A lot of real estate coaches and “gurus” are peddling the lie that wholesaling is an easy business.
Send a few mailers, get a house under contract, flip it to a buyer, and make a cool $10,000 in the middle.
At least, that’s what they say.
But while wholesaling is a proven and profitable business model, the truth is that’s it’s not as mind-numbingly easy as many online course-sellers would have you believe.
It’s a business.
As a business, it requires an ongoing investment of your time and money, it requires grit, and it requires clear and level-headed expectations.
In fact, here’s a video of Ryan and Greg (actual successful wholesalers) discussing this.
And here are 3 realistic expectations that every real estate wholesaler should have for their business.
1. You’ll Spend About $100 Per Lead
Direct mail and paid advertising are the best sources of leads for many wholesalers.
And many expert wholesalers are comfortable spending between $50 and $200 per lead on their campaigns, so don’t be surprised if your cost falls somewhere around there.
In fact, when you’re just starting out, it’s likely that your cost per lead will be higher.
After all, you’re just learning. And you’ll be able to decrease that cost as you get better at marketing and learn how to speak to your target market with direct mail and ad campaigns.
But still, even once you’ve become an expert wholesaler, you’ll likely be spending $100 or more to acquire leads. While you should always seek to improve that metric, it’s never going to hit $0.
So best get used to the fact that you have to spend money to make money 😉
2. It’ll Take About 30 Leads To Find a Deal (This Equals $3,000 Per Deal)
This might make you feel uncomfortable… but remember those leads that you spent money to generate? Well, the vast majority of them are never going to turn into deals.
In fact, a ratio of 1 deal per 30-40 leads is pretty typical for wholesalers.
Assuming you fall into an “average” category and close one deal from 30 leads — and assuming that you spend about $100 per lead — then you will spend about $3,000 to acquire a single deal.
That might not sound quite as sexy as the no-cost lie that many “gurus” are preaching about, but it’s realistic and, more imporantly, it’s profitable.
Think about it. In most markets, you can reasonably expect to make $10,000 to $20,000 per wholesale deal. Doesn’t it make sense, then, to spend $3,000 to $4,000 in order to make $10,000 or $20,000?
See — not so bad!
3. You Can Spend Time… Or You Can Spend Money
If you want to build a wholesaling business — or any business, for that matter — you only have two resources to do so.
You can spend time… or you can spend money.
To get your business off the ground, you’re likely going to spend a lot of time. You’ll need to learn key processes and fully understand the wholesaling business model before you start to delegate and automate.
As your business grows and you get a few deals under your belt, then you’ll be able to spend money instead of time. And the more money you make, the more money you can reinvest into your wholesaling machine… which in turn will make you more money!
That’s where the entrepreneurial dream comes alive.
But it’s important to have realistic expectations for what it’s going to take.
While the wholesaling business model is awesome, keep in mind that it is still a business. It’s not a get-rich-quick scheme and it’s not for the faint of heart.
It’ll challenge you and, if you let it, it’ll grow you as well.
But enough from me… what expectations do YOU think that new wholesalers need to keep in mind? Let us know in the comments!