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Capital for wholesaling?

YoungPharmD20

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I'm sure people have started with zip and ran it up from wholesale profits.
But what is a reasonable amount of cash to start wholesaling with? Considering contracts and other things needed to close the deal.
Ive read many recommended books from here over the past 4 months and i feel like I'm ready to execute.
Not sure if it is necessary but i will be opening an LLC next week.

I hope some experts on here can shed some light my way, thanks in advance

cheers
 
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WriteThatDown

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By no means am I an expert... but I've dealt with a few wholesalers before.

I would imagine a lot of your money, especially if you're just starting, should be spent on advertising to get your name out there. Throw up a website: they're cheap to make, give you a little credibility, and are a resource for both people looking to dump a property, as well as the investors you're looking to turn these properties to. I would check for a domain that includes the geographic region you're in, and work in your business. Eg- mycityhomebuyers.com

Print business cards. ALWAYS have them.... Seriously; always. Your name, business name, phone number, website, and email.

From there it's getting people to your site/call you on the phone and put a deal together. You can do this different ways. Road signs (think campaign signs with "We buy houses!"), postcards, newspaper classifieds, Craigslist, and online ads (FB, google, etc). As with any business, there's all different ways of advertising. You just need to pick a few routes and start trying. Make sure you keep track as best you can. When you get someone to call, ask them how they found out about you.... Word of mouth, online ad, street sign by their hardware store, etc.

So, I really didn't answer your questions with a dollar amount.... don't really know if anyone could. But I would pick a few ad channels, and decide how much you want to spend, and analyze the results. Determine the most cost effective avenue, and scale.

One other thing to keep in mind- Don't spend ALL of your time finding deals only; that is only half of the equation. You need to put together a list of quality investors/developers that you can turn these deals over to quickly. If you're just starting out, I'm assuming you're going to try and put something under an assignable contract. You'll probably have 30, 45, or 60 days to turn that over to an investor... not a huge amount of time in real estate. Have a good group of investors a phone call/email away makes your job a whoooole lot easier.
 
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YoungPharmD20

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A few grand, it's 10x harder than you think, and you'll run into problems that aren't covered in any books.

Yeah ive heard, ive been reading alot on that on biggerpockets.
There's just two things im trying to weigh around in my mind and I would like to get some opinions:

1. Why would a seller sell to a wholesaler that gives them a time frame of 30-60 days vs someone with quick cash, is the seller immediately relived of the property? and considering that the deal is a pass through escrow wont they shy away from the deal, or are they unaware?

2. When that contract expires are there any repercussions? Can you just walk away from the deal? i've read and heard there isn't any consequences but i think thats too good to be true.

Any input is appreciated.
 
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rc08234

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Yeah ive heard, ive been reading alot on that on biggerpockets.
There's just two things im trying to weigh around in my mind and I would like to get some opinions:

1. Why would a seller sell to a wholesaler that gives them a time frame of 30-60 days vs someone with quick cash, is the seller immediately relived of the property? and considering that the deal is a pass through escrow wont they shy away from the deal, or are they unaware?

2. When that contract expires are there any repercussions? Can you just walk away from the deal? i've read and heard there isn't any consequences but i think thats too good to be true.

Any input is appreciated.

You don't act as a wholesaler. This is my opinion and only my opinion. If you tell them your going to try and sell their property 99% of the time they will tell you to F off. The way I do it is I work for a house buying company, I have to run everything by my "boss" I have very good relations with my cash buyer. I'll comp the house out and guessitmate repaires by what they say, if i think it can be a deal I'll go check it out, I usually bring my cash buyer along as he knows his rehab numbers. Everyones numbers will be diff. If he likes it, I'll lock it up and assign the contract to him. You prolly won't make as much as if you were to do it by yourself and shop the contract around. I sleep well at night knowing the day I sign the contract with the seller someone already wants it and I have it pre sold.

My contract has an inspection period, after the inspectiong period if I back out I'll loose my earnest money deposit.
 
