Ep 176 - Our Journey Episode 6 - Wholesaling

We decided to move from Texas to Arizona to be closer to Dani’s family and quickly found out sub to wraps were a pain in the neck to get done. We got one deal done and it was a total pain. So we moved into wholesaling! We share some stories and explain how we approached it differently than the other wholesalers in the Phoenix market. We also give a pro/con list and the 5 category break down with a bonus category today.

Download your Free Private Lending Report here: www.freedomcapitalinvestments.com/lending

Download your Freedom # worksheet here:  www.freedomcapitalinvestments.com/worksheet

Click on the Social Media links below and listen in on our Private Group Conversations about how to achieve Financial Freedom through a consistent pipeline of passive income investments:  

https://www.facebook.com/groups/freedomthroughpassiveincome

https://www.linkedin.com/groups/14048250

—————————————————————————

Alright, so we're gonna go through our top five.
1) Risk tolerance? Yes, there's a risk here, yes, you can get in trouble, especially with the Board of Realtors really cracking down on wholesalers these days.
2) Time availability? Yep. You need time, especially to find, research, and negotiate the deals, plus time for marketing in order to find a buyer.
3) Knowledge? You need to know how to do the deals and have the right terminology and right paperwork.
4) Inner Circle. Yes, attorneys, title companies, the buyers, that’s the biggie.
5) Access to capital? Yes, some capital to run the business as you ramp up but not necessarily to purchase properties.
6) Bonus. Location. We are including this one because we were doing sub to wraps, and all of a sudden we moved to Phoenix and it was a big pain in the butt to do sub to wraps. You need to be a chameleon. It's not only the location, but also the market you are in.

Join our groups on Facebook and LinkedIn.

https://www.facebook.com/groups/freedomthroughpassiveincome

https://www.linkedin.com/groups/14048250

www.FreedomCapitalInvestments.com

Invest Smart.  Live Happy.

—————————————————————————

Connect with us here:

FB personal pages
https://www.facebook.com/Flipster
https://www.facebook.com/dani.lynn.robison

Linkedin personal pages
https://www.linkedin.com/in/fliprobison
https://www.linkedin.com/in/danilynnrobison

Instagram personal pages
https://www.instagram.com/fliprobison
https://www.instagram.com/danilynn23

TikTok  personal pages
https://www.tiktok.com/@danilynnrobison
https://www.tiktok.com/@fliprobison

Transcript

Hey everybody! Flip and Dani here, founders of the Freedom Real Estate Group Family of Companies and welcome to another episode of our podcast, which is called Freedom Through Passive Income. Welcome to another episode of our podcast, this is our journey. We're gonna listen to that about six more times. You're the one, you're the one that came up with the idea you should know what you're dealing with. 

This is again, this is our journey. And this is episode 6 of a 12 part series here that we're doing of the 365 day series that we're in the middle of. And this is number six. This is our journey. This one is called wholesaling.

Yes. So again, our series again, in case you didn't catch the first five episodes, we talked, we started off, you know, being musicians on cruise ships. And then we went to art auctioning, and then we moved to land and then I still did art auctioning, you went off into the insurance game, and then the mortgage game, and then I got off of the art stuff, and then we needed to do something else. And we're meanwhile somebody's going to do real estate. And so we jumped into real estate. And of course, we did what everyone does. We had a realtors license. And that sucked after eight months. And so then we went into real estate investing. Yep. And let's see, we've done short sales. We've done mortgage assignments, we've done sub tos, we've done sub to wraps, and we've done seller financing. And then we moved to Phoenix because it wasn't hot enough in Texas. That's where we are.

Yeah, here in episode 6. So now we're here in Phoenix. We actually are working right now we're in a small little town in north of Phoenix that was created by Del Webb, the housing community, they decided to make a town. And so they made the anthem, Arizona. It's a small little town north of Phoenix. And it was kind of nice. It's kind of like a small town feel, but Phoenix is right there. So we moved there. And we got there real quickly, we found out that it was subject to wraps. Not the thing to do in Phoenix. No, no, because you need a good title company. You need a good attorney to do this. And we figured Phoenix is some bazillion people in Phoenix. Right? We'd figure somebody would know how to do it. We ended up doing one deal. And it was the most painful deal to do. And so we're like, okay, we can't do that here. And so we transitioned real quickly over to wholesaling. And that was a very, actually was a pretty smooth transition because of our knowledge that we've already built up. Yes. 

