Wholesaling real estate has been a tool that RE investors have leveraged long before it became popularized on social media as one of the many ways to “get rich quick” in 2022. Although it’s certainly not all sunshine and rainbows as often glorified by gurus and influencers alike – Its low risk and high reward $ potential does allow any hustler or aspiring real estate entrepreneur to make good money, while also building valuable business skills and relationships to bring life-changing opportunities in the real estate industry.
To be clear (and speaking from experience as we are still on our journey to 7 figures in revenue) – wholesaling real estate to reach 6 and 7 figure revenue targets is anything but easy. It takes time, money, and a continual investment into yourself and your business to weather the heavy competition of wholesalers trying to capture just a sliver of market share.
However if built with the right systems, delegation of roles, and proper processes – building and scaling a successful real estate wholesaling business can be one of the fastest ways to achieving financial freedom.
These 4 steps will help guide you on your journey to building a profitable real estate wholesaling business in any given market:
1: Open & Register Your Business Entity
Now I know what you’re thinking, and let me stop you right there before we go any further…no, you do not need to have a business entity to make money wholesaling real estate. However forming a business entity and applying for an EIN (Employer Identification Number) will provide legal protection, tax advantages, and allow you to build business credit along the way. Choosing the right business structure for you and your business will be up to you, however, a Sole Proprietorship or Partnership LLC is a good start for those who are newer to managing a business. As you grow your team and generate consistent revenue, you can think about migrating your business into a Corporation.
2: Choose a Customer Relationship Management (CRM) System
A Customer Relationship Management (CRM) system is the foundation of your business. Let me do you a favor and suggest NOT organizing your leads in Google Sheets. Although I recommend leveraging as much free software as you can in your Start-Up stages, a CRM is one I would make sure you set aside some budget for each month. There are many CRM’s out there tailored to real estate investing and wholesaling, however, make sure at the very least it gives you the ability to do the following:
As long as your CRM can provide those 6 key functionalities, your business will be able to work more efficiently and accommodate scale.
3: Develop your outbound marketing channels & campaign strategy
There are a number of ways you can get in touch with your seller leads. The traditional methods include cold calling, SMS text blasting, and direct mail. In addition, with so many sellers being active on Social Media and the Web, Google Ad and Facebook Ad spend has helped businesses generate a high volume of lead traffic when PPC (pay per click) marketing is done effectively.
(This is an area our business has been investing more into in 2022 now that we have more budget to work with alongside our traditional marketing channels with CC & SMS marketing)
Choosing the right marketing channels will depend on the size of your team, and the available budget you have to allocate. If you’re just starting out, we have found that SMS marketing & Cold Calling was the most cost and time-effective for getting in touch with as many people as our marketing budget would allow. (we started out targeting about 5,000-8,000 properties per month, and my brother and I were working full-time jobs).
Regardless of the method you choose for your business, make sure you are doing the following:
Develop a sequence for your campaigns, you will not be successful in this business if you try and hit these leads 1 time (the $$ is in the follow up)
Make sure you are tracking your leads and dispositions throughout your marketing campaign cycles as they go from sequence to sequence (you do not want to be hitting people multiple
times that you have already engaged with – this will waste time, money, and get you at risk of getting your business reported to the Attorney General)
Pick at least one method that you want to get really proficient at and master that channel. Review the data, understand trends in your outbound marketing, and make adjustments quickly
when necessary, but don’t try to be an expert in ALL the marketing methods that are available when getting started. (we “boiled the ocean” too much with our channels and it ended up costing us more and not providing ROI)
Lastly, commit to your marketing channels for at least 3 months. Sale cycles can belong in real estate, and building a healthy pipeline takes time. Experiment with other marketing methods if you feel your market is better suited for one over the other, but don’t get
discouraged if you aren’t seeing leads flooding into your CRM the first few weeks…stay the course and persevere over your competitors who I guarantee aren’t as patient or committed!
4: Build your cash buyer & investor list
If you’re like me and my brother when we first started out – we committed all of our time, $$, and resources into acquisitions and finding the right deal. You certainly can FIND money when sourcing a good deal, but you cannot MAKE any money unless you connect the dots between property and qualified buyers. At the end of the day, no buyer means no deal and no $$ back into your business.
I can confidently say that we lost out on tens of thousands of dollars when we first began because we did not have strong enough relationships with the right buyers in our markets. It caused us to move slower, not take as many risks in getting deals under the agreement that ultimately got lost to competition, and forced us to be on the defensive when negotiating with buyers because our options were slim, and we were desperate to just make any $$ on any deal we got under contract.
Which is more important, the deal or the buyer? That is a debate that can rival the age-old question “what came first, the chicken or the egg…” The best answer is you can make money doing both. However, if you want to build a sustainable and successful business to make life-changing money and generational wealth, it’s important to devote time, $$, and resources equally into both Acquisitions and Dispositions.
Luckily – dispo is an easy fix, (and let this be a reminder or warning to anyone who is reading this that is just starting out) network with as many buyers in your market as you can and treat disposition marketing the same as you would with acquisitions. The more buyers you have, the more deals you can move and the more $$ you can make.
Now that you have the framework to get started – your speed to achievement will depend on the amount of time & money you have to invest into your business. The more money you have, the more you can put that money into software, tools, and the hiring of virtual assistants or employees to help delegate tasks in both acquisitions and dispositions. The more time you have, the less money you will have to spend in these areas which can make doing the day-to-day much quicker. If you are in the luxury of having an abundance of both, then you can easily grow to six figures or more in your first year.