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YoungPharmD20

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You don't act as a wholesaler. This is my opinion and only my opinion. If you tell them your going to try and sell their property 99% of the time they will tell you to F off. The way I do it is I work for a house buying company, I have to run everything by my "boss" I have very good relations with my cash buyer. I'll comp the house out and guessitmate repaires by what they say, if i think it can be a deal I'll go check it out, I usually bring my cash buyer along as he knows his rehab numbers. Everyones numbers will be diff. If he likes it, I'll lock it up and assign the contract to him. You prolly won't make as much as if you were to do it by yourself and shop the contract around. I sleep well at night knowing the day I sign the contract with the seller someone already wants it and I have it pre sold.

My contract has an inspection period, after the inspectiong period if I back out I'll loose my earnest money deposit.

Thank you
 
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YoungPharmD20

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NP, any other questions feel free to ask.

My last questions would be: how much do you usually put down for the earnest money deposit? like 100 bucks every time? or does it depend on the value of the house. And if your deposit has any influence on theyre willingness to sign
 

rc08234

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My last questions would be: how much do you usually put down for the earnest money deposit? like 100 bucks every time? or does it depend on the value of the house. And if your deposit has any influence on theyre willingness to sign

250$ but it doesn't matter. 98% of the time they don't have a clue what earnest money is, and once I explain it to them they are happy they get something if I back out. Sometimes people don't know what it is, I explain it, then they want more lol. That always makes me laugh. If they bitch it's not enough I tell them we are buying it as is, where is and we still have due diligence to do, and we aren't going to put up more money when we don't even know if they title is clean yet. I also explain we are paying for the 300$ title search and in some cases a few grand for lot surveys and soil tests (if it's a tear down) so we have alot more on the line then the 250$ earnest money.
 

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I have heard of people making money wholesaling properties. There are many obstacles to work through though. This business gets a bad rep from people that tie up properties under false pretenses and then cannot sell them. Most sane people will not allow a wholesaler to tie up the property without a pre-determined buyer.

It takes more capital and experience to buy and flip, but I like the model better.

Earnest money is usually in the thousands. It really depends on your reputation and seller desperation though.
 
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YoungPharmD20

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I have heard of people making money wholesaling properties. There are many obstacles to work through though. This business gets a bad rep from people that tie up properties under false pretenses and then cannot sell them. Most sane people will not allow a wholesaler to tie up the property without a pre-determined buyer.

It takes more capital and experience to buy and flip, but I like the model better.

Earnest money is usually in the thousands. It really depends on your reputation and seller desperation though.

Noted. Before anything Im going establish a large buyers list to minimize that. (Im pretty close with a decent amount of investors, landlords, and realtors).

Other than finding a buyer,advertising, and making sure im getting a Great not good deal, what other major hoops should i be looking out for?
Also, do you think an LLC would be beneficial in the wholesaling game?
 

SteveO

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Noted. Before anything Im going establish a large buyers list to minimize that. (Im pretty close with a decent amount of investors, landlords, and realtors).

Other than finding a buyer,advertising, and making sure im getting a Great not good deal, what other major hoops should i be looking out for?
Also, do you think an LLC would be beneficial in the wholesaling game?
An LLC is good for certain things. Asset protection would be top on the list. Each state has different costs and other terms so you need to evaluate that for yourself. It is a cost vs. value evaluation.
 

rc08234

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Noted. Before anything Im going establish a large buyers list to minimize that. (Im pretty close with a decent amount of investors, landlords, and realtors).

Other than finding a buyer,advertising, and making sure im getting a Great not good deal, what other major hoops should i be looking out for?
Also, do you think an LLC would be beneficial in the wholesaling game?

No need for a large buyers list. You said your pretty close to some investors, call them up and ask them exactly what they are looking for, and what neighbor hoods they want, then go out and find it. Ask them for very specific areas, from what street to what street. Drive the streets and write down every address of every house that needs work or looks dated. Go homes and look them up on your county assessors site, mail them. This will be one of your best lists. Whenever I enter a new market I do this, it will take hours and hours. You seriously only need 2 or 3 SERIOUS buyers. If you find a deal, a true deal, they would buy it...why wouldn't they? I have two different people that buy all my rehab deals a 1 guy that buys all my tear down deals.
 
