Wholesaling appeals to newbies in real estate because you don’t need any personal finances of your own to get started. It’s also possible to close a deal in as little as 30-45 days—giving many the impression it’s a quick and easy way to make money.
But that doesn’t paint the full picture.
While it may sound easy, many aspiring real estate investors end up quitting when the reality of wholesaling really dawns on them. Although the idea of finding a motivated seller and connecting one to a serious buyer sounds simple, it’s easier said than done. There’s so much more to it than that.
You aren’t just going to find a buyer and seller walking down the street. Wholesalers need to have good people skills because real estate is a social profession by nature. What’s more, unlike other real estate ventures, wholesaling is very time-sensitive. As a wholesaler, you have to be up-to-date with current real estate market trends, build a network, determine what’s a good deal, negotiate the deal, and so on.
So, before you go into the wholesale business and start investing yourself, you have to make sure it’s right for you. Let’s take a look at how you can figure that out by answering 5 questions.
5 Questions to Determine If Wholesaling is for You
Wholesaling is often seen as more beginner-friendly than other real estate investment strategies. Of course, it still comes without its own unique difficulties. Ask yourself the following questions to get a clearer idea if you’ll enjoy wholesaling, or if you might be better off trying something else.
- Do you have a big enough network to find deals?
Wholesaling takes a lot of work, doesn’t have a regular income, and deals in progress don’t always close. To make it easier, you need to regularly build your network. As a beginner, you might not have enough connections to sustain yourself and find deals, making it far more difficult than someone with experience and connections.
But it’s not all bad. For those who power through and successfully grow their network, wholesaling can be a very rewarding career. With familiarity in the real estate market, a grown network, and a good grasp of the wholesaling process, it gets easier as wholesalers become more seasoned.
2. Are you willing to put in the work to close deals?
In wholesaling, to find success, you have to actively work for it.
Closing deals takes a lot of effort. From finding a motivated seller to an actual buyer and everything in between—it all needs to be accomplished under time pressure. Wholesaling can therefore be very demanding, especially when the market isn’t hot.
Another thing you need to take note of is that income in wholesaling isn’t consistent. You earn only if you close deals. However, it’s also important to note that your income isn’t fixed. If you close more deals, you earn more, but if you don’t close any, you won’t make any money, either.
If you’re going to pursue wholesaling, you’ve got to be ready for all the mental and physical work it entails—and for the income to be less consistent than other real estate investments.
3. Do you have the necessary people skills?
Closing deals relies heavily on your ability to be persuasive to sellers and buyers. Remember, they’re also making major financial decisions, and they’re not likely to do business with someone they don’t feel comfortable with.
In wholesaling, you need to be persuasive, but also trustworthy, so you can show that you have their best interests in mind. If you have good people skills, you have a better chance of convincing sellers and buyers to do business with you. And more importantly, increase your chances of closing more deals.
4. Are you up to date with the real estate market?
Wholesaling isn’t just a matter of finding any random property and convincing sellers and buyers to make a transaction. Wholesaling also entails that you do your homework.
You need to know the market values of different properties and what kind of properties buyers are looking for. Research and staying up to date with the current market trends are crucial. When you’re looking for wholesale properties, you should also always consider the buyer and make sure you are finding properties that they’re actually interested in.
5. Can you properly assess and make financial computations for properties?
Wholesaling relies on a lot of math. You’ll have to determine the right selling and buying price, the expected repair costs, profit margins, and so on. Getting the right figures is important to make sure that everything is done fairly. That way when any questions on the pricing come up, you can justify these with numbers and the correct figures.
Make Sure Wholesaling Works for You
If you want to excel in your career, you have to like your work and it has to be right for you. As Steve Jobs—American entrepreneur and co-founder of Apple—once said, “The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle.”
If after asking yourself the questions you mostly answered yes, then congratulations! You’ve got what it takes to pursue wholesale real estate. But if after asking yourself the questions, you mostly answered no, then you may want to re-evaluate your plans.
Is there anything more about getting into wholesaling you want us to discuss? Let us know in the comments below!