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Wholesaling can change your life. And this is how…
Today, we'll delve into the experiences of two successful investors, Ryan and Megan, and how they managed to create a thriving wholesaling business from scratch. Their journey started off sort of impromptu, but it drastically changed their lives. With wholesaling and real estate investing it's enabled them to establish financial freedom.
We will also cover various strategies they employed to find buyers, build a massive buyer's list, and the importance of having the right mindset and approach in this business.
What is Wholesaling?
Wholesaling real estate is a real estate investing strategy where you, as the wholesaler, get a property under contract. Typically you get it off-market so you can have a more lucrative deal. Then you pass it off to an investor who has the funds to close on the deal. The investor pays you a fee for the privilege of closing on an amazing rental property or investment property that needs work. You get the property at such a great price, and they pay you a fee for finding the deal (e.g., $20,000).
Ryan and Megan's Journey in Wholesaling
Ryan and Meg have collectively taken down numerous rental properties and managed to close almost 400 wholesale deals. Their rental portfolio has become pretty substantial along their journey, but we'll save that for another blog post.
They have gone direct to the seller, had all the conversations, and found amazing deals. In this blog post, we will lean on their experiences and learn how they found their first buyer, developed their buyer's list, and more.
The 30-day Wholesaling Challenge
Ryan found his first wholesale deal within 14 days, starting from scratch with no buyer's list. Instead, he focused on finding a great deal, and then he looked for an investor to buy it.
Note: Can you complete a wholesale deal as fast as Ryan? The 30-day Wholesaling Challenge encourages you to try.
He found his first potential buyer through Facebook Marketplace. A realtor saw the deal and referred their investor. This led to a sale, and Ryan started building relationships and getting referrals for future deals.
Forging a good relationship with your buyers is key to turning them from a one-time buyer into someone who consistently sticks around for more deals.
Important Legal Note: As a wholesaler without a real estate license, you can only advertise properties you have an equitable interest in (i.e., properties you have under contract). It is crucial to have the property under contract before advertising it on platforms like Facebook Marketplace. Also, check the laws in your areas for wholesalers because each state is different when it comes to restrictions on wholesaling real estate.
Building the Buyer's List
When Ryan started wholesaling, he did not have a cash buyer's list. Instead, his first three buyers came through referrals:
- A realtor's referral found through Facebook Marketplace.
- A referral from a friend, whose uncle was interested in investing in their area.
- A referral from another investor who liked their deals.
From these connections and continuous networking, Ryan developed a large buyers list. However, they mainly focus on 10 repeat buyers who make up the majority of their transactions. This follows the Pareto Principle: 80% of their deals come from 20% of their buyer list (the heavy hitters).
Treat Your Buyers Right
Although Ryan started with no special treatment for their buyers, he eventually realized that their core, repeat buyers deserved consistent assignment fees. Initially, he reduced his assignment fees to establish relationships with these buyers, but over time, he understood that he could do fewer deals and still make more money if he increased his assignment fees back to the original amounts. Now, he maintains a consistent assignment fee of $5,000, regardless of the buyer.
Key Takeaways
Wholesaling can be a lucrative real estate investing strategy when done right. There are two primary aspects of creating a successful wholesaling business: finding great deals and finding the right buyers to close those deals. Following Ryan and Meg’s journey, you can take away the following points:
- Start by focusing on finding fantastic deals; the buyers will come.
- Use platforms like Facebook Marketplace, social media, websites, and more to advertise your properties legally and effectively.
- Network and build relationships, as referrals play a significant role in finding buyers.
- The Pareto Principle applies in the wholesaling world; focus on the buyers who bring in the most business.
- Be consistent and fair with your assignment fees for all buyers, especially your heavy hitters.
By understanding and applying these lessons, you too can create a thriving wholesaling business and ensure your success in the world of real estate investing. Happy wholesaling!