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Chicago Jon

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No need for a large buyers list. You said your pretty close to some investors, call them up and ask them exactly what they are looking for, and what neighbor hoods they want, then go out and find it. Ask them for very specific areas, from what street to what street. Drive the streets and write down every address of every house that needs work or looks dated. Go homes and look them up on your county assessors site, mail them. This will be one of your best lists. Whenever I enter a new market I do this, it will take hours and hours. You seriously only need 2 or 3 SERIOUS buyers. If you find a deal, a true deal, they would buy it...why wouldn't they? I have two different people that buy all my rehab deals a 1 guy that buys all my tear down deals.
I started wholesaling last year. It took me awhile to get going but I finally started doing some deals. I agree that you can sell most of your deals to a few reliable buyers over and over but I also think having a deep buyer's list can be advantageous. I've run into a couple of wholesalers that had decent (not great) deals and couldn't find a buyer. If you have a strong buyer's list you can add value by simply blasting their deal out to your buyer's list. If you find a buyer, you can split the assignment fee with the wholesaler who put the property under contract.

Usually JV or co-wholesale deals like this aren't home runs but they pay the bills and in some cases, require very little work, especially when you have a great buyer's list. I'll gladly take a couple grand to send out an email or two. If you have a great buyer's list, and you cross paths with other wholesaler's who need help moving their deals, you can cut yourself into their deal by finding them a buyer. Just make sure that they're actually deals with some meat on the bone because no matter how great your buyer's list is, nobody is going to buy a bad deal.
 

rc08234

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I started wholesaling last year. It took me awhile to get going but I finally started doing some deals. I agree that you can sell most of your deals to a few reliable buyers over and over but I also think having a deep buyer's list can be advantageous. I've run into a couple of wholesalers that had decent (not great) deals and couldn't find a buyer. If you have a strong buyer's list you can add value by simply blasting their deal out to your buyer's list. If you find a buyer, you can split the assignment fee with the wholesaler who put the property under contract.

Usually JV or co-wholesale deals like this aren't home runs but they pay the bills and in some cases, require very little work, especially when you have a great buyer's list. I'll gladly take a couple grand to send out an email or two. If you have a great buyer's list, and you cross paths with other wholesaler's who need help moving their deals, you can cut yourself into their deal by finding them a buyer. Just make sure that they're actually deals with some meat on the bone because no matter how great your buyer's list is, nobody is going to buy a bad deal.

I agree, but there is only one person I will co wholesale with because he is very reputable/has an office and I know he has done over 200 deals etc. Most wholesalers are fly by night don't know what they are doing types. I know of more horror stories than positive stories on co wholesales. Just me personal preference, I'm not saying it's not lucrative to some people.
 

CashFlowDepot

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I've been wholesaling properties for more than 20 years. LOTS of properties.

Here's a realistic budget to get started

$100 postcards to send to run down vacant looking houses
$25 tank of gas to go driving for dollars
$20 option consideration.( for 2 deals, $10 each)
(this is assuming you already have a way to take calls from motivated sellers - otherwise add cost of cell phone and calling plan_

$10 to buy the Flip Deals ebook to learn how to wholesale
 
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Greg R

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I'm glad that you want to get started in real estate but I'm not sure wholesaling is a fastlane ticket. The ones that I know hustle very very hard just to make a couple of bucks. The barrier to entry is too easy here and I would suspect that there is way easier money to be made else where. Not to say when I first learned about wholesaling, I got really excited and motivated... then I found out that the scheme was old news. Anyway sorry to discourage but good luck.
 

CashFlowDepot

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If wholesaling is done the old school way, then it is true that you will be lucky to make $5,000 to $10,000 per deal in less than a week. Still not bad.

But there are a lot of newer strategies for finding and selling wholesale properties which net a much better profit. Even more profit than a rehab.
Last week I did a coaching call with a guy who made $148,000 net profit on a wholesale flip. The week before that I did a coaching call with a lady who made $27,500 on a wholesale flip.

You can't use the same old methods for finding deals that everyone else is doing. Or you will have a hard time in a wholesale business.

And, if you want to make substantial profits, you should not just assign your contract. There are much better ways to sell the proeprty which will maximize your profits.

