To Be Or Not To Be: Wholesaler
I am still confused about having to be a birddog before a wholesaler. Alot of people suggest birddogging first but I feel that I am ready to jump into wholesaling; am I crazy? What is the biggest risk? Is it just that you might have a property on your hands that you can’t sell to an investor or a buyer? All of the wholesale material that I’ve been reading suggests wholesaling as a way to start into RE with very little money. To my understanding, the main difference between birddogging and wholesaling is that with wholesaling you get the property under contract (in your control), but the same amount of research is required for both, is that correct…thanks in advance for your help!
raquel,
The reason many are directed toward bird-dogging first is due to a lack of capital, or a fear of failure issue. If you feel that you're ready to jump right in doing wholesaling, then I suggest that you go for it.
Might I recommend calling some of the investors that you intend to do business with, and find out from them what their minimum requirements are when analyzing a deal. That way you're not spinning your wheels tying up properties that investors don't want.
Good luck
Jeff
thanks for the encouragement Jeff! When you say "capital", when is it needed and what amount is a safe amount? I keep reading about situations where very little capital is required. How is that?
Raquel,
I hope you don't mind if I throw in my two cents.
I think almost every deal you will be successful at completeing is going to require some "capital". The main thing to realize is that if you know how to structure it or you have the resources, it doesn't necessarily need to be "your capital". There are plenty of books and courses and research material out there to spark the creativity in you.
As far as the difference between birddogging and wholesaling other than lack of capital goes, I have to agree with Jeff. If you feel your ready you should just go for it. Good Luck.
Dave
[addsig]
When I say capital, I'm talking about enough money to get the property under contract, and succesfully market it to investors. You're looking at earnest money, and possibly some advertising expenses. If you're doing this full time, you'll want to have more than one under contract at a time, and enough spare change laying around to live on until the deals progress to the point that you get paid.
One more question someone can probably answer...but I have access to the MLS (mulitple listing service) and have found a few properties that could possibly be good investment properties for an investor. Seeing how it was somewhat simple and only required a little time to go look at them, wouldn't an investor have access to the MLS as well instead of paying a wholesaler? I know that the MLS is only one way of picking up properties, as a wholesaler, but is having access to the MLS really an advantage?
Raquel
I'm told that the really big fish in this business Use an army of bird-dogsand wholesalers to find their deals because they are so busy making the deals that they don't have time to look for them too.
I think this really makes some sense. Every extra set of eyes out there finding deals for you multiplies your efforts. I believe that it was Andrew Carnegie that said something like "I'd rather have the efforts of 100 people for 1 hour that my own efforts for 100 hours." When you get really busy, managing projects, and making deals, driving around a neighborhood is time that you could spend doing something that only you can do. If you have full access to the MLS, then you can use it. I'd caution you though that the homes listed in the MLS are listed with real estate agents. That commission could make the difference between a good deal and a great one, or a good deal and no deal. You still should try to find the ones that haven't been listed. Vacant houses, run-down rentals, or homes in obvious need of repairs. Use the MLS too,but don't neglect where the real money is either.
Just my 2 Cents.
Jeff
Raquel,
Birddog - you generate leads and someone who knows how to put deals together does so.
Wholesale - you put the deal together and you sell it on as something all set up. This means you can handle the process for getting a good deal agreed on paper and that you can then sell the deal as agreed. You also need to know how you will either get out or close on the deal if you can not sell it.
You will do better with the seller if it does not feel like you are just shopping the deal around. They want a buyer, not another messenger. Hence you have to present deals that will fly and that you expect to close on one way or another. Otherwise the seller is looking at you as just another sales channel.
Conclusion - you might think you are ready to wholesale. The proof will come when you have sold some deals. Based on the questions you are asking be prepared to learn quickly when you are really trying to get a deal on paper. Ask questions on TCI as people can offer suggestions for what to do. Not the same as being able to agree the finer points when sitting in front of the seller.
John
[addsig]