You have seen the infomercial… it goes like this…
There are a few variations on this theme, so allow me to share a different spin that I and a few colleagues of mine have explored. It looks more like this…
So this is not exactly what we are doing since we are also doing new construction but remove the new builds from the equation and it is pretty close. So what’s the deal?
The deal is rehabbing is a lot of work. A vast amount more work than wholesaling. In many cases, more work than the paycheck validates. This is not an uncommon issue. I have experienced and seen others work for months only to make the equivalent of a modest to good wholesale fee. While the experience is nice at first, it can and does grow old quickly if you repeat the experience. We only want to repeat experiences that propel us forward. Never forget that.
After being bogged down with rehabs, only to meet a wholesaler that made more on his assignment that your six to twelve months of work, one realizes, there is a better way.
These days, getting a nice assignment fee is really a matter of two things. One, knowing your market and two, negotiation. Knowing your market is absolutely critical as a wholesaler. You have to go off reality and not hype. Far too many wholesalers get caught up in hype. Sadly they do not tend to last in this business. You have to be in tune with reality and only reality. Because when you put your rehab on, that’s the only thing that will matter. Know your market like the back of your hand. Instead of casting a wide net, start smaller, master a geographical area and then expand.
Second, negotiation. It is often said that negotiation is your single most important skill to making money. The better you negotiate, the more you make. Negotiation is the opposite of hype. While hype feeds on emotional impulse, negotiation relies on factual information to convince someone that what you are proposing is a great idea and in everyone’s best interests, specifically theirs. It is a skill that warrants constant improvement.
So if you have done some rehabbing but prefer to wholesale or at least want to have that part of your game steady, only a few things are needed.
First, network like crazy. As a rehabber, you talk with a ton of people anyway. Simply expand your network at every opportunity. You will be amazed at some of the opportunities that can just ‘appear’. Second, get back to marketing. Being steady and consistent always works so get back in the groove. Third, talk to leads and follow through. Whether a homeowner or investor is irrelevant. Talk to your leads and follow through consistently. The deals will start to flow again bringing cash flow (and sanity) back to your life as a rehabber.
Case in point, we have a ton of projects and decided it was time to think about something other than an I-joist, LVL or piece of trim. We decided to wholesale a deal we were going to renovate. In one swift move, we made a significant percentage of our expected rehab profit. And we never had to lift a finger. This is beautiful. Next, a friend brought us a deal of which I had a Buyer for from our Buyers list. However, rather than blast it out, I was able to sell it with one phone call! We had a nice co-wholesale profit, the Buyer got the house and everyone was happy. No marketing involved. Again, beautiful!
So, we are getting back to our first love so to speak. Being a wholesaler is immensely satisfying as you really do get to help others and get a nice paycheck if you do a good job. We will continue to be a rehabber but we will seek to balance these two trades further. Both worlds have their pluses and minuses but if you need a break from the intensity of property renovation, wholesaling is always one step away. Take it and remember that everything in real estate really does not have to be difficult!