Wholesaling is an excellent way to get started. You don't need much cash, no credit and no partners.

There is much less risk than rehabbing properties because you don't need to actually buy the house or fix it up.
 

Greg R

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If wholesaling is done the old school way, then it is true that you will be lucky to make $5,000 to $10,000 per deal in less than a week. Still not bad.

But there are a lot of newer strategies for finding and selling wholesale properties which net a much better profit. Even more profit than a rehab.
Last week I did a coaching call with a guy who made $148,000 net profit on a wholesale flip. The week before that I did a coaching call with a lady who made $27,500 on a wholesale flip.

You can't use the same old methods for finding deals that everyone else is doing. Or you will have a hard time in a wholesale business.

And, if you want to make substantial profits, you should not just assign your contract. There are much better ways to sell the proeprty which will maximize your profits.

Wholesaling is an excellent way to get started. You don't need much cash, no credit and no partners.

There is much less risk than rehabbing properties because you don't need to actually buy the house or fix it up.
What are some alternative ways that you have heard of?
 
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MattCour

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I believe it. Three weeks ago, I made $60K on a wholesale deal that I purchased expecting to make $50K as a flip. It happens...and when you have experience, a big network and cash to do marketing, it's really not that tough.

That said, for everyone like the two people you mentioned (and for every person like me), there are probably 100 people who try to do wholesaling deals who never do a single one. Why? Because a good wholesaler needs to be better than all the flippers and landlords they are reselling to. A wholesaler needs to find the deals I'm looking for (and hundreds of other investors like me are looking for) -- which is tough when I'm spending $10K/month on marketing and they don't have any money to spend -- and even if they find a deal, they then need to convince the seller to sell to them instead of me (or the dozen other investors who have contacted that same seller) -- which is extra tough because as a flipper I can pay more than any wholesaler.

I talk to dozens of people per week who have bought wholesaling courses, gone to seminars, purchased coaching, etc., and then never did a deal. They quickly realize that wholesaling without money or experience is like an amateur poker player with a tiny bit of cash sitting down at table full of professionals with large bankrolls. Sure, the amateur will occasionally get lucky and win a hand, but 99% of the time, he's going to walk away without his little bit of cash and having nothing good to show for it.

If someone wants to attempt to be in that 1% of people who can become successful wholesalers with no cash and no experience, I wish them good luck. But, there are plenty of other ways to make money that have higher chance of success and require less effort (in my experience).


This is an incredibly insightful post @JScott, how do you suggest newbies make money in real estate besides wholesaling? I'm sure the OP would appreciate your input.
 

CashFlowDepot

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Gosh, are some of those wholesaling courses recommending spending $10k a month. That's insane.

There are a lot of ways to have a steady flow of leads and wholesale deals without spending a penny on marketing to find deals.

The guy who made $148,000 on a wholesale deal just made $50,000 on a wholesale deal on Sunday (2/14/2016). He has not spent any money on marketing to find deals in many many years yet still closes several wholesale deals a month.

Today I got an email from a lady who did 7 wholesale flip deals in the last 7 weeks. She did not spend any money on marketing to find deals but has great systems in place to get a consistent flow of leads.

If wholesaling is done correctly, there should be absolutely NO competition with other investors making offers to sellers. You are the first one there and you close the deal.

You certainly should not try to do wholesale deals from MLS because there is a ton of competition.

I don't know where your 1% success rate is coming from JScott. Certainly NOT my students. They have a 90% success rate. Unfortunately, there will always be some people who buy a book or course then never do anything with it.

Wholesale flips are the easiest way to get started with real estate investing. And has the least amount of risks because you do not buy the house, you don't have to spend money on rehabbing, no loans, no contracts and no holding costs. When done right, you should get paid in less than 2 weeks after you get a contract to buy.
 

CashFlowDepot

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For getting started, I would recommend do wholesale flips for cash and master leasing for cash flow. These techniques let you make cash and cash flow without much cash to start.

Then start buying houses with seller financing or subject-to that can be rented out for additional cash flow.
Focus on houses that need cosmetic repairs only - no major rehab.

Use the proceeds from wholesale flips to put each rental house in a 2-3 year pay off plan.

