Wholesaling can be broken down into a simple formula. Here is our formula for a successful wholesale real estate business.
Q-L + Q-H + R-S + B-L + R = Big Dollars. What does this mean? Let us tell you.
The Q-L stands for quality leads. In order to be successful as a wholesaler you need to find sources of leads that are quality houses. Quality leads that is; that means that there motivated sellers. You want to have a seller that’s not trying, that doesn’t necessarily need to sell. You don’t want that seller that’s just kind of testing the water to see, “Oh maybe I can see what I can get.” Or, you know, you need the motivated sellers.
A lot of real estate investors fail because they don’t deal with enough motivated sellers and that’s what we mean by quality leads. A quality lead really equals a motivated seller such as a bank or someone in pre-foreclosure or a HUD property or an old landlord that’s burned out. You want to have those quality leads coming at you every day, every week because those are the deals that are going to make you the most money. Motivation = Money.
Q-H, which is quality houses It is important to have quality leads from motivated sellers but you don’t want to have junk. You don’t want to have houses that are not going to be marketable to your back end buyers. You’re going to want to houses that are your bread and butter type houses. You want to avoid houses that are slanted to the left or houses that are what’s known as functionally obsolete.
So you don’t want houses like that or houses that are too small. You want bread and butter houses. Houses that you are proud to represent. This is an area where some wholesalers make a mistake thinking that just because they found a deal where the numbers may work that they automatically have a good house. A bad house is not going to sell because your investors aren’t going to want to junk.
And remember when we say mean these houses are going to need to some type of work. They’re going to need some degree of fix-up whether it’s minor – paint and carpet, or whether it’s a full blown rehab where the roof and air conditioning system and floor boards are messed up.
Most of the houses you’re going to wholesale are going to be your fixer uppers or your handyman specials. There not going to be your pristine houses in great condition and that’s because there’s a lot of equity in the houses that need fix up. As a result of this rehab, your end buyer’s going to be able to create that equity as they fix the house up.
S= System. You need a repeatable system. You need something that you can do day in and day out. That’s going to be your success. You want to have a steady stream of customers coming in and out and they can only do that if their systems internally can be repeated. Treat your wholesaling business like Mcdonalds. You as a wholesaler want to be able to set yourself up where you can put your business on auto pilot and systemize it where your doing the same thing over and over again until where it becomes really on auto pilot.
So it’s very important to be successful and to be in a business where you can make $10,000 dollars from one deal every 30 days and then build this into a six figure or even a seven figure business. You need that repeatable system.
And then B-L. B-L is your buyer’s list. Your buyer’s list is your gold. It allows you to be able to find a, you know, when your out there looking for your houses you can say, “Oh yeah I know that John Smith would like this house.” Or, “I know that Sally would like this house.” When you are out looking for houses you’ve already have a-determined what your buyer’s want because your tuned into them and developed that list.
Your goal should be to have a hungry list of buyers waiting for your next deal. Having this allows you to be able to make offers with confidence knowing that you’re going to have a buyer to wholesale to right away. One of the main reasons for our success has been our ability to develop our buyers list because part of our success is really attributed to knowing what our customers want and having the relationship with them. And that’s the one thing that you as a wholesaler really, really need to focus on is that list of buyers.
R is very critical as well, R = your resources. These are your people on your team from the closing your closing attorney, your real estate agents, your contractors, etc. that you can refer out to your buyers.. You cannot be successful in this business or any business at all without teammates, without having people around you that compliment you. These people can also be a part of your internal team i.e. an assistant or a birddog that’s out there looking for deals for you.
A big part of our success is really attributed a lot to our people internally and then our real estate. If we couldn’t do the amount of volume of business that we do without our real estate agents or without our closing attorneys being able to get deals done quickly when we need them to. So it’s really key to have the right resources in place, have the right team.