Now I got a very long, very detailed question from a 20 year old guy. He’s a young guy who wants to get into wholesaling houses. Now wholesaling houses is a great way to make fast money in real estate. I’ve wholesaled many houses. Now I’m up in Canada where wholesaling is quite difficult. If you’re from America, the land of the free and the home of the brave, wholesaling is much easier than it is up in Canada.
Now wholesaling is all about one thing. It’s all about your cash buyers. If you have a good buyers list, you can really feed anything to those guys. You’re typically going to have three types of people on your cash buyers list. You’re going to have your hardcore retail flippers. These are the guys that they need to highest margin. These are the guys who are hiring crews. They need quite a big margin. These guys you could probably send them properties at 40 to 60 cents on the dollar.
Then you’re going to have people over here. These are probably your landlords. These guys, they’re probably happy at 70 to 80 cents on the dollar. You could send them deals that these hardcore flippers won’t take. Then your last one is your retail buyers. Your retail buyers, these are the ones you’re going to make a ton of money on. These guys will probably buy anywhere from 90 to 100 cents on the dollar.
Now depending on where you get your properties, some people get them at the auction, some people get properties off of WeBuyHouses, bandit signs. Some people do mailers and letter campaigns. Some people knock doors. Some people do online classifieds. Some people just do pure networking. There’s typically three ways that you’re going to get your deals. There’s networking. Two is marketing. Three is negotiating.
Networking, this is getting out there, knocking on doors, meeting realtors, meeting other investors, signing up to REAs, real estate groups, meeting as many people you can. Because typically, you guys, your network’s your net worth. The better the network you have, the more cash buyers you’re going to have and the more deal suppliers you’re going to have.
The second one is marketing. I talked about bandit signs. I talked about direct mail campaigns. You can do all sorts of direct mail. That is a huge, huge, huge subject. You can do online marketing. You can do flyers. You can do door knockings. Any number of things you can do underneath marketing to get deals. The last one is negotiating. I put negotiating up there because a lot of the deals I get are deals other people saw but I did a better job of negotiating so I made the money on the deal. Negotiating is something you got to spend more time, more effort, more energy to get your negotiation skillset up so you can take the deals that are almost deals and turn them into deals.
The thing that’s going to drive your entire business in wholesaling is cash buyers. If you have a good database of cash buyers segmented into these three areas and you know with these people want, you can go into the market and supply it for them at a discount. The ones you’re going to make the most money off of are probably these two guys. The most competitive are the hardcore flippers.
The best place you can go to get cash buyers is go to the auction. The auction in your city is going to have these real hardcore flipper guys. It’s also going to have the real landlords. These are the real guys who are buying and selling property in your market. They’re hanging out at the auction. Some of these retail things, you might be able to find some of these guys maybe at a REA, a real estate investment association. Then these retail buyers, you’re going to find these guys everywhere. They’re like your online classified crowd. These are people who maybe want to buy, fix, and sell a house themselves. They want to do all the work themselves.
If you can put together a good cash buyers list, guys, you are going to do very well at all this. If you want to be a hardcore wholesaler, I advise that you get into these two markets, into your cash buyers, because that’s where the biggest spread is for you.
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