Congratulations! You did it! You closed your first wholesale deal! You are a true wholesaler now. You took the leap of faith into a scary entrepreneurial venture. All of your friends think you’re crazy, but you know, deep down, you have what it takes. You are going to prove them all wrong.
Fast forward to one year later…
You managed to close a handful of deals. You have proven to yourself and all of the haters that wholesaling works, and you have the checks to show for it. But you still don’t feel like you’ve “made it”. You still have to grind for the next deal. You didn’t score that $100k deal that made all of your dreams come true. What happened?
Like you, I didn’t score that $100k deal my first year. Or my second year. Or my third, fourth or fifth year…..
I did manage to score a $40,000 assignment though! But it didn’t matter.
Because I didn’t approach wholesaling like a business, that $40k deal might as well been $4k. That month, I grossed $80,000. But, I didn’t manage my operating expenses or save the money. At the end of that year, I didn’t have anything to show for it.
That was a wake up call for me, and I hope it is for you. This business didn’t end up being as easy as either of us thought. In some ways, it’s even more stressful. The income is inconsistent, yet you still have to grind to find deals every week.
Yet, when you go on social media every day, you see this…
What is everyone else doing to get rich that you can’t figure out??? It makes you feel like a failure…and you already followed the courses and YouTube videos about closing deals to a tee. What do you do now?
If you feel like this, you aren’t alone. I believe this realization happens to a majority of wholesalers. But why does this happen and what can be done about it???
Today, I see this pain in a lot of wholesalers over and over and over again. I’ve been in the industry for 5 years now and it hasn’t gotten any better.
It’s gotten worse.
Over these 5 years, I’ve seen most wholesalers come and go. They weren’t lazy and they weren’t dumb. They closed a few deals, but at the end of the day, ended up right back where they started and decided it wasn’t worth the struggle anymore. I don’t want the same fate to befall you.
If you have closed a few deals and are looking to take the next step in your business, listen carefully. It’s time to level up to the next phase in your development. You need to stop thinking like a wholesaler and start thinking like a CEO. CEOs win in the long run, while wholesalers drop out. CEOs increase their bank account and have true freedom. Wholesalers live deal-to-deal and are a slave to their business. It’s time for you to adopt the CEO Mindset.
There are investors who become very successful and achieve true freedom in their life. And we see it all of the time on social media. But what isn’t talked about is the high turnover in our industry. There’s always a new success story or new get-rich-quick marketing tactic. Blah blah blah. I’m writing this post so that you understand what it really will take for you to beat the odds and become a successful investor or wholesaler in the long run.
If you are serious about becoming successful in this business, I’m here to share my honest experiences and what I believe the output that is truly required from you to be successful.
A word of caution. If you are the type of person that avoids reality and hopes for the best without taking a hard look in the mirror, this post is not for you. Better you go watch some standard YouTube case studies of people making a bazillion dollars on their last deal yesterday to keep your hopes up and avoid doing the real work that it will take to achieve your dreams. Otherwise, commit to do better and to be better. Right now.
If you are serious about becoming successful in this business, I’m here to share my honest experiences and what I believe the output that is truly required from you to be successful in the long run in real estate wholesaling.
The 5 Challenges In The REI Business You Must Overcome To Be Successful
- Most REI content does not help you succeed in the long run and only fuels shame.
- Even wholesalers that know how to close deals go out of business
- Wholesaling, in fact, get’s harder over time.
- Wholesaling and flipping require risking large amounts of capital consistently while providing inconsistent monthly income, and it’s stressful.
- This business is lonely as sh**.
All of the above, especially as they all are happening at the same time, can build up to an extreme amount of anxiety. And that stress will get to be too much. And people will quit. And it’s for the better, because they don’t know a way out and deserve to be happier. But I’m giving you the tools you need to avoid this fate, so you don’t have an excuse now.