Dani, what is wholesaling? Wholesaling, Flip, let me see. So it's really, we're gonna go talk to a seller and we're going to offer to essentially buy their house, we're gonna put the property under contract, and we're going to sell that contract for a fee to an investor who wants to own the property either to Flip or to hold for themselves. So wholesaling is essentially just selling your contract at a wholesale fee to somebody else, and therefore you get paid for brokering that transaction.

 Now, this was 2014, when we did this, and wholesaling was still big. It's not as big as it is now, right? Thanks to the internet, and technology, but it was still pretty big. And we were in Phoenix and there were a lot of gurus in Phoenix. And so they're called bandit signs. And if you don't know what those are, those are the yellow signs that are on the corner road saying we buy houses or whatever. And so every weekend, there was a whole new batch of bandit signs up everywhere in Phoenix. But you know, we created a real simple process. Yep. We had two other people that were working with us and so we drew straws and the shortest straw got to drive in a car about six to seven hours a day, five days a week. And I , he’s painting himself, myself. I got the shortest straw. But what do you do when life gives you lemons? You make lemonade and so I just put in tapes, like tapes, I popped in the old eight track of ABBA. No, just kidding. I was actually listening to it on my iPod. I was listening to you know lots of motivational speakers but like Zig Ziglar because I used to come home drove her crazy because I’d come home and say well hello there sweetheart and I start talking like Zig Ziglar and so you see would hate that but at least you know so I'd actually make it educational. So as I was learning while I was doing it, I drove up and down the streets and you know just write down addresses and then I take the addresses Then give it to the other people that were working with us. And then they would skip trace them and call them and say, Hey, we're interested in buying your property. So we're doing something different than everyone else was doing, because everyone else was mailing letters. Yes. So we didn't mail letters, we did, we went to find the houses, and then we just called them directly, you know, or tried to find them directly. And along with the bandit signs where he put up on corners everywhere.  We did do bandit signs a little bit, but we stopped doing bandit signs, because the driving around was getting more leads than anything.

But the biggest thing, before we talked about anything, was that we learned a lesson very quickly. And that was to find the three biggest buyers in Phoenix. Yes. And so we found the three guys, that just happened to be three guys, that were the three biggest buyers. And so and the reason why this is key is because we didn't after, after so many months, we didn't have to market anything anymore. So if you know, I'd find a property, they call them, we'd give whatever we'd negotiate, whatever I'd show up to the house or show up to Dunkin Donuts or whatever, get the property signed, get the contract signed. And we'd say, you know, within 30 days, we'll buy the property. Before I would even get home. I've already talked to all three of those buyers. Or if I had to, I would just call one. And if he didn't want it, then I called the next one. If he didn't want to, I called the third one. But I would always have the property sold from getting assigned before I got home. 

That's right. That's all you need to do with wholesaling. And I don't know how many times I said that I shouted it from the mountaintops. But it doesn't matter no one listens. So anyway, that's it. And we got this down to a science. Yes. And so I don't want to jump ahead to the next stage. So we're going to talk about the pros.

Yes. So another one of the pros is this is early on in our investing career. I mean, we've done a lot to this point. But we still weren't at the stage that we are today. And so it was a no money required type strategy. We didn't have to spend a whole lot of money to do this. Yeah, it wasn't a whole lot. I mean, we still had to pay for gas. And I'm sorry for the other people buying the property. Yes, we have to run the business. And now we've talked about that in previous episodes.

Plus, it's a great way to learn about a new market and the big players. So I mean, Phoenix is huge down. Yes, it's a huge town. And in fact, we didn't know the city so well, that I remember talking to one of the buyers and said, Oh, we've got this property over on x. And he was, Oh, wow. You have a property on that street. And I said, Yeah, he goes, What's the address? And I told him the address. He's like, Okay, have you been in that house? I said, Yeah, actually, Dani and I were there yesterday morning. We were walking around on the property. He goes to one of the most dangerous gang areas in the city of Phoenix. I'm like, Oh, we didn't know that. Probably a good thing we didn't know that. We wouldn’t have walked around the property looking into the boarded windows. Yeah, I’m sure there were a lot of people looking at us funny. But we did learn that market very quickly.

Yes. Another pro was when you're wholesaling. If it's a deal, it's going to sell very, very quickly. We tell people that all the time, because now we're in that position that we are and we say hey, wholesalers bring us deals and if it's a deal, we'll buy it tomorrow. Just bring them to us. And quick paydays. Again, this goes back to the mortgage assignment days. We go back to episode three, one. No one was why real estate? Oh, yeah. Realtor three, three. Yeah. Quick paydays were there were times we would get them under contract. And we were at the title company, like 10 days to two weeks later. Yeah. And getting our little, our little Checky Checky. Check check. Yeah, that's right.

