How To Be A Successful Real Estate Wholesaler
Becoming a successful real estate wholesaler is the first step in mastering the real estate investing industry. As a result, it will require investors to retain a great deal of knowledge about the industry. After all, it’s most likely the first exit strategy they will implement. The first thing investors will need to do is develop an intimate familiarity with the industry. That means getting to know the terms, the processes, systems, and the ins-and-outs of everything. Perhaps even more importantly, however, real estate wholesalers will need to build a trustworthy network. Remember the buyer's list we talked about earlier? It’ll play a vital role when assigning contracts and conducting double closings. Remember, real estate is a people business; the people you align yourself with can make or break your success as a wholesaler. One of the most important skills that you will learn over time is how to make the right offer. You want to avoid going too low and losing or offending potential sellers, and going too high will make it difficult to find a buyer. For a more detailed idea of the traits successful wholesalers possess, let’s take a look at what a day in the life of a wholesaler looks like. Daily Habits Of A Successful Real Estate Wholesaler Step 1: Partake in a curated morning routine. Step 2: Research the happenings of your local market. Step 3 : Work on your brand. Step 4: Evaluate your current deals. Step 5: Attend a networking event. Step 6: Make an offer. Step 7: Turn to your buyers list. Step 8: Close a deal. While it may not be possible to work on every aspect of your business every single day, doing so can be a good goal to keep in the back of your mind. Regardless of your experience, starting the day off with an effective morning routine is crucial for those who want to be a successful real estate wholesaler. Follow the action plan below for a day that encompasses what it takes to wholesale real estate effectively. 7am – 9am (Pre-Work Morning Routine) Successful entrepreneurs know the importance of having a productive (and consistent) morning routine that primes them for success throughout the day. Even something as simple as making the bed, according to a survey by Hunch.com, can make you happier and more effective in your workday. You want to tailor your morning routine around actions that empower you and get you energized and ready for the rest of your working day. These include daily actions like: Exercise Writing in a journal Planning your monthly, quarterly and yearly goals Eating a healthy breakfast Meditation and/or visualization Any activity that helps you feel focused, confident and ready to do your best 9am-10am (Local Market Research) There’s no substitute for knowing your local market inside and out. Not only will it help you better judge the profit potential of future deals but will help you find innovative ways to acquire leads. Local market research includes: Knowing the price points of specific neighborhoods Studying the competition Tracking market inventory (number of houses officially listed for sale) Understanding zoning laws Building a Rolodex of key real estate professionals (Realtors, lenders, brokers, contractors, etc.) 10am – 11am (Branding and Marketing) It’s nearly impossible to be a successful real estate wholesaler without also being a successful marketer. And this means taking a two-pronged approach. One is creating branding assets that give your wholesaling real estate business credibility. This includes things like: Business cards Seller credibility packet Buyer credibility packet Investor credibility packet A website and/or blog Active social media platforms (such as a Facebook page and a LinkedIn profile) Business name and logo Though these assets don’t bring in a huge amount of leads on their own, they do give your business much-needed authority in a crowded real estate marketplace. As for the marketing side, you’ll want to have numerous lead-generation strategies going, at once, to see which one works best for you. Popular wholesale marketing options include: Direct mail campaigns Craigslist Bandit signs Driving for dollars Online advertising The MLS (Yes, you can find leads here) 11am – 12pm (Deal Evaluation) Once you’ve got leads coming in, it’s time to sift through your options and narrow down which properties you’ll make offers on. (And which you’ll avoid like the plague.) Though this process can be frustrating — especially when you rule out properties that don’t meet your criteria — proper deal evaluation can save you a whole lot of money in the end. Evaluating properties to see how they align with your wholesale exit strategy includes actions like: Gathering information about the seller (their motivation, current debt, bottom-line price) Gathering information about the property (condition, listing status, square footage) Determining MLS market comps for the property Determining Off-market comps for the property Coming up with an estimated resale price 12pm – 1pm (Lunch: Building Your Network) Everybody’s gotta eat, right? So, why not transform your daily calorie upload into an opportunity to broaden your real estate network? You could sample some local cuisine with: Private investors Hard money lenders Fellow wholesalers Real estate agents Title agents Mortgage brokers Probate attorneys Anyone you can think of that will help boost your real estate network 1pm – 2pm (Making Offers) If there’s one thing holding back the novice real estate wholesaler, it’s that they simply don’t make enough offers. You’ll never know (in advance) which offers will be accepted, and which won’t, so it’s imperative you spend a good portion of your time, making more/better offers than you are currently. This means: Learning how to assess what a seller really wants (emotionally and financially) Researching the seller and/or agent you might be working with Constantly developing your skills as a negotiator Setting up your financing (if needed) Knowing what to look for when you “walk through a property” Crunching your numbers so you know what to offer (when the time comes) 2pm – 3pm (Creating a Buyers List) Too often many dabbling into real estate wholesaling for the first time will wait until a deal on a property has closed before they create a wholesale buyers list. This is not the right approach. Instead, try to create a buyers list as early as possible, so you’re ready to move swiftly to sell a property upon closing of a deal. This includes looking for buyers with sources such as: Craigslist Facebook real estate groups Auctions Local REIA meetings Networking events Trade shows Referrals from your real estate network (See, that networking lunch does pay off) 3pm-4pm (Closing Deals) Here’s the fun part; where you get to close deals and (hopefully) start to see profits. No matter what kind of wholesale closing you do — whether assigning the contract over to a cash buyer or buying outright and doing a “double close” — here are some strategies to help you reach closing faster than you thought possible: Create a detailed, accurate cost of repairs on the property Instill urgency in potential buyers with a deadline Confirm financing by examining a proof-of-funds letter Signing or (assigning) all proper sales agreements and legal documents Have an escrow team ready to get into closing as soon as possible 4pm- 5pm (Building Your Team) Once you’ve got your real estate wholesale strategy down, it’s time to build out your team — and take time-consuming tasks off your real estate wholesaler to-do list. This usually means performing a task yourself first and then document your process. (So you can eventually hand it off to someone else.) Time-consuming, though valuable tasks, include business functions like: Putting up bandit signs Implementing direct mail campaigns Craigslist posting Inbound and outbound phone calls All things social media General office duties (reports, email, etc.) The last thing you want to outsource is negotiations. This is where your biggest profits lie and the foundation of your long-term business lives. Summary Not every day is going to go according to plan. Not every item on your real estate wholesaler to-do list will be checked off in the course of a 24-hour period. So does wholesale real estate work? Yes, and the more you can strategically plan your days around high-impact activities that directly move your real estate wholesaling career forward. You’ll find not just your investing career improves — so does your ability to be productive. No matter what the day throws your way. Ready to start taking advantage of the current opportunities in the real estate market? Maybe you have plenty of capital, an extensive real estate network, or great construction skills— but you still aren’t sure how to find opportunistic deals. Our new online real estate class, hosted by expert investor Than Merrill, can help you learn how to acquire the best properties and find success in real estate.