Ah, for the good old days of 2009.
Finding deals was SO easy.
We didn’t even need a marketing budget; there were literally thousands of bank-owned and short sale deals just sitting right there in MLS, and a day of looking at 15 houses and making offers would usually turn up at least one at literally fifty cents on the dollar.
Of course, figuring out what “fifty cents on the dollar” meant was a guessing game; so few houses were selling that coming up with comps was nearly impossible.
And getting those deals sold was a teeth-gritting, anxiety-producing process, too; even at a 40% discount, there weren’t a ton a motivated cash buyers in the market, and when we called 10 who’d specifically identified that kind of property in that area as their favorite, they’d all say, “Yeah, I might be able to get there in the next week or 2”. Buyers saw no reason to go running down the hill with their hair on fire about any particular deal, because there were SOOOO many deals available.
In short, it was easy to get deals. There wasn’t even a need to talk to sellers; banks, auctions, and hedge funds had all the inventory you’d ever need. The time investment—and it was a big, ongoing investment—was all in nurturing a buyer’s list, and repeatedly contacting that list about any given deal, and negotiating with buyers on the price, and just getting the dang things sold.
The job, in 2009, was buyers, buyer marketing, and selling deals. And if you didn’t live it, you’re probably thinking, “I WISH that was the problem! Buyers are easy; I can’t even find a deal!”
And that’s the story of 2022. And ’21. In fact, it goes all the way back to about ’17, when this seller’s market really started to get into full swing.
The JOB of wholesaling—in fact, the job of real estate investing, full stop—right now is finding the right deals, which means finding the motivated sellers in big enough numbers to put together enough deals to make enough money to reach whatever your income goals may be.
And in today’s housing-short market (it’s not just us that are having a challenge with finding deals; did you know that it’s become a thing now for home buyers to do mass marketing to homeowners looking for SOMEONE, ANYONE who wants to sell a house off-market?) it’s the buyers who are easy and the deals that are hard.
The wholesale “game” is really more like a ride—a seesaw, to be exact.
I’ve been at it for over a quarter of a century, and I can assure you that, except for a short time here and there where we’re passing through a moment of balance, either inventory is headed up and interest in buying that inventory down, or vice versa.
And it’s always the “down” side that creates our work as wholesalers.
If we can’t adapt how we spend our time and hone our skills as the forces in the bigger economy move the market seesaw, we can’t survive and thrive as the buyer-seller ratio changes. And it always changes.
In 2022, we’re living in an era of very low inventory, and very high seller demand. Don’t think there aren’t some good things about this:
- Any good deal sells in days
- If one buyer doesn’t like the deal, or can’t close it, there are hundreds of others chomping at the bit to take their place
- Buyers are having NO problems getting the money to close—the market is flush with hard money and private lenders, and with convention money to take those lenders out, for BRRRR buyers
- The competition on the buyer side means we can sell deals for a higher percentage of value than I’ve ever seen: 75% of ARV – repair costs for deals needing moderate to serious rehab, 80% of ARV – repair costs for deals needed little rehab.
- And because prices are up significantly, so are wholesale fees. It’s just math: it’s easier to build a $20,000 wholesale fee into a $200,000 deal than it is to build it into the $50,000 deals we saw in 2009.
But there are the obvious negatives, too:
- There are many fewer truly motivated sellers in the market; there are still the same number with real problems, but they’re ALL aware that the market is hot, and they can and do hold out for higher offers because
- The competition for those properties—especially the uneducated (or unethical) competition that will happily offer WAAAAY more than they can sell the deal for—is higher than I’ve ever seen it.
So what’s a wholesaler to do?
The answer is easy, but the work, as is the case no matter where the seesaw happens to be at this moment, must be done, and done persistently and consistently if you hope to make good money in this business.
Your main work—and I mean, like, 85% of the time you spend wholesaling—is to find sellers who have a property and have a problem. The old rule of “20 suspects = prospects = 1 deal” doesn’t apply at the moment; it’s more like 30 suspects (that’s a person who has a property and an ACTUAL problem, not one of those “I want to sell but I’ll wait for my price” problems) = 3 prospects = 1 deal.
At the moment, those suspects all live in the off-market world, which means that if you don’t have a marketing strategy—direct mail, online, door knocking, warm-calling, SOMETHING (or better yet, multiple things), that you implement well and consistently, you’re not going to make it in the wholesaling business in 2022.
You may need help to organize and implement all of this, especially if you have a full-time job. If so, get it.
It also means that you have to be, or get comfortable with talking to human beings, or get someone who is to partner with you. You HAVE TO get to the root of the seller’s problem by asking lots of questions that might not be comfortable for you at first: questions like, “What made you decide to sell now? When do you need to sell by? What happens if you don’t sell by that time? What’s your bottom dollar if you can get the house sold by then?”
Your secondary work is to act on those leads FAST.
You can’t spend days on comping, and calculating repair costs, and looking up code violations, and waffling about what you want to offer. With the right interview questions, you should be able to do most of that at your desk in about 20-30 minutes. If you can’t, you should probably be at THIS WORKSHOP on the 29th of January.
Your goal should be to know which leads to left-swipe before you even get off the phone with the seller (because he’s not motivated and has no reason to be), then to get back with the ones who ARE motivated with a “soft offer” (“I think that based on what you told me, I’ll be in the $xx,xxx range as an offer”) within 24 hours, and then go see the property and have a “hard” offer (“Here’s what I can pay, contingent on inspections etc.”) within a day or 2.
And your third job?
Patience, and follow up.
Most of the deals I did in 2021 came long after the initial soft offer.
Most sellers said no to that offer, because they had a (ridiculously) higher one, the eventually fell through.
But after months of ‘check in’ calls, they realized that the (uneducated? Unethical?) buyer that had led them down the primrose path with that higher offer wasn’t going to perform, and because I was the one who was “still there”, they accepted my offer.
So yes, wholesaling is still a good, money-making strategy in 2022. The thing is, you have to:
- Make it a goal to talk to a certain number of suspects every week, no matter what. No calls from your marketing? Start warm calling. No one answers? Start texting. No one resConds? Find them on Facebook and send a private message.
- Get comfortable with really talking to sellers, and listening to what they say, and asking the hard questions about their situation
- Get your comping, inspection, repair estimating, and offer making skills in place so that you aren’t one of the masses who offers too much, can’t sell the deal, and ends up teeing up a deal for me, or someone else ,who tells the seller the truth the first time
- FOLLOW Up like your income depended on it, because it does.
So yes, YouTube sort of lied to you when it told you that wholesale was “easy”. It’s not easy—it’s simple. It gets easier the more you understand it and the more people (VAs, team members, supporters) you put in place, but it always has, and always has been something that you have a work at, even when you’re frustrated, even when the market changes, even when you’re tired or bored with it.
If you’re not serious enough about getting the rewards to do the work, wholesaling isn’t for you—not in this market, and not in any market.
But if you are, you can definitely make a full-time income with part-time effort doing it in 2022.