From Jamel Gibbs, Wholesaling Advisor...
The last four to five years have brought so much change in the real estate market and economy, that many folks are feeling almost paralyzed in their real estate investing business.
Are you familiar with Spencer Johnson’s timeless parable Who Moved My Cheese? If so, then you know that “the cheese has moved” and real estate in general has changed more than we ever thought imaginable only a few years ago.
Like the characters in the book, "Hem and Haw," far too many of us have become so thrown off balance by it, that they've slowed to an uncertain crawl, or flat out gone out of business.
But honestly I've got to say that today’s market hasn't affected my business as a wholesaler all that much at all.
Why? Because I've adapted to the many changes we are seeing in the marketplace right now. Along the way I've tweaked and adjusted the way I do business to “move with the cheese” of the market.
Here's What I’m Going to Show You
In this lesson I’m going to show you exactly how you too can work in this new wholesalers market and be successful. I’m going to share with you my “3 Must-Do’s” to be successful in wholesaling right now. These are the three things I've implemented each time the market has changed – and we know it’s changed a lot over the last few years.
By the time you finish this lesson you’re going to know exactly what you need to do to get (and keep!) your wholesaling business running in a way that’s going to put all those other scared wholesalers who look like a deer in the headlights each time there’s a change in the marketplace to shame.
First things First - You Have to Adapt
Before we jump in to my “3 Must Do’s” I want to share something really important with you.
Here it is: I’m not doing things the exact same way I did five years ago. I've had to adjust my offers. The same house I would've bought for $50K two years ago is now worth about one-third of that in the market I’m working in. A house that I would've paid $100k for back only five years ago is worth about $30k now.
I’m going to show you how you can also grow your wholesaling business in this changed (and what seems like, ever changing) market, just by simply adapting to the new marketplace.
Next: Overcome Your Fear that “This Just Won’t Work in My Market”
If you’re concerned about your own market viability – maybe there are foreclosures on every corner or maybe not – don’t worry, it's as simple as this: If you have recent cash sales to cash buyers in your market, then you have a viable deal making market - go carve out your piece of it!
It’s easy to get a list of cash buyers in your area and see if your market is viable. That’s a topic for a whole different lesson really. But my point is, if you have cash buyers, then you have a viable market as a wholesaler.
Without further ado – here are My “3 Must Do’s”
Wholesaling in a changing market really boils down to three essential things:
1. Know Your Cash Buyers
It may seem simplistic to day, and maybe a little like Wholesaling 101. But you've gotta keep your finger on the pulse of the legitimate cash buyers in your area -- and I mean the buyers who are actually, currently closing cash deals.
Without cash buyers you don’t have a wholesaling business, right? Any self-respecting wholesaler already knows this is the cornerstone of your whole business.
No cash buyers = no money, no business.
Know cash buyers = cha-ching!
But the problem is that today’s cash buyers aren't yesterday’s cash buyers. Many have come and gone, some got out of the game and some got back in. What’s more, the numbers your cash buyers are using today aren't the same numbers they were using yesterday.
As I said, if you have recent cash sales to cash buyers in your market, then you have a viable deal making market. But you have to tap into it, and far too many investors out there are still trying to wholesale todays deals to yesterday's buyers.
Bottom line, you've still got to go out and find out who the cash buyers are right now, and then do your homework on what they‘re looking for, so you can be the person that brings them the deals they want. If you've already done that once before a few years ago, you may well just need to go do it again.
The essentials you need to find out from any cash buyer are:
a. Who are the cash buyers?
b. What are they buying?
c. Where are they buying?
d. How much are they spending and
e. How quickly can they close?
You have to know these things. But today’s market is fluid and the cash buyers can be more of a moving target than ever. Your job is to stay on top of it. You need to do your research and keep it fresh, as this is the most important information you must have in a wholesaling business, no matter if you are in an up or down economy and no matter what changes start to happen in your market.
Bottom line, put your finger freshly and firmly on the pulse of your buyers. And keep in mind it can be a moving target. Move with it.
2. Know Your Numbers
You need to understand what your numbers are and what they need to be BEFORE you go out and start putting deals together.