There’s no going back now 🙂
Let’s break down each one of these truths. Then, we’ll lay out with a game plan for you to overcome the obstacles so you can be successfully wholesaling 10 years from now…
1. Most REI content does not help you succeed in the long run and only fuels shame.
Most people new to the REI business focus on these topics:
- How to get your first deal
- Understanding purchase and assignment contracts
- How to talk to sellers
- How to find a buyer
- Broad case studies of people closing deals
And these topics are what I see being discussed 90% of the time on social media. And this information is important in helping you close your first couple deals. It’s necessary to build your confidence and get the ball rolling.
But it won’t KEEP the ball rolling.
A lot of this content is pushed out by people who want to sell you a product. And if you are convinced that their product will bring you riches, you will buy it. So you get pummeled with out-of-context success stories. And I’m guilty too. I run a PPC agency business for investors and also put out content to sway you on the PPC bandwagon, though I try to provide as much honesty and context as I possibly can.
I’m not here to bash “gurus”. They are only doing what they are economically inclined to do. Don’t blame the gurus. You just need to understand what everybody’s incentive is.
Don’t compare yourself to Facebook posts like:
or variations of the following…
“Just closed on my 6th deal this month, first six-figure month!”
or “just closed on this whopping deal of $50k assignment fee. It’s possible folks!”
There’s nothing inherently wrong with these posts on their own, but they are often taken out of context. Reading this type of content is not going to help your business. Yes, it may give you a short-term boost of inspiration, but nothing more. Often times, this type of information on social media can be misleading. Because for every six-figure month, there could be 3 unprofitable months. Not as many people are talking about their net income at the end of the year…
This “inspirational” content is running rampant yet it may actually lower your confidence. You know what the first thing I think of when I read these posts is? “Why can’t I do that? What makes them better than me?” And that’s not a helpful question to ask. It leads to negative judgment about yourself that will lower your confidence. Ultimately, it makes us all feel “not good enough”.
Social media is toxic. That is widespread across society and everybody knows it. But in our industry, it’s disguised as inspiration. Remember, there are hundreds of thousands of people trying to make it in our business. The law of averages states that any given time, some of these people will be closing huge checks and crushing it. The problem is, Facebook, Instagram, forums and blogs are littered with these posts, and not the posts of the other 99,000 people who aren’t so lucky.
In the culture of real estate investing, it’s not cool to post information about losing money out of your ass. Nobody wants to publicize their shame or failures. The problem is, it creates this false narrative for our industry.
It’s time for you to think for yourself. As you see now, most social media and course content will not help you become successful in the long run. It’s not anyone’s fault, it’s just how things have played out. Maybe it’s all of our faults, or Facebook’s fault, or the gurus’ fault. I don’t know and it doesn’t matter. What matters is that you break out of the cycle and be different than those before you.
You need to stop comparing yourself to others and do things that build your inner strength and confidence, regardless of your income coming in. You need to tie your certainty and feeling of control in your life through your internal actions, not your external circumstances. The most successful businesspeople, true CEOs, do not measure their success based on their income for this month. It’s too up and down. You will be inconsistent and shaky at best. And anxiety-driven, paralyzed, and depressed at worst. You must think like a CEO to behave like a CEO. And when you behave like a CEO, you will be successful in the long run.
2. Even wholesalers that know how to close deals go out of business
We see tons of testimonials from people. Rarely do we see a follow up case study from them 2 years later. Why do you think that is? There is very high turnover in our industry for a reason.
Let’s talk about wholesaling, specifically. It’s simple. Here are the steps to succeed:
- Market for leads (we can help with this step)
- Talk to sellers; find the motivated ones
- Get the house under contract and assign it for a fee
- Rinse & repeat
Anybody can do it, right? Nobody is denying that wholesaling is simple. It’s so frustratingly simple that you may get depressed because you can’t execute it consistently despite its simplicity.
Wholesaling is simple, but it is not easy. Here’s why:
- Marketing is an inconsistent business
- Wholesaling is a job, just like working at McDonald’s.
- To make wholesaling NOT a job, you have to turn it into a business… and that sh** is hard. That’s where the CEO Mindset comes in that we will talk about later.
3. Wholesaling, in fact, get’s harder over time.
The problem-solving questions asked of a hopeful excited new wholesaler are…
“How can I find my next deal?” How can I get better at talking to sellers?”
