In Wholesaling go with the Flow- Not against it

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Justin: How are you? My name is Justin Wilmot. Today, I will be your host for today’s FlipNerd REI Classroom. And today, I’m going to talk to you about moving with the flow, not against it, specifically in the wholesaling business.

Mike: This REI classroom real estate lesson is sponsored by HYPERLINK “http://theinvestormachine.com”
theinvestormachine.com, FlipNerd’s private investor coaching program and your blueprint to investing success.

Justin: Now, as a seasoned wholesaler, I actually got my start in the downmarket, in the good old 2008-2009, when foreclosures were abundant and a lot of us that were thriving good in that time, we just had a couple relationships. And literally, for me, I was getting multiple properties literally fed to me on a silver platter. So inventory was a very easy thing for me to come by and, more importantly, it didn’t cost a lot of money, and I didn’t need to have all the systems set up that I do today in order to get the inventory in hand and under contract.

So lots of foreclosures, lots of bank-owned, lots of HUD stuff. And so as the markets have changed and evolved and it’s heated up, and become more of a seller’s market, and inventory has gotten smaller and reduced over time. As many people or you’re probably experiencing, what we decided to do years ago, as soon as I started to see the pinch and as soon as I started to feel the regulations from the government and the seasoning requirements from Fannie Mae, and really starting to push the investors more out of the foreclosures, particularly the MLS-listed foreclosures, we started to change the business model.

And just by being aware, right, that the flow of the market was trending somewhere else and this is something that I see a lot of, where people are still trying to tread against the water, it’s still back 10 years ago, five years ago, and having a really tough time and meeting a lot of tough issues, or sending out a lot of direct mail and not getting it. Or trying to make offers on foreclosures, which is crazy to do in most markets. There are still small pockets across the country, but generally, very difficult to do, particularly on the MLS. You’re not getting deals there.
So what we’ve decided to do is look at everything from 30,000 feet and follow the trends, and go with the flow. And the flow has been lots and lots of what I call smart money has been flooding into the market across the country. And these are from people that are typically just taking money, whether it’s out of a retirement account or 401(k) or IRA or typically stocks and putting it into a hard asset because most of the country believes that now is a good time to put their money into real estate long-term, maybe they would have the dreams of flipping a property, whatever, but these are typically your people that are newer into this space.

And so, when I started to notice that this is where a lot of the market is changing, are these people flooding into the market, inventory’s contracting, we decided to actually just start following the trends of the buyers, figuring out what it is that they want, and start acquiring inventory differently. So the days of us particularly needing to get properties under contract at 40, 50 cents on the dollar like the foreclosures were in the beginning, have really come to a slow, right? We still do it, we still get golden nuggets, we still do lots of direct mail, we still buy leads online, but I don’t need to get properties under contract for pennies on the dollar in a seller’s market anymore.

So keep that in mind when you’re meeting a lot of resistance and if you’re looking for properties for literally 20, 30, 40, 50 cents on the dollar, and if you’re meeting a lot of resistance, it’s because you’re in a red-hot, smoking seller’s market. And if they can list it at retail or 10% below with an agent and sell it because their neighbor just sold their property in a couple days, and Bob across the street just sold his property in six days, it’s going to make your life harder. Step back, if you’re wholesaling, step back, think about this, and start targeting those buyers.

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