CO-WHOLESALING–WHAT IS IT ALL ABOUT?
Due to such a overwhelming interest from a lot of our students in the wake of the launch of the with SystemNext Step Intelligence, I have decided to write a little article on the art of Co-Wholesaling.
Before we get started with the strategy, let’s first take a look at the common mistakes made when wholesaling. First off, lets get something straight, there is no magic pill or shiny penny that will get you rich quick by doing absolutely no work. You are in the right place, at the right time, with the right team. We must crawl, before we walk, and walk before we run. In today’s market it is important to not be fooled by the hype and the flair that gets thrown our way every day. Always keep in mind that this is a business so we need to get to work. Do yourself a favor and choose one strategy so you don’t spread yourself too thin and get frustrated. Another common mistake is trying too many techniques at the same time. Avoid strategies that produce cash slowly. Focus on making money in the next 30-60 days. You don’t need to know everything to take action. Consider that 80% of your results will come from 20% of your efforts, and 20% of what you implement will make you money. In conclusion the advice I want to leave you with is to focus on taking action that will produce results, there is no magic pill or short cut to success.
Now for the stuff y’all (yes, spending 8 weeks working in Alabama has me talking like a Southern Boy) have been waiting for. The best advice we can give to you is to go out and start Co-Wholesaling NOW. Let’s take a look at exactly how you do this. First, you need to shift your mindset and make friends with your competition. As a wholesaler you should always call on every “we buy houses” and “I buy houses” signs posted all over your market. We call every single one of these signs that we see. I actually keep a legal pad in my car so I can write down the numbers and take detailed notes when I call them. We typically ask them if they have inventory or if they have buyers. We ask what they are looking for, what % of ARV they are paying, what areas of town they are buying in, etc. While we are on the phone with them we also ask them if they have any wholesale deals they are trying to sell. If they say yes, we ask them if they would be willing to let us work on marketing the property to find a cash buyer. We tell them if the deal is right we can close within 2 weeks with cash. (We can do this because we have cash buyers already in place to buy these types of deals in specific markets. Once you identify your competition, you need to find out what they are buying, where they are buying, and how many properties they actually buy vs. how many they wholesale. You also want to make sure that before you take the time to start marketing another wholesaler’s property you need to work out a co-marketing or fee agreement and get it in WRITING before moving forward.
So let’s sum this up by leaving you with the important things to consider when Co-Wholesaling:
1. Make sure you ask what they have done to market the property, is it online, in the paper? You want to avoid the mistake of getting a property marketed by the wholesaler at $100k, and then create a flyer and market if for $110k when typically anyone who receives a property is going to Google the address to see what price it has been advertised at.
2. Work out a fee agreement in writing with the wholesaler. If they net $2500-$5000 less per property but you help them sell 5 properties that is a WIN/WIN.
3. Make sure you have the mindset of hitting base hits: For example $2,500-$3,500 per property is a good fee to earn for doing a little marketing. Don’t try and make $10k and price the deal out of being an attractive and discounted deal just because you want to hit a home run and make big bucks on the first deal.
4. Building relationships with other wholesalers is just as important to your business as having private money and a go-to agent on your team. After you have called them and asked them the questions you need to work with them, confirm their contact information and add them to your buyers list.
Taking action and applying this strategy will allow you to organically grow your buyers list fast. Imaging meeting a wholesaler who has a buyers list of 500, another one with 1,000 buyers, and two more with 500 buyers each. If you add these four wholesalers to your buyers list and send them any deal you have, you would get your deals in front of 2,500 buyers.