The problem-solving questions asked of an experienced wholesaler looking to scale and build a business are:
- “How can I find good talent?”
- “How can I leverage technology and people to outsource tasks and/or improve my operations?”
- “How do I better manage and lead my team?”
- “How do I measure and track my KPIs effectively?”
- “How can I improve my KPIs and what do they need to be in order for me to stay in business?”
- “How can I increase my bottom line?”
- “How do I balance risk and profit?”
- “How do I manage my cash flow effectively?”
You don’t see gurus answering those questions a lot. Why? Because you can’t sell a course to solve them. They are difficult decisions where the solution differs for each person, in each market, with each business model, risk tolerance, lifestyle, skillset and goals. To become the type of person who can answer these questions effectively will require you to step OUT of the wholesaler mindset and INTO the CEO mindset.
The investors who can’t figure out these answers, frankly, go out of business. And you never hear from them again. Instead, they get replaced with this…
and the cycle continues…
4. Flipping and wholesaling both require risking large amounts of capital consistently while providing inconsistent monthly income, and it’s stressful.
It will require risking significant amounts of capital on a consistent basis to be successful in the long-term. This isn’t necessarily a bad thing. If you understand how to measure risk and not over-leverage yourself, you will be fine. But if you lack this under-educated skill, you will be gone.
Most wholesalers won’t ever reach consistent monthly profitability. Why? because it’s the freaking business model. The wholesaling business model does not provide consistent monthly income. It never will, unless you are doing hundreds of thousands of dollars per month. And if that is the case, you are no longer a wholesaler, you are a CEO running a full-fledged corporation.
If you are a new wholesaler, understand that the system is not setup to serve you in the long run. You need to go above and beyond what the information is being given to you. You need to let go of being a “wholesaler” and adopt the identity of a CEO.
CEOs ask, “What do I need to do to be in business 10 years from now?”
Why aren’t people asking that? Because this business entices the “get rich quick” mentality.
And those folks aren’t thinking about 10 years. They need a deal TODAY. Most of the gurus haven’t been in business for 10 years. Heck, I haven’t even been in business 10 years! Why don’t you hear from 30-year veterans in the industry much? Because there aren’t many, it’s hard, and many have wised up and moved on to better business models than traditional wholesaling or even flipping. Perhaps the coaching program model?
5. This business is lonely as sh**.
Running a wholesaling business is stressful. It’s even harder to do it alone. And our family and life partners can’t often relate to our struggles. There’s not a ton of support groups out there discussing the stress on those chasing that next deal. Wholesalers chase that big check “fix” to relieve their anxiety! “Once I get that big check, I won’t be stressed anymore!” Where’s Wholesalers Anonymous?! Anyone?
That big checks feels amazing, it really does!….for about 1 day, maybe 2. Then you are back at it again. Oh sh**, I need to spend 10k on mailers today and spend half of that hard earning money. Well, fuck, now I’m stressed and back at the grind again….
Ask me how I know this feeling? In 2016, I was stuck in this trap.
By all accounts, I was a successful wholesaler. I was grossing over six-figures, netting about $60k and living that 4 Hour work week! For me, that was my dream. I wanted my time freedom and I had it all! My friends were at their cubicles and I was playing Pokemon Go and tennis half the day. And it was on my terms. It was everything I ever wanted.
The problem is, it was the worst fucking year of my life. After I achieved the life I wanted, I became very depressed. Borderline suicidal even. Becoming miserable when you achieve your dreams REALLY messes with you.
Granted, I’m oversimplifying here. There were a lot of reasons why I became depressed, and not all can be attributed to wholesaling. I lacked certain emotional muscles and stress management skills. But, I am certain that if I knew what the life of a full-time wholesaler really entailed and had adopted the right mindset, I would’ve prepared myself much more and do not believe I would’ve crashed so hard mentally.
Also, a major part of it for me, was loneliness. Entrepreneurship in general can be very lonely. Spending a lot of money on marketing, month after month, is stressful. Stress + loneliness do not go well together. We need to surrender to this and do what we can to combat loneliness. We need to make conscious efforts to surround ourselves with community, purpose, fellowship and like-minded folks we can be real with.