You should be able to get 15 houses free and clear in about 5 years. If they each product $1400 rents,
after taxes and insurance and maintenance, you will still have $15,000 a month in cash flow
plus the proceeds from future wholesale flips and more rentals.

Does this plan work? I did it and still do it. It is not theory.

I would never do a rehab or borrow any money from banks or anyone else. Rehabs take too much and tie up too much cash. A sudden turn in the market could wipe out all profits but you are still personally liable for the loans. We saw this happen in 2008.

Need a new car? Do a few wholesale flips then pay cash.

Want to move in to a different house? Buy it subject to or with seller financing. Or master lease. There is no need to get bank financing.

Don't spend all the money you make. Save.

Other advice - avoid those high priced seminars and courses. Do not pay for coaching/mentoring Really successful investors made their money from real estate and do not need to charge ridiculous prices for seminars or books. The not so successful investors could not make a living in real estate so they charge high prices for seminars, have upsells in to even more expensive coaching and mentoring.
 
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The guy who made $148,000 on a wholesale deal just made $50,000 on a wholesale deal on Sunday (2/14/2016). He has not spent any money on marketing to find deals in many many years yet still closes several wholesale deals a month.

You can't use the same old methods for finding deals that everyone else is doing. Or you will have a hard time in a wholesale business.

I am a firm believer that if you are doing the same things every one else is doing, you are going to get mediocre results.

One alternative method I utilize is JVing with other wholesalers. For example, there was another investor who was doing marketing. He had a deal on his hands, but he just didn't have the confidence or resources to get it done. I was able to help him evaluate the deal, take care of the paperwork, work with the title company, and send it out to my cash buyers list. For there we turned a $12K profit. We split it 50/50 and it was a huge win/win. The guy would have never done the deal without a little guidance. Net out of pocket for marketing on my end $0,

@CashFlowDepot thanks for sharing your input and experience. Would you be willing to share some of the alternative methods of finding deals?
 

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I'm sure people have started with zip and ran it up from wholesale profits.
But what is a reasonable amount of cash to start wholesaling with? Considering contracts and other things needed to close the deal.
Ive read many recommended books from here over the past 4 months and i feel like I'm ready to execute.
Not sure if it is necessary but i will be opening an LLC next week.

I hope some experts on here can shed some light my way, thanks in advance

cheers

I actually discussed this over dinner tonight with a friend who is financially free before age 33..
I have been wholesaling houses for about 3 years now.. with about 75% of it being my full time source of income..
It is a FEAST or FAMINE business, and I would not recommend it to my loved ones.. LOL

I have spent over $18,000 in mentoring and training courses.. I've read over 40 books on the subject.. and spend hundreds of hours in research..
Had many talks with real estate millionaires over the past few years.. and NONE OF THEM have made it through wholesaling..

Wholesaling is a GREAT way to make extra money on the side.. but I believe it takes a massive marketing budget to keep the flow going and make it a full time revenue business.. if I were to do it all over again.. I would have taken a secure job, kept my expenses low and put every excess dollar into buying cash producing assets.. specifically residential rental properties.. wholesale the deals that come across your desk that don't fit your buying criteria.. keep everything that will cash flow.. sell rental properties at the height of sellers markets.. repeat.

If I would have done it this way.. I'd most likely already be financially free, rather than stuck in hustle mode.. always trying to get that next deal.. one more deal.. one more deal..

If you've read all this and still want to wholesale.. read the ultimate real estate blueprint off amazon.. it's free.
Get a bluetooth headset.. your money is made on the phone, and in person when you make offers.
Don't buy a million courses and books and waste your time mentally masturbating as they say.. learning about success makes you feel all warm and fuzzy, but you don't make money until you make offers..
it is a very simple business.. look at 100 houses.. make 100 offers.. buy 1-2 houses.

In my experience.. it takes $2000+ per month in marketing to keep consistent lead flow... if you can't afford that.. you should get a job and buy assets instead.. much safer, more profitable.. (tax benefits, equity, cash flow, tenant paying your mortgage, you can wait for sellers market before selling on the MLS at top dollar rather than 70 cents minus repairs.. etc etc..)

alright.. there's my rant. :)
 
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CashFlowDepot

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Here is one of many alternative methods of finding deals ( without spending $10,000 a month in marketing)...