Some of the cons was it's a saturated strategy by people who don't know what they're doing. So that is still the case today. We're not a big fan of wholesaling not because it's not worthwhile or a good strategy, but there's just too many people out there doing it the wrong way. And that was certainly the case during this time. So it's a very, it's a big struggle and you don't even really like telling people that you wholesale properties because you get bashed into the bad name of all the people doing it wrong. Right. So many people are given a bad name. Yeah. So that was a con. Yeah. And still is, quite frankly, yep. And then daisy chain with this is something that I didn't even know existed until we moved to Phoenix. And it was, I had gotten a property under contract. And this was before we knew the three big buyers and I got it under contract. And so it was already prepped and ready to go on the internet. And so boom, we put it on our website, we sent it out, emailed it out, and on my drive home, I got a text from another wholesaler selling the property that I just got under contract but $30,000 more than what I got. So he was daisy chaining my wholesaler that I just got under contract without even asking me. Yep. All right, even talking to me about it. Yeah. And I'm just like. He had no rights to the contract. That's part of what's wrong and wholesaling. You're not even allowed to, you technically can't even market the property you have to market the contract, right. That's the legal way to wholesale. property. So he was trying to sell a property, wrong. He was trying to sell a property that he didn't have under contract, wrong. So yeah, that definitely, definitely con. 

Alright, so we're gonna go through our top five. Risk tolerance? Yes, there's a risk here, yes, you can get in trouble, especially with the Board of Realtors really cracking down on wholesalers these days, because in order to do something like this in terms of selling properties, they want you to have a real estate license. So wholesalers that are not selling the contract. They're trying to sell a property, trying to sometimes put it in the MLS and state that you're not supposed to be putting in them. There's so many rules around this, there is a high risk to this if you don't know what you're doing, because you're probably gonna get slammed on by the board. And then there's lots of different consequences. Recently, there's been some wholesalers trying to wholesale properties that are on the MLS. Yeah, yeah. Lovely. Yeah. Yeah. Time availability. Yep. You need time, especially to walk around those gang areas. Knowledge, well, maybe there should have been risk. Knowledge you need to have the knowledge that you and with that, we didn't have that much knowledge of the city, but we got it very quickly. But you need to know how to do the deals and you need to know and have the right terminology and right paperwork. Yes. Inner Circle. You need it again. Yeah, it's the attorneys, the title companies to be able to close them and the buyers, the buyers, the biggie, that's the biggie and access to capital. Now, it's in paquito. Yeah, but then this is the one that I told you earlier. Way back, remember Episode One, when I said there's a sixth one? Yeah, it's location. Yes. So this one is because we had just spent the time doing mortgage assignments, short sales, which we didn't do too many of. sub two sub two wraps, seller financing, and all sudden we moved to Phoenix and we can't do it. You know, so it was like, it was a big pain in the butt. Yeah, we could do it. It was a pain, but we could do more wholesaling. So as location that's right, location based. And that's when I said, Wow, you really need to need to be a chameleon, no matter what. It's not only what location you're in, but also what market we're in, you know, because right now we're in a completely different market than we were four years ago. So yeah, exactly. Right. All right. So that's the that's going to wrap up this episode. on Episode Seven we're going to move into the next part of our journey. And while in Arizona, we actually started our turnkey real estate journey. I love this story. So Flip’s going to share this story in the next episode, Episode Seven.

Awesome, well make sure you head over to our website freedomcapitainvestments.com to join our investor club to see what we're doing in 2022 to make sure you’re heading over there, make sure you hit the like button and you hit the like button because this is a fun freakin series. And we hope we're sharing a lot of value because we don't talk about this type of stuff. We have so much knowledge about all of this stuff that we just don't talk a lot about because this is a past real estate life for us really and I'm not even telling half the stories Yeah. 

Make sure you hit the subscribe button and the bells and the whistles and the five stars and all those. Yes, please. But let us know how we're doing and we hope that you're enjoying these.

We like to end all of these episodes with Invest Smart Live Happy, bye everybody.

Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate, financial or business professional for individualized advice. opinions and information on the show are not guaranteed. All investment strategies have the potential for profit or loss.

Transcribed by https://otter.ai