Nobody tells you that wholesaling is lonely. I decided to get a job (which I still have to this day, BTW – shoutout to Carrot.com!) which is a good balance of social support, freedom, and caters to my skillset really well. And I’m happy. But I also got lucky, and not everyone does. I work there not because I HAVE to, but because I know what I need now. There’s light at the end of the tunnel, you just need a flashlight to get there.
You Deserve Success
Okay, enough about me. Let’s talk about your situation. If you believe any of what I’ve written here, you may be getting overwhelmed or feeling a sense of helplessness.
My goal here isn’t to scare or depress you. It’s to prepare you. It may be a lot of accept, and I get it. But, remember this:
You deserve success and deserve to know what is required of you to obtain it.
I work with dozens of investors each week who are crushing it in this business. They are able to succeed when the majority don’t. They are truly living out their dreams. Just listen to Clint’s story. They have the income to provide for their family and have the freedom to take a vacation whenever they want. It really is an amazing thing. I’m inspired everyday by our clients who are committed to their dreams and work so hard to be the people that can achieve those dreams. All of these successful people have overcome most, if not all, of the 5 REI challenges and all have adopted the CEO Mindset. They aren’t wasting their opportunity, and you shouldn’t either. We live in America, the land of opportunity, and our clients are taking full advantage. Honestly, it’s insane how much money they are earning. And I want that same success for you. But the first step is to accept the reality of the situation. Only then, can you be empowered to overcome it.
You do have the power to overcome these challenges. It’s not easy, but it is possible. So, let’s talk about the solution. As you now know, you need to adopt what I call “The CEO Mindset”.
The CEO Mindset
What is the CEO Mindset? Well it’s kind of self explanatory…
Treat real estate investing as your business that you are the CEO of. Now set a goal to be in business 10 years from now. I want your business to be alive and thriving 10 years from now. But you will need to become more than a “wholesaler” or “investor” to make that happen. The investors with the most successful businesses have developed these crucial skills:
- Understanding KPIs and financials to make the most informed decisions
- Managing Cash Flow
- Hiring great people
- Managing and leading your team
- Strong communication skills
- Building trusted relationships
- Casting vision for their life and business for themselves and their team
- Self-awareness and discipline to the point where they know how to manage their emotions and be productive on a weekly business
- How to automate, systemize, and delegate functions in the business
Look, if you are brand spanking new, you need to learn the transaction. Your priority should be learning how to close a deal. That won’t take you too long because it’s straightforward. There’s enough information on YouTube and from gurus to help you with this. But if you have a few deals under your belt, you need to start studying business. Not wholesaling courses, business books. Here’s a few that should cover the skills listed above:
- Traction by Gino Wickman
- E-Myth Revisited by Michael Gerber
- Start With Why by Simon Sinek
- Profit First by Mike Michalowitz
- The 22 Immutable Laws of Marketing by Al Ries
- Rework by Jason Fried
- The Pumpkin Plan by Mike Michalowitz
- Financial Statements: A Step By Step Guide by Thomas Ittelson
- The Road Less Stupid by Keith Cunningham
- Deep Work By Cal Newport
- The Infinite Game by Simon Sinek
- Growing a Business by Paul Hawken
- One-Minute Manager by Ken Blanchard
- Who by Geoff Smart
- Topgrading by Bradford Smart
That should occupy you for the next year. If it doesn’t, you aren’t studying them enough. And while you are studying them, half of the wholesalers out there will go out of business or go nowhere.
But becoming knowledgeable is only half the battle. You need to learn how to execute on this knowledge, which requires you being able to execute. This may require you to:
- Pay a Performance Coach and/or Therapist
- Develop new habits and/or eliminate toxic habits
- Dive into self-help courses, books, etc.
- Dive into relationship and communication books
- Find a mentor or at least someone who can keep it real with what you need to do that you aren’t
- Join a support group or mastermind
This is why many successful investors pay so much money to be in masterminds. Because they need to solve high-level business problems or level up in ways that can’t be taught in a course and need to be thought through with other high performers.