Before I was involved in real estate investing, I was a stay-at-home Mom for TWELVE years. On Tuesday's there was a Mother's Day out program at our church. I could take my young son and daughter there from 10-2 then go shopping or go back to bed.

When I started real estate investing in 1993/1994, I didn't have extra cash to spend on marketing and didn't know how to do marketing anyway. So, I got in my pick up truck then drove around town in the less than median priced neighborhoods looking for vacant looking or run down houses. I'd track down the owner usually by talking to neighbors, get a contract on the property, then wholesale to another investor. Some months I'd do 1 deal. Some months I'd do 3-4 wholesale flips.

Then i thought, if I could just get more eyeballs out there looking for run down houses, I could do more deals and make more money.

So, I asked the pastor of the church if I could hand out a flyer to recruit the Mom's who took their kids to the Mother's Day out program to go drive around looking for houses for me. I knew they had Tuesday's off and would appreciate the opportunity to make money but still be devoted to staying home wih their kids. Most all the Mom's jumped on the opportunity to make some extra money for their family. Some even asked if they could go looking for houses when it was not Mother's Day out day.

I agreed to pay them at least $500 for every house I was able to buy. I usually paid them $1000 or more. The more they made, they more than wanted to go looking for houses.

Instantly, I had more leads coming in and my business doubled.

You can also recruit the FEDex drivers, mail delivery people, and even run ads on craigslist to recruit property locators.

The more eyeballs you get out there looking for deals, the more deals you will do... without spending money on marketing.

You also get to the house and the seller before anyone else even knows about the opportunity so there is no competition. 99% of the time, there is no for sign out front.
 

Greg R

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Here is one of many alternative methods of finding deals ( without spending $10,000 a month in marketing)...

Before I was involved in real estate investing, I was a stay-at-home Mom for TWELVE years. On Tuesday's there was a Mother's Day out program at our church. I could take my young son and daughter there from 10-2 then go shopping or go back to bed.

When I started real estate investing in 1993/1994, I didn't have extra cash to spend on marketing and didn't know how to do marketing anyway. So, I got in my pick up truck then drove around town in the less than median priced neighborhoods looking for vacant looking or run down houses. I'd track down the owner usually by talking to neighbors, get a contract on the property, then wholesale to another investor. Some months I'd do 1 deal. Some months I'd do 3-4 wholesale flips.

Then i thought, if I could just get more eyeballs out there looking for run down houses, I could do more deals and make more money.

So, I asked the pastor of the church if I could hand out a flyer to recruit the Mom's who took their kids to the Mother's Day out program to go drive around looking for houses for me. I knew they had Tuesday's off and would appreciate the opportunity to make money but still be devoted to staying home wih their kids. Most all the Mom's jumped on the opportunity to make some extra money for their family. Some even asked if they could go looking for houses when it was not Mother's Day out day.

I agreed to pay them at least $500 for every house I was able to buy. I usually paid them $1000 or more. The more they made, they more than wanted to go looking for houses.

Instantly, I had more leads coming in and my business doubled.

You can also recruit the FEDex drivers, mail delivery people, and even run ads on craigslist to recruit property locators.

The more eyeballs you get out there looking for deals, the more deals you will do... without spending money on marketing.

You also get to the house and the seller before anyone else even knows about the opportunity so there is no competition. 99% of the time, there is no for sign out front.
I really like the "paying off the mailman idea" not sure how ethical that is but I LOVE IT!
 

MKHB

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I'm sure people have started with zip and ran it up from wholesale profits.
But what is a reasonable amount of cash to start wholesaling with? Considering contracts and other things needed to close the deal.
Ive read many recommended books from here over the past 4 months and i feel like I'm ready to execute.
Not sure if it is necessary but i will be opening an LLC next week.

I hope some experts on here can shed some light my way, thanks in advance

cheers

Here some advice:

Don't solicit entity formation, tax, or career advice from shadowy figures on forums where they don't not give their real name. You failed your first test!

