Making Fast Money with Wholesaling

Real estate investing is the process of building a portfolio of properties that produce passive income.

But to build a portfolio, you need to be able to purchase properties … and to purchase properties you need cash.

So what can someone without a ton of equity who’s just getting started in real estate do to earn the money for a down payment?

Wholesaling.

This real estate-adjacent technique is a low-risk way to quickly convert hustle and relationships to cold, hard cash. Listen in as we discuss the ins and outs of wholesaling with an industry veteran.

In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your wholesome host, Robert Helms
  • His wholly absurd co-host, Russell Gray
  • Educator and wholesaler Tom Krol

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What is wholesaling?

Wholesalers play an important role in the food chain of real estate.

Let’s start with a definition. A wholesaler is someone who finds properties and gets them under contract … but then finds a buyer to clinch the deal. The wholesaler gets a fee for doing the work of finding low-priced properties and getting them to buyers.

You may notice signs in your neighborhood that say something like, “We buy houses!” Probably a wholesaler.

It can be a brilliant way to go if you’re committed and excel at building relationships.

By building up pipelines of hard-to-find deals and committed buyers, you can make real money … fast.

Why does wholesaling work?

Tom Krol got his start in real estate by wholesaling.

Actually … he got his start in lawn-mowing, but then he got fired. His brother convinced him to try wholesaling, and he has never looked back.

Tom has now done hundreds of transactions. We sat down to chat with him about how YOU can get into the wholesaling business.

Wholesaling is “more like a pawnshop than a real estate business,” Tom says. That’s because your main task is to form relationships with homeowners who want to sell quickly.

When owners are selling, they can choose two out of three criteria … speed, price, and convenience.

Wholesalers are looking for sellers who are willing to give up a high price for a convenient, quick sale. “We’re the ‘this week’ guys,” Tom says.

People sell for different reasons … divorce, bankruptcy, job changes, disrepair. Another type of seller wholesalers look for are absentee landlords looking to get out of a property.

Wholesaling works because if you can find a discounted property, there will always be SOMEONE who has the cash and is willing to pay.

Finding sellers and buyers and valuating properties

“A common stumbling block for wholesalers is valuations,” Tom says. “I always suggest you just use your gut.”

He says most people have a good feel for what homes are worth in their market and what prices are good and bad.

Knowing the local market is helpful. “The best deals are in your backyard,” Tom says.

A good rule of thumb is to shoot for a selling price between 40 to 60 percent of the home’s valuation on Zillow or other property appraisal sites, although that will vary by area.

You get a feel for what will work over time, Tom says … but the key is finding a deal and jumping on it. Ultimately, a wholesaler’s job is to find and seal deals quickly.

Plus, you risk very little by mis-estimating a price for the home. Price a home too low, and you simply get more money. Price it too high, you just don’t get a contract. You’re not putting any money down yourself.

“What’s great about wholesaling is it produces a lot of cash in a short amount of time, and then it provides a pipeline of cherrypicked properties you can choose for your own portfolio,” Tom says.

What about finding buyers? Tom says as long as you can find consistently discounted properties, you’ll always be able to find a buyer.

“The art is just to get really good at finding discounted properties. You can then go into any room and someone will say yes.”

All you need is grit

From wholesaling, it’s very easy to make the transition to traditional real estate investing. Wholesaling allows you to accumulate cash … and find great properties on the way.

“What keeps people out of wholesaling is belief that homeowners don’t sell at a discount,” Tom says.

But that belief is a myth … if you have the tenacity, there will always be owners looking to sell quickly and conveniently.

Tom now teaches other folks how to wholesale. It takes a lot of work, a lot of persistence, grit, and determination to get started, he says.

And while it doesn’t cost a lot to get started, it does cost a bit … you have to spend the money to market yourself properly.

It’s a great business for people who are just getting started in real estate, or those who are already landlords or rehabbers and want to step up their game and find great deals.

And, if you’re starting from nothing, don’t worry. “Rock bottom is the strongest of foundations,” says Tom. You have nowhere to go but up if you really want it.

Tom has created a special report for our listeners on the five big things he wishes he had known when he was starting out in wholesaling. You can access that report here.

Now go out and make some equity happen!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

The role of housing in economic growth …

Some people think housing is a driver of economic growth.  But that doesn’t make sense to us.

Sure, a robust housing market creates a lot of jobs from construction all the way back through the supply chain.

But housing itself is a by-product of prosperity, not a creator of it.  After all, who buys a house first … and then gets a job?  It’s the other way around.

So we think housing is not a leading indicator, but a trailing indicator.

With that said, in addition to reflecting economic prosperity, housing definitely plays a role in driving economic activity.  But not in the way most people think.