Even if you commit to learning all of this material, business will not be easy. Anything worth doing never is. You will need to be resilient. Success in business is not an exact science. If it was, we all would have won already. There is never a guarantee for success in the short term. But that’s what you signed up for when you decided you wanted to be a wholesaler or flipper. My goal here is to prepare you for the next 10 years in business. Give yourself the best opportunity to succeed. Follow these crucial principles to tip the odds of success in your favor.
Tipping The Odds Of Long Term Success In Your Favor
A lot can happen over a period of 10 years. Some years will be better than others. You may have quarters that are not profitable. A deal might be south. I’ve never met a successful investor who’s never been burned before. Just like you, your business needs to resilient. You cannot let a bad month, quarter, or year destroy your business. Here are principles to follow to make sure you can weather the inevitable ups and downs over the next 10 years.
Supplement Your Income
Our client, Steve, from Charleston has been in real estate long before I was ever born. He knows how to run a lasting real estate business. His advice is to get some rental properties for some side income while you build your business. Some years will be better than others, and it’s important you have supplemental income to weather the down times.
I used to work at a call center and then at a newspaper while I was building my business. Now, I have a job and my PPC agency (which helps wholesalers generate high-quality leads) as other income sources. Many of our clients also have secondary sources of income. Some have full-time jobs (by choice, like Vance) and others run successful side businesses or own franchises. If you aren’t beholden to the next deal, you will be able to make better decisions based on logic and numbers versus fear and hope.
Keep Overhead Low
It may be better to streamline your operations, use software operation to keep payroll at a minimum. The leaner you are, the easier it is to pivot your business if the market shifts.
What if you did 10 deals a year at $50k per deal versus 50 deals a year at $10k per deal? It’s the same profit, but doing 50 deals may require a lot more overhead and management. This can cause stress and be harder to manage if you have a bad month or a flip gone south. Think about your business model and marketing methods to see if you can make the same profit with less overhead.
Everybody can be successful when the market is up. When sh** hits the fan for the first time in your business career, don’t be caught off guard. If you want be in business 10 years from now, you need to minimize your risk.
Grow organically over time. Don’t hire an acquisition manager before you need it. Hire one after you are making enough profit to afford and have the volume to justify one. Lead with profits.
Don’t over-leverage. Let’s say you have your marketing systems down and want to expand your business from one market to four markets overnight. That sounds enticing, but let’s say you do this and your ninja marketing system doesn’t work in one of those markets…you may not be able to recover enough to sustain the other 3.
Another example: Let’s say you just closed a $30,000 from a $1000 mailer of a tax delinquent list. Don’t just go out and spend $30,000 in mailers on that same list. You don’t know that it will scale proportionately and might be making too many assumptions. Maybe you got lucky. Or maybe you are flooded with too many calls you can’t handle and only get a hold of 60% of the leads. I made this mistake early on. I blew all of my profits on a big high-equity mailing campaign that flopped and it made the rest of the year very stressful for me and hampered my growth. I wasn’t smart and took too much risk.
Set aside safety reserves. Take 5-15% of your gross profit and put it in a separate account that you don’t touch it (see Profit First). Your business needs to be to survive even by doing this.
Ultimately, you need to understand what operating margin you need to have to be a sustainable business. Once you have clarity on this, it will help guide your operating budget, investment decisions, your own salary, and how much you should be saving.
Decide Who You Are Going To Be
Committing to the CEO Mindset is not easy. Resilience is mandatory. It requires hard work and tough decisions. It may require you to think and act differently than you are now. Which is why most avoid it like the plague! Dig deep into your motivations and vision. Why did you enter into real estate investing? What is your true long-term goal? If you truly want long-term financial freedom, you need to be a CEO, not just a wholesaler or flipper. If you just want to try and make a quick buck and prove to yourself you can close a deal, that’s okay too. But I implore you to reach for more, commit to more, and the become the best business person you can be, not just for yourself, but to inspire our industry to be better and to keep it real. It’s worth the price of admission.
And instead of posting pictures of checks, you can post about how your business is serving you, your family, and your team, like the ones below.