Wholesaling is by far the most popular real estate strategy for new investors (with sandwich lease option being a close second) because it seems like one of the least complicated routes to make some money in the start when you don’t have money for down payments, renovation costs, or like many that take their first real estate course – often do not even own their own home. I would disagree in many ways that the wholesaling world is the best thing to foray into right out of the gate. There is no doubt that on paper it would be one of the simplest ways to get some cash in your pocket – find a great deal, get it under contract, and then sell that contract to another more experienced investor for a profit. There are some inherent issues there however – you would need to have some experience with other investors and analyzing deals to make SURE it’s a good deal before you run out there and get that home under contract. Having a contract is great, but if you make great claims to the owner of that property that you will be closing on it in two week or less and you never remove conditions (which is fine in concept) letting the deal drop this could annoy them – which again in theory is fine but if you do this to a hundred people in the first 3 months of doing real estate you may be building a reputation and image that you don’t want for your company long term. The image and brand that you have in business is one of your most important assets and its very difficult to repair once damaged. Some mistakes are going to happen in your first year in real estate and that’s OK, but it is very important to have a strategy to make sure you have a winner of a deal before you tie it up with a contract and have a buyers list of whom you know exactly what they are looking for before sending them deals that will waste their time and yours. Is this an excellent strategy? Yes – is it an easy one to execute in the beginning? I think not – network like crazy with experienced investors in your local market, pick a few that have similar profiles then find deals that suit them. One of the most important things I feel you should remember in the wholesale game: don’t try to be all things to all people – focus your due diligence on 1 type of deal then go from there!
To your success!
Tim