So let’s take a look …

Economic activity isn’t about asset values.  It’s about velocity … transactions … how fast money is flowing through society.  That’s why they call it currency.

But it isn’t really money that’s flowing.  It’s credit. It’s a subtle, but important difference because you can’t create money from nothing.  Only credit.

If you’re not familiar with the VERY important difference between money and credit, you should strongly consider investing in the Future of Money and Wealth video series …

… because G. Edward Griffin (author of The Creature from Jekyll Island) does an amazing job of explaining it all in an easy to understand way.

The fundamental principle to understand is that a loan is an asset to a bank.

When a bank makes a loan, they effectively create “money” from nothing by issuing credit.

Obviously, the biggest loans in most people’s lives are mortgages on houses.  So that means banks are creating LOTS of “money” by extending credit.

Meanwhile, governments issue bonds, which are simply humungous, glorified IOUs … like a mortgage.  Except the collateral isn’t a house … it’s the citizens’ earnings.

And when the mother of all banks, the Federal Reserve, buys government bonds, they are effectively creating “money” by issuing credit.

Now when all this “money” gets into the financial system it pushes asset prices up.  But not evenly.  And no one know for sure where it will all end up.

If lots of the new “money” goes into bonds, bond prices go UP and interest rates go DOWN.  There was a LOT of that going on over the last decade.

Similarly, if it goes into stocks, then stock prices go up.  There was a lot of that over the last decade also.

One big driver of rising stock prices has been corporations pigging out on cheap debt and then using the proceeds to buy back their own stock.

But remember, this isn’t economic activity … it’s just inflation of asset prices.  So it’s a mistake to think a rising stock prices means a booming economy.

In fact, “stagflation” occurs when prices go up, but economic activity is slow.

And just last week, former Fed chair Alan Greenspan said he sees stagflation coming to an economy near you.

At the same time, fellow former chair Janet Yellen is warning of excessive corporate debt.  We were just talking about that in our last commentary.

Funny.  Neither Greenspan or Yellen has said anything about the Fed going insolvent.  Pay no attention to that man behind the curtain.

Meanwhile, Fannie Mae’s economics team recently announced their prediction of slowing economic activity in 2019.

And just so you don’t think they’re merely jumping on the bandwagon, Fannie Mae Chief Economist Doug Duncan predicted this in his Future of Money and Wealth presentation on our last Investor Summit at Sea™.

All this to say, there are some notable experts saying the economy could be in for some headwinds in 2019.

So back to housing and its role in goosing economic activity …

Anyone paying attention knows housing prices have bounced back nicely from their 2008 debacle.

And almost everyone who bought early in this last run-up has built up gobs of equity.  Good job.

Unsurprisingly, consumer confidencecash-out refinances, and consumer spending all surged in 2018 … as households became equity rich … and then tapped that equity to SPEND.

In other words, credit flowed through housing to consumer spending which drove a lot of economic activity.

So it’s not housing construction that’s a leading indicator … it’s rising prices and equity.

But as housing price appreciation slows … it’s no surprise consumer confidence is dipping too.

Remember, consumers are usually the last ones to realize what’s coming.

So again, it’s the flow of credit into home prices and equity … and then the flow of credit through home equity to consumers … and then from consumers into the economy … that be a leading indicator of what’s coming down the line.

There’s one more nuance to consider …

As we’ve been pointing out for the last few months, there are LOTS of reasons to think more money is heading into real estate.

A combination of the best tax breaksOpportunity Zones, and nervous stock investors fleeing Wall Street in record numbers to seek a safer haven in housing … all could have real estate setting up for a nice run.

But be cautious.

Because if Alan Greenspan is right about stagflation … rising prices without rising real wages and economic activity …

… then real estate PRICES could rise from big money seeking safety … while the rents you use to control the property could be under pressure.

Consider RentCafe’s recent year end report, which found the most popular things renters searched for in 2018 were “cheap” and “studio.”

So as we’ve been suggesting for quite some time …

… it’s probably safer to focus on affordable markets and product types… using long-term fixed financing … and focusing on solid cash-flows to position your portfolio to ride out a slow-down.

We’re not saying there will be slow down.  But others are.

And it’s better to be prepared and not have a slow-down, than to have a slow-down and not be prepared.

And remember … asset prices and economic activity are NOT one and the same.

Until next time … good investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Podcast: Making Fast Money with Wholesaling

In our latest episode, we take on a question we get a lot from beginning real estate investors … how do you get started without a lot of money?

One possible solution … wholesaling.

In the real estate world, a wholesaler is someone who finds great properties, gets them under contract … and then gets someone else to clinch the deal.

