Lex Levinrad talks to us today about how as your business grows, you’ll need a system in place to handle both the sellers side and buyers side of deals.
Listen in as Lex Levinrad explains what you need to properly get a system in place for your wholesaling deals so that nothing falls through the cracks.
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.
Lex: Hi, everyone, Lex Levinrad over here. I’m the founder of the Distressed Real Estate Institute. For you guys today, I have another show for REI Classroom. We’re going to be talking about building your wholesaling real estate system . . .
Mike: This show is sponsored by PassiveRental.com.
Lex: and building it like a business. When you first start out, especially if you’re a beginner, you’re looking to structure your first deal, find a house to buy, sell it to someone, and make some money. As time goes by, you’re going to build a business system just like we have where we wholesale 10 to 20 houses a month. And you’re going to need to have some kind of a system in place where you can keep track of all the sellers and keep track of all those buyers.
More importantly, you’re not going to be able to talk to everyone. In other words, there is no way you can possibly . . . just like I cannot possibly talk to all the sellers and all the buyers. That’s where having a system come into place is so important because essentially, the business that we’re in, when were wholesaling, really we’re the middle person. We’re the middle guy. We got a seller selling a house, we got a buyer buying a house, we’re the guy in the middle or the lady in the middle that’s trying to sandwich a profit of maybe 5%, 10%.
Picture sellers coming in, picture buyers coming in, and they’re all coming down a funnel. And that funnel is your leads coming in. If you don’t have leads, that’s a different topic, but you should have leads. When those leads come down the funnel on the seller side, you should have a script that you can give people that tells them exactly what to look for, namely just the property address, the contact info or name, email, etc., and then a system that they might be able to go up and pull up some comparable sales, pull out a preliminary repair estimate for the property. Then kick that up to somebody else who, in our model, we call an acquisitions manager, who would then go on and review the numbers.
Okay. So you’ve got your funnel coming in. And now, on the buyer side, it’s very important to understand that you’ve got cash-buyers calling your office and they want to buy houses, but you need to qualify them. You can qualify them by finding at what city they’re looking to buy in, or maybe there are two or three cities of interest that they have, find out what their price points are. Make sure they aren’t cash buyers or if they’re buying with hard money. Then how many bedrooms and bathrooms are they looking for, are they looking for a house with major rehab, minor rehab.
In other words, qualify them so that if you find a house that meets their criteria, you can get the house from the seller’s side and give it to the buyer side, or you can get a house from acquisitions and make it a disposition. By creating a system like that is where you’ll basically be able to leverage your business and take it to another level.
Okay. So creating a system once again, just to summarize, at least as far as wholesaling is concerned, just think of it: sellers, buyers, leads, you are the source in the middle of all those leads that coming in, and you have to have a system in place, have one individual who handles the desperate sellers, another individual who handles the cash buyers, and that allows you to step out from the business. In other words, in my business, I could be on my boat, I could be anywhere and houses are being bought, houses are being sold, and I don’t necessarily have to be in the office for that to be happening. So this is Lex Levinrad with the REI Classroom, and building a wholesaling system.
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