facebook, Linked In and other social media sites. Try not to spam. If you post the same deal multiple times a day you will just annoy people. Rather focus on one key post with an ability for the user to click on the post and visit your site to see additional pictures and information about the property. Make sure if they do visit your site that it is easy for them to sign up for emails to see wholesale deals.
With all of this marketing for buyers your phone will be ringing off the hook. You still won’t be making any money though – unless you can get one of your cash buyers to buy another wholesalers deals. This is why you need to network with other wholesalers. It is also why you need to learn how to source and get deals yourself. Learn how to bid for properties online on sites like auction.com and Hubzu.com. Get your real estate license so that you can search the MLS for free and advertise the sale of real estate (legally) in your State. I recommend to all of my students that they get their real estate license first before they start marketing for buyers and sellers.
With all the buyers and sellers calling you, you will need a place to keep track of all of your leads. You need a place to store buyers and seller’s info including their names, email address, phone number and property address. If they are buyers you will need to know their buyer’s criteria and be able to take notes. If they are sellers you will need to be able to take notes and follow up on your calls. They database or system that you use to keep all of your leads is called a CRM. It is useful if your CRM can also send emails and have capture pages and web sites all linked to the CRM so that you can have everything in one place in a complete real estate system. We use a system called Lex Real Estate System.
When you start out calling and talking to buyers and sellers you will hit a wall. You will get frustrated. And you will most likely want to quit. 90% of newbies quit within a few months. If you have a full-time job then there is a pro and a con to that. On the one hand, if you are working you probably have some money to set up systems and implement some of these ideas. However, what you lack is time. If you don’t have money, or if you just graduated college or you are in between jobs or you have been laid off, then you may have lots of time but not so much money. This is another reason why going to REIA meetings is very beneficial. You will meet new wholesalers with lots of time and no money. And you will meet investors with lots of money and no time.
Understand that there is a synergy there. People that work full time need things done and the people who don’t work could be doing those things. If you go religiously to your REIA meetings, over time you will meet other investors and become friendly and some of these investors may become bird dogs, business partners, JV partners on deals or private lenders. Networking pays off. But only if you attend all the meetings and are willing to be patient. Remember most newbies quit within the first 3 to 6 months so if you can stick it out then you are in good shape. Also remember that it will take time and a learning curve to start making real money as a wholesaler so be willing to put in the time and invest in your education.