3 Steps to Start a Profitable Real Estate Wholesaling Machine that Generates 5k per Month

Jun 14

Okay, so some of you guys may know me as just the Airbnb or furnished rentals guy,

but there's a side of my business that fewer people know about - which is real estate flipping and wholesaling. This started when covid hit and actually, at the time, I was way more into it than I was rentals or Airbnb.

I think most of you know what house flipping is but for those who don’t know what real estate wholesaling is - it’s the process of finding an off-market property, then signing a contract with the seller saying that we have the option to buy the property or sell the contract to someone else, then finding someone to buy our contract to purchase the property for a higher price than we paid for it. And if you do that right, you make a profit or spread as some people call it.

Sometimes people get confused with the concept when a house is involved so imagine an example with a car.

You find a seller of a car, you then find someone who’s looking for the car, you get the car under contract and 10k but then you sell that contract to a new car buyer for 15k - and that 5k serves as profit, and essentially a finders fee for making the connection. It’s pretty cool and the people who are really good at this make tons of money

I was interested in this strategy for a few reasons:

I felt like the money was really good AND there were ways to automate or delegate a lot of it. I had some investor friends who were making 5-20k per month and didn’t have to spend that many hours on it after it was developed thanks to automation and virtual assistants.
The second reason was that I thought it was an important skill to learn. Essentially what wholesalers are good at is finding off-market real estate deals and then reselling them to other people. As real estate gets more competitive, I just felt like knowing how to find off-market deals would be more and more valuable.
Lastly - It’s a great way to find rental deals for a personal portfolio. And especially because a lot of these deals can be negotiated with creative financing with the seller. Im not sure If I follow this but some wholesalers follow the saying - keep the best and wholesale the best. Sort of the best of both worlds

So fast forward a year and a half and wholesaling has been able to generate about 130k in profits for me. And I really think it will only get better as we improve the systems and hire more people.

So... let’s get into the process we use for each and how we set them up. And if you guys want to see more content like this in the future.

What Market and What Marketing Strategies:

This was something I really struggled with at the beginning.

Mainly because there are so many potential markets and so many different ways to market to people in those markets. Some people just pick a market because they live there and some people pick a market for a specific reason. Some people use calling and other people use direct mail.

Some of the other popular marketing strategies are direct mail, cold calling, texting, and ringless voice mails.

For the location - I ultimately decided to go with Kentucky because I made a lot of relationships there when I lived there and it has a strong market for flipping/cash flow rentals and has a lower price point - the median purchase price is: 175k

Then for marketing strategies, I decided to go with texting.

This was for a few reasons but mainly because it’s very cheap compared to the other strategies and I think the open and response rates are the current highest of any marketing.

The Systems, Virtual Assistants, And Where We Get Our Data or Records

I’ll probably do a breakdown on each part of this process but from a high level here are the exact tools we use and the exact tools I think you can use to get started very quickly.

For lists - We buy our lists from a guy named Josh Chan. He was recommended by a friend - Omar Shazley who also has a growing wholesale business in our CFCC but he introduced us to Josh and we have been really happy with the list quality and the price.

I don’t know how he does it but he sells his skiptraced records for 3-5 cents a piece. Normally with other similar services, this would be 15-20 cents. As far as the type of list, we usually pull high equity, out-of-state owners, and either tax-delinquent or probate
Next, we take those records and upload them into a texting tool called Launch Control.

We’ve done training on this tool in our Communities - MMTR and have a training coming up in CFCC but from a high level, it’s just a really well-organized texting tool that has tons of built-in templates and follow-up automation.

It’s great for sending a lot of texts quickly and gathering information to see if they are potential leads
Our CRM. For those that don’t know what a CRM is - it’s a customer relationship management tool.

A fancy word for a tool to manage customers, leads, note tracking, follow-ups, and current deals. We currently use the CRM Resimpli. I considered a few different CRMs and started with a really popular one called Podio - which I thought I would like but after about 6 months building one ourselves and then paying a subscription for a pre-built one, I decided to move away from it.

It was just too complicated and if you broke something, the entire thing could stop working. Resample is a simple, straightforward effective CRM.
Virtual assistants and workflow: we like finding virtual assistants from online jobs. ph and different services depending on what we are looking for.

In this case, we got a referral to someone who had real estate wholesaling experience. She is now the one who is texting and following up calling on our lists in launch control.

As I mentioned before, whenever she identifies a lead after qualifying it, she will move that lead into our CRM - Resimpli.

When she does that our acquisitions person gets a notification and starts working on the lead to set up an appointment. Our acquisitions person has become a big part of this process as he will step in and qualify leads and analyze them to make offers.

I got connected with Lucas through Facebook actually and he was just someone who had sales experience and was looking to make a little more money. We started slow and now he has become a great addition to what we do

Our Process When We Have A Deal - How to Sell It

Some people may disagree with this but for beginners, I’m going to recommend the same thing we did at the beginning to sell deals. And that’s partnering with JV partners who can help sell your deals for you.

What this means is that someone will help you sell your deal to their buyer's list for a cut. This is typically handled by someone with a title called 'dispositions' but at the beginning, it can sometimes be tricky to find buyers quickly when you are on a due diligence time constraint.

It’s good for a few reasons but mainly because you don’t need to do any of the buyer-list-building AND typically if the JV partner has more experience than you, they can help facilitate the closing and process. You want to oversee this and be involved but at the beginning, there were just a lot of firsts and we met some great JV partners to help sell our deals.

The other cool part about this is that once you sell a few deals to buyers from a JV partnership, you most likely will now have relationships with a buyer who can buy more deals from you. You don’t need to involve another JV person if you can go directly to that buyer again

This was not something we did at the beginning, and I regret it. We had a deal that missed due diligence because we couldn't find a buyer and we lost money on it.

Regardless of finding your owner buyer - or working with a JV partner - you will still need to create a marketing package and coordinate with the seller to transact the deal.

This is something that Claire handles now - she runs operations for a few different areas in the company but when we have a deal that looks good and locked up under contract - she will work to find either JV partners or end buyers to buy the deals. She also helps build our marketing packages and does a great job with the dispo or 'dispositions'

We post them in networking FB groups, and flipper groups and now send them to our growing buyer list

CONCLUSION

So does wholesaling sound like a way you want to make money? Can you start marketing tomorrow and locking up deals that set you free from your office job?

My only definitive advice - if you take one thing from this video and you are going to try wholesaling.... is that you must give yourself AT LEAST 90 days to get trained, start marketing, and hopefully work through your first batches of leads.

I’m not saying you can’t get a deal sooner, but like anything sales-related, there is a process to build up leads and a funnel to then start closing deals.

Also - I know there are other people involved now and that can be intimidating to some people but - at the beginning - it was just me and one other person.

I knew from the beginning I didn't want to be the one making the calls/texts and had experience with virtual assistants so I was going to outsource that part, but everything else I was doing myself - which was okay at the beginning

It’s normal to be doing a lot yourself and then as you start making money or gaining momentum you hire people and build out better systems.