Are you interested in hearing about how to stay out of trouble as a wholesaler?
Well, it’s really simple actually: If you want to stay out of trouble as a wholesaler — in terms of a lack of deal flow — do some marketing for buyers.
Yes, the market for sellers, but you absolutely must market to find buyers.
Well, let’s look at this in the big picture.
Who’s your customer in a wholesaling business (in any business)?
A customer is the one with the money. The one with the money who will buy what you’re trying to sell.
See, so many people in wholesaling get it wrong. They think the customer is the seller, and they’re always working so hard to find sellers and talk to them. And I’m not saying that’s bad — but I’m just saying as wholesalers, we should focus more attention on finding the buyers first.
Here’s the advantage: It’s so much easier to shop for what cash buyers want than to try to sell them what you have.
Imagine having a bowl of spaghetti, and you walk out onto a busy street and try to sell your bowl of spaghetti to people. Of course, they’ll think you’re weird. So, you go find people who like spaghetti, and you start selling it to them, but they like Parmesan cheese and you don’t have Parmesan on it. (Hungry yet? I sure am!)
Now, what if you did this…
You find the people who like Italian food, and then you ask them, “What do you like? What are you looking for?” They say, “Lasagna.” And then you go make/find lasagna and sell it to them.
Do you think you’re going to have an easier time shopping for what buyers want or selling them on what you have?
It’s a HUGE difference.
And, even if you already have a bunch of buyers, you should always be marketing for buyers. Because guess what happens to your buyers? They get finicky, they get picky, they start getting fat and greedy and they’re not too happy with you making $10,000 on every one of their deals.
They’re like, “This isn’t fair. I’m doing all the work. I’m putting up all the money. I’m taking all the risk, and you’re making a quick $10,000? Um, no.”
And you’re thinking, “But Joe, I like my buyers because they’re reliable. I know they’re going to close on my deals. I know they are consistent.”
Here’s the problem: You start getting cozy with your buyers — you start becoming employees of your buyers, and your $10,000 profit goes down to $7,000 and then $5,000 and then $3,000 — and all of a sudden you’re an employee of the buyer.
Don’t be that guy.
It’s all about margins. I’m telling you, at some point, your beloved buyers are going to take a hard look at where their money is going, and they’re going to see you as the middleman wholesaler, taking a chunk of their profits. And they’ll reduce the amount you can walk away with and/or likely to find other ‘cheaper’ wholesalers to bring them deals.
Always market for buyers if you want to stay out of trouble.
So, what does that mean?
Network at your local real estate clubs and REIAs. Ask buyers who are there what kinds of deals they want. Then go find it for them!
Another way to find buyers: Target them in hot, turnkey markets like Ohio, Alabama, Mississippi, Louisiana, Tennessee — and send active buyers letters:
“Hey, we are the Premier Real Estate Investment Company in Saint Louis, Missouri. We noticed that you just bought a house at 123 Main Street in Memphis. It appears that maybe you’re an investor. Listen, if you’re looking for more deals, St. Louis is a great place, give me a call and let’s talk, and we’ll tell you about what we have to see if you’re interested. XXX-XXX-XXXX”
Now, you’re not going to get a ton of calls with these letters, but the people who do call you will be interested, motivated buyers. So make sure you answer your phone!
Listen, these buyers are out there. People who are happy to pay $70k for the deal you got at $60k in virtual deals outside of where they live. Just find active cash buyers from the past 6 months by looking at the county records or get a list from ListSource.
Don’t target buyers who are already buying in your market. Huge mistake. Target buyers who are buying in other markets outside of yours from outside of their states. Those are the best buyers.
The fastest way to do wholesaling deals is finding buyers first, then finding them what they want.
Do you need to get your license to do that? Maybe. I recommend getting your license anyway. If you don’t, make sure you get a partnering agreement on those deals.
And that’s it.
See, it is simple…
Market for buyers if you want to stay out of trouble. 🙂