It’s a win-win … the wholesaler earns money for each property he finds, and the investor doesn’t have to slog through a thousand properties before finding the right one.

Wholesaling is one way to get started in real estate … even if you don’t have the money to make a down payment on a portfolio of properties.

Plus, it’s fast.

Usually we steer away from strategies marketed as “fast cash,” but wholesaling is a tried-and-true method for quickly converting hard work and relationship credit into usable moolah.

In this episode, we talk wholesaling with an industry veteran. Tune in to learn more about the ins-and-outs of this money-making strategy.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

The big story for 2019 will be …

As we’re winding down 2018, it’s time to rub our crystal balls and peer into the new year … and we see …. 

Taxes.

For most high-earners, taxes are their biggest expense.  And almost everyone who has to pay taxes would prefer not to … or at least pay less.

So while there are MANY trends and developments real estate investors should pay attention to in the new year …

… the biggest story may well end up being how market participants respond to their growing understanding of the revised tax code.

Thanks to tax strategy advocates like Tom Wheelwright, many people ALREADY investing in real estate are cashing in on the amazing tax benefits the new law gives to real estate investors.

But as investors of all stripes close the books on 2018 and start looking for tax breaks in the new year, we’re guessing many will discover real estate for the very first time.

Meanwhile, it’s quite possible stock investors will trade in their “buy the dip” strategy for “drop the falling knife” … and look for other, less volatile places to invest the proceeds.

While YOU may not be interested in the stock market, its recent tribulations are noteworthy because it may portend a shift of capital from Wall Street stocks to Main Street real estate.

And if you’re a syndicator talking with prospective investors, you should really have more than just a cursory understanding of what puts downward pressure on stocks.

After all, some of the jittery money still stuck in stocks just might be inclined to move your way … if you’re able to explain the case for real estate.

Besides tariffs and rising interest rates, there are two factors putting pressure on stocks but aren’t discussed much on mainstream financial news.

First, as interest rates rise, it’s less profitable for corporations to borrow heavily to buy back their own stocks.

Besides, many have already gorged themselves on cheap money while taking corporate debt to record levels.  This alone is causing some concern.

And if rates resume their climb, debt service will begin to take a toll on corporate earnings as interest expenses rise. 

There’s a second factor sucking the wind out of the corporate buyback sail …

The big tax break offered to corporations enticing them to bring their offshore money back to America has already worked most of its magic.

And a lot of the money ended up in stock buybacks.

But with the dual air pumps of cheap debt and repatriated offshore funds both losing pressure, stock buybacks are slowing … letting air out of the stock bubble.

Remember, asset values (prices) are largely based on “air pressure”.  There always needs to be more money coming in to keep prices elevated.

On the other hand, income producing assets … like rental properties … derive their value from income.  And because those incomes are relatively steady, so are the prices.

That’s why jilted stock investors often migrate into real estate. 

Sure, they like flirting with the hot stocks when the punch bowl is full.  But when the bowl runs dry, many investors choose to go home to old faithful … real estate. 

And when you add in the new tax breaks, old faithful got a face lift … and is even MORE attractive.

But it gets better …

The world is really starting to buzz about Opportunity Zones

O-zones promise huge tax breaks … and much of it is likely to provide long-term benefit to real estate in those designated areas.

Of course, like anything new, it takes time for folks to figure it out, to get in position, and make their moves.

That’s the advantage of being small.  You can study fast and out-hustle the big money to get into position. 

Then when big money finally shows up, you get to ride a wave.

So when we look at the upcoming year, we think the impact of the tax laws will continue to magnify a movement of money into real estate.

And even if the overall economy slows, it’s our guess real estate will continue to attract its unfair share of investor interest.

Now we’re starting to understand why Tom Wheelwright and Robert Kiyosaki get so excited about taxes, real estate, and infinite returns.

Until next time … good investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Podcast: Precious Metals for Real Estate Investors

If you’re getting this email, it’s because you’re into real estate investing. But in our latest podcast, we take on precious metals.

This episode is the second in a short series we’re doing on real assets besides real estate. We started with gas and oil. Now, we’re looking at gold and silver.

But don’t tune out … understanding precious metals is essential to understanding the whole world of investment.

After all, precious metals were the first form of money, and they continue to be important in the world of economics.

This episode is a primer on precious metals investing … from why various people and organizations invest in precious metals like gold and silver to how new precious metals investors can approach this valuable investment.

Putting your money into something that produces no cashflow can seem nonsensical … that’s why we invited our special guest, a precious metals expert, to explain why stocking up on gold might be a good option for YOU.

Who knows … by the end of the episode, maybe you’ll be asking for some gold and silver in your Christmas stocking this year!

Get informed on this valuable commodity. Listen in now.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

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