Should Beginners Wholesale Properties
There was an article on wholesaling I read the other day that has been keeping me up the last few nights thinking about. I actually agreed with most of what the author was saying, except for one major piece – that beginners should NOT start out wholesaling properties…
It made me think a lot about this business, students, why some succeed and others don’t… And the author is right, most people do not succeed investing in real estate. That’s the honest truth.
Several years ago, when I was at an event, listening intently to what the speaker was saying, a gentleman leaned over to me with his arms folded and said, “What he’s talking about DOESN’T work. I’ve tried it and it doesn’t work.” I leaned back over to him and said, “It worked for me…” He just starred at me puzzled. Then of course he was quiet the rest of the time. Afterwards he apologized and wanted to know how I did it.
See, I believe there is more to real estate investing than whats on the surface. Just because it doesn’t work for one individual, doesn’t mean the strategy doesn’t work for everyone. It just means the strategy didn’t work for that one person. Was it the strategy or the person?
The Truth About Wholesaling
Now, I’ll be the first to admit, wholesaling properties is not easy. Anyone who says otherwise has either never wholesaled a property or they are an exception and not the rule. It’s a tough business. Real estate as a whole is a tough business. It’s why most and when I say most, I bet 80 percent of the people who try their hand in real estate and spend money on getting the education, fall short of what they were hoping to achieve. It didn’t work for them. Why?
Was it the strategy? Was it the education? Was it the market or the area? What was the reason it didn’t work for them – but yet works for many others?
I believe it’s a combination of these factors plus one critical piece that most every real estate investor “want to be” fails to implement and in my mind is the difference between those who can’t get it to work and those who make it work.
There are several different strategies in real estate. No question, certain strategies are easier than others, but that doesn’t mean ANY of them allow you to sit around and collect a paycheck. All strategies in real estate require WORK! Plain and simple. Wholesaling requires work, yet is and will always be in my mind one of the best ways for beginners to start out despite what some might argue.
The reasons are simple. It allows ANYONE to make money, even the people who have nothing, no rich Uncles, no assets, no job, no cash, no nothing. Right now, unfortunately, there are a ton of beginning investors that fit this criteria. So they need a strategy that works for their situation. It is also the least risky. The idea is that you are flipping your deal to a rehabber / landlord and passing the rehab work onto them so they can fix it up and take on the risk of rehabbing.
Education is very important, without question. The wrong information can be very harmful. Several years ago, when it seemed like everyone was making money in real estate, books and educational material were popping up everywhere. Unfortunately, many of those books and the advise they gave only worked when times were good. Some of those strategies don’t work as well anymore. People selling pipe dreams and old antiquated advice will not help you be successful in this business. It can be hard to really know who is real and who is selling fluff. My suggestion… Ask for references, get proof and do your homework. You want to follow the investors who are in the trenches actively doing real estate deals.
Yes, education does cost money. I don’t know of any University you can attend at no cost or professor who works for free. Educators should get paid for their expertise. It’s just as important to make sure the University is credible. And it’s important to continue your education because markets change so quickly. It’s why real estate agents, attorneys, CPA’s and others are required to attend so many hours of ongoing education each year, so they stay on top of changes within their industry. Real estate investing is a business and is no different.
Certain markets are definitely easier than others. I know this from experience having bought in different markets. For instance… There are certain depressed markets throughout the country right now (St. Louis, Birmingham, Indianapolis, just to name a few) where you can pick up a property extremely cheap and have it cashflow $600 – $700 per month. These homes will then sell for $40,000 – $50,000 because the cashflow gives investors a 12%+ return which is better than what they are getting in their 401K.
These kinds of deals are only in specific areas of the country and wholesalers are making a killing in these areas because it’s easier to make the numbers work. These kind of numbers do not work where I live. So does that mean wholesaling doesn’t exist where I live? Not at all. It happens everyday. The numbers are just a little different. (higher prices, similar profit) It is much easier though to wholesale in certain areas because the numbers work better and you don’t need as much upfront capital.
The Key Ingredient To Success
While all these are great reasons and concerns a new beginning investor might question why he or she can’t get real estate to work for them, I believe it all boils down to a few key ingredients… #1 is Goals.
Goals are a key ingredient to success. Yet 95% of us fail to set goals. Goals can give you the drive necessary to achieve levels you wouldn’t have reached otherwise.
#2 I believe is Drive. Just simply getting out there and DOING IT!
That my friends is the difference between the guy who says it doesn’t work and guy who succeeds and is willing to put in the reps needed to achieve success.
See we are all conditioned to stay in our comfort zone because it’s comfortable and easy. Usually the things we want are just outside of our comfort zone and require us to work to get them. So the questions are,
“How Bad Do You Want It?”
“What Kind Of Price Are You Willing To Pay To Get It?”
I believe we can achieve whatever we want in life. The challenge for most people is that when things get hard or outside of their comfort level, they quit or give up and immediately say it didn’t work. They never push through those obstacles that hold them back and therefore it doesn’t work for them. By having a clear and defined goal with an action plan, those obstacles can be overcome and the end result is success.
- Would there be a Disneyland if Walt gave up?
- Would there be a light bulb if Edison hadn’t failed 1,000 times or quit after 1,000 (probably… 50 years later after everyone was sick of carrying lanterns everywhere)
The point is that it’s not the vehicle, it’s the driver. If it was the vehicle, no one would be making any money wholesaling and it would no longer exist. Anything of importance in life takes work. Real estate is no different.
Real estate is not for everyone. There is also a lot of hype out there about real estate. It’s just like anything else. It takes work and you’ve got to WANT IT, you’ve got to be willing to put in the work. So, do you want to make money in real estate? Well, that’s a question you have to answer yourself.
If it is, you need to set some goals. In setting these goals, you’ll be able to discover your weaknesses, your strengths, what obstacles you face, how to overcome those obstacles, what knowledge you need to achieve your goal, what sacrifices you need to make, how to prioritize the events in your life, what habits you need to change, etc.
This works in all facets of life. Not just business and financial. If you’ve ever wanted something but haven’t obtained it yet, start with setting a goal. You might be surprised where you end up.
Wholesaling is a great real estate strategy. It always has been. It works well for beginners and even those more seasoned. There is a lot to learn and a lot to know before you wholesale properties. The right knowledge is critical. It does require work as do all the strategies in real estate. Anyone that says you can push a button is full of it. It’s not so much the strategy as it is the individual overcoming their fears and pushing through the challenges they might face.
Wholesaling is a passion of mine if you can’t tell. And by no means is it the end all be all either. There are lots of great strategies out there. To me, this is one that most beginners should start with which is why I decided to explain everything in a step by step fashion, with real examples, and everything you need to do a deal, even my support. Ask me any questions you want. The only reason you won’t be able to do a deal is because of you.
So I hope you’re excited for the upcoming weeks. Now, go set some goals and watch for future emails as I walk you through the wholesale strategy. Don’t forget, if you have questions or comments, leave them below.