You want to succeed in real estate, do it the way 99% of those who are successful do it; get a job in an ancilliary industry...from say a developer, builder, real estate company or agent, bank or a gov't agency. Learn first, act later.

I have worked for and with a lot of successful real estate players and companies, both public and private, been involved with hundreds of deals at various levels, and have yet to encounter someone who started as a "hustler wholesaler."

However, almost daily...I encounter another "new crop" of self-made real estate experts (ironically only in up-markets) on the internet selling books, seminars, t-shirts, coffee mugs...

Hey what ever happened to Carlton Sheets, Dave Delguiado, or that asian dude on the boat with the hot chicks???? oh and my fav Bob Kawasaki...I think he does very little real estate investing now days and more fortune telling, predicting future financial calamities. ?? Where was he when I needed his predicting power circa 2007, oh that's right he was busy selling books and seminars.

Those that can - do, those that can't - teach.

Or, you could just wait until Wade Cook comes out of retirement (jail) and learn to trade butterflies and iron condors!! Big money.





 
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MKHB

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Very much agreed...

For some reason, people seem to think real estate is a get-rich-quick industry where anyone with a pulse can make lots of money without lots of effort.

I know it's not a popular sentiment on this (or other) websites focused on entrepreneurship, but if you want to learn how to build a successful real estate business -- or any business -- my best recommendation is to get a degree (or some formal training) in business and finance. Find a good business school that has an entrepreneurship program. And/or get a job in the industry, make connections, learn from the ground up and then go out on your own when you have some cash in your pocket and some experience under your belt.

Speaking of cash, if you don't have any, real estate probably isn't the best place to start. You'll see people claiming that they've (and their students) have made tens or hundreds of thousands of dollars in days with no cash and no credit, but in my experience, that rarely ever happens. When it does, it was more due to luck than skill -- and certainly not due to some guru "system" that taught them how to create money from nothing.

If you want to be a real estate investor, treat it like a business. Learn to run a business. Learn to scale a business. Learn to finance a business. Etc. And then the path to success will be clear...

Yeah, I think real estate is a get "very' rich "very' slow method. Timing the real estate is glamorized and heralded, but in reality it is for the under-capitalized and uniformed. Real estate equity always grows over time, while cash in the bank always gets spent.

When it comes to long term real estate investing I have made every mistake in the book, except the one deadly mistake - selling.

When I bought in 2007 at the peak "some" of my friends and family laughed at me, when I bought again in 2009 at the bottom "all"of my friends and family laughed at me. Oh well, I'm sure they are happy with their 2k+ rent payments.

And to your point...I have been involved with over 10M in speculative residential development (PUDs/infill/scattered lots) but I have been out of the residential spec business since 2005 (shifted mostly to commercial since then), but unlike long term real estate investing, spec development is all about timing, location, and execution and the timing could not be better, so therefore; I am getting ready to dive back in.

My first move...get a job. Yeah, I don't need the money, I have my own and want to keep it that way. Even though I have twice the experience as the guys I will be working for, I would lose every penny if I went and did trial and error on my own. I have no sourcing connections, do not know what product is selling best, who the go to brokers (important note here * brokers are your best friend, overpay them), architects, engineers, and lenders are, who the best subs and suppliers are, and more importantly, no knowledge about the subject area's arcane world of local governing body approvals, plan check and permitting.

And I will steal one of your lines, as you stated in your Bigger Pockets podcast "make sure you know what you know and more importantly what you don't know."

For I know a lot, but it don't mean "shxx" because it's what I don't know that will sink me.

BTW, love the site http://www.123flip.com/ on of the few real estate sites worth visiting.

MK
 

CashFlowDepot

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You're so right. Real estate investing and especially wholesale flips are not a get rich quick plan.

Some months you will make $2,000. The next month you might make $20,000. Then no payday for 2 months. Then a nice $30,000 month.
then a $5000 month. There is no way to keep the cash flow consistent.

That's why i highly recommend working towards generating cash flow with rental properties. You don't have to buy them. You can Master Leases.
But buying with seller financing or subject to is even better. Then you also control the equity too.

Wholesale Flip Deals will keep cash coming in to pay the bills while you work on increasing your cash flow with rental properties.
 

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