As I mentioned before, the market has changed so much that I’m paying about one-third of what I used to pay for wholesale deals. I’m able to do this because I know my cash buyers (see #1) and I know what they’re paying.
Wholesaling 101 is knowing that you have to back your numbers off of what the average cash buyer is paying. And if they're paying 30% less than they were 4 years ago, now you are too. Knowing your numbers means knowing their numbers, which means knowing them.
3. Shake the Tree. Hard and Often.
When it comes to wholesaling (and real estate investing in general) you've got to be aggressive; you must shake the tree hard and consistently in order to make things happen!
Besides knowing my buyers and their numbers really, really well, one of my biggest personal secrets to thriving in the current arena while others are languishing is my fierce determination to make it happen. I’m a go-getter to the core. I don’t just think about doing deals – I do deals, no ifs, ands or buts.
This mindset has me out there taking massive action all the time. Trust me, I know when to play and when to rest. But when I’m working, I’m working and nobody’s going to stand in my way.
This attitude – this mindset, forces me to be out there shaking the tree. I’m mailing yellow letters. I’m calling REO agents. I’m driving my neighborhoods. I’m calling my deal partners, pressing them to take action. I’m all about forward momentum and making things happen.
And thanks in large part to all this tree shaking, deals just keep falling into my lap! It’s really as simple as that. I know you've probably heard lots of folks give you the “take massive action” speech, but I hope this is the one time it really makes a big enough impact on you to really stick. Because truthfully, it is one of my biggest secrets to success, and that’s no joke.
Here’s the Bottom Line
Wholesaling in a changing market really boils down to three essential things:
-
Really keeping your finger on the pulse of the legitimate, current cash buyers in your area. What are they buying, where are they buying and for how much?
-
Back your numbers off of theirs. If they're paying 30% less than they were four years ago, now you are too. Reverse engineer your numbers from the cash buyer’s perspective.
-
Really be aggressive in your deal-getting; shake the tree hard and consistently - make things happen!
A Quick Sample from My Real Life
I recently negotiated a deal, and before I even signed the purchase contract I presented the property to my cash buyer at a price I wanted to get to be sure I made a good profit on the deal. The deal was so good, my buyer quickly made me a full price offer, and I was then able to quickly close the deal.
This is your textbook, picture perfect wholesale deal, right? These are the deals everyone in the business is looking for all day long. And they’re the deals I actually close all day all – right now, in the current economy, in multiple real estate markets, to the tune of 5 to 7 times a month.
Why? All because I knew my market, I knew what my cash buyer was willing to pay and I had adjusted my numbers to adapt to the changed market – but most importantly I had been very aggressive in finding the right deal and cash buyer.
Bottom Line: You Must Take Action and Be Aggressive
In closing, remember that book Who Moved My Cheese that I mentioned earlier? If you've never read it, you really should. Its short, easy to read and contains a profound lesson.
The two human characters in the book, “Hem” and “Haw,” couldn't figure out what to do when someone had “moved their cheese” and they no longer had food to eat. Hem is paralyzed by the lack of cheese and daily routine while Haw overcomes his fear and adapts and finds new cheese. Haw (the adapter) prospers and becomes happy while worrying that his friend Hem may become extinct if he does not finally adapt.
Don’t be “Hem,” adapt to this new market and take action, be aggressive and grow your wholesaling business.
You may have heard they saying, “Keep doing what you've always done, and you’ll keep getting what you've always gotten.” Well, yes and no. In the case of wholesalers from 3-4 years ago, if you keep doing what you've always done…well, you already know you’re not getting what you've always gotten. Move with the cheese!
As long as you can find three to four solid, legitimate cash buyers, willing to buy properties from you and you know what they're willing to spend and you are out there making cash offers, then you’ll be making money in wholesaling.
-
Go out and find out who are the current, active cash buyers in your area.
-
Once you've found your cash buyers, find out exactly what they are buying, where and for how much.
-
Check your numbers. Find out what cash buyers are paying and reverse engineer your numbers from the cash buyer’s perspective to ensure you are making good offers that you know you can close and make a nice profit from.
-
And most importantly, each and every day you gotta be aggressive – don’t let worry, fear or intimidation about the new market paralyze you, but learn how to adapt and be aggressive in your deal getting. Shake that tree hard and often!