Almost every week I talk to an investor who went to a wholesaler training. But apparently whoever taught the training lived in another area where people have more money and fewer smarts. Because those beginners end up paying too much for a property when they buy it from a wholesaler who’s looking for someone who doesn’t know what they’re doing to take the property off their hands. I’ve seen it too many times.
This is called a “Greater Fool Theory”. If the wholesaler sells the property to a third party who doesn’t know what they are doing, it will definitely cause financial hardship to the third party. You don’t want to do that. You want to build a relationship so that you have people who will take your deals at wholesale. They still need to be able to make a profit after paying your wholesale fee and make repairs to the investment.
If they don’t have all the information or know how to run all the numbers and figure out all the costs, they will wind up in debt. In this case, they will never buy from you again. You will find it impossible to continue wholesaling if you get this type of reputation. Run the numbers as if you were going to buy the property yourself to make sure you’re offering a fair deal to the next person. Yes, you need to make a profit, but make a fair profit. Don’t become greedy.
I hear too often about people who go to a seminar and think they are going to make a ton of money wholesaling properties. However, wholesaling like you see on the TV shows today is not wholesaling. Buying a property, spending 50 grand to fix it and then reselling it for retail value is not wholesaling. It’s when you get a property under contract and then you assign that contract to someone else for a fee. That’s a big difference. It’s very important that you know the difference and to be truly educated about how to really make money.
What is a million dollar education worth to you? How much are willing to pay to earn an extra $10 grand a month? You have to figure out what that is worth to you. Once you decide what that is, spend that investment. It will take you to places you never thought you could go. That true knowledge can change your life.
If you want more tips and tricks on how to become a better wholesaler and investor, visit my website, LarryHarbolt.com.
Podcast: Play in new window | Download