Should a Newbie Wholesaler Focus on Short-Term Revenue or Long-Term Relationships?
Many newbie investors, when asking for advice, are told to focus on wholesaling to generate quick revenue before doing anything else. As a result of fast, easy revenue being used as the guiding principle, transactions are approached through the lens of “what is the most amount of money it can make?”
Stephen Watson, a wholesaler who has completed over 200 real estate transactions, doesn’t think this advice is ideal. In our recent conversation, he explained that there are certain scenarios where he could have made a lot of money, but in order to achieve long-term success, he shifted to a “how am I going to be of value to everyone in the transaction and make it a win-win” mentality, and why you should do the same.
Focus on Adding Value, Not Making Money
As a wholesaler, there are many one-off deal opportunities where you can make a quick buck. However, it is difficult to foster long-term relationships with this “means-to-an-end” attitude. For example, many of Stephen’s wholesale deals have been stressful and emotionally taxing on all the parties involved. If he only looked out for his own self-interests rather than focused on making the transaction go as smoothly as possible, he believed that he may never have gotten the opportunity to work with the buyer or seller again. Typically, everyone just takes a break from working with each other for only a little while, but during that little while, there may have been multiple opportunities missed!
Obviously, we need money in order to survive and thrive, so this is a very difficult mindset shift to make. But, since we get paid by providing value to the marketplace, there are countless ways to make money as a by-product of adding value to others. For example, instead of finding a deal and then locating a buyer, reverse the process and build a relationship with a cash-buyer first. After finding a buyer, figure out what problem they have and how you can fix it. Maybe they have a lot of money but don’t have the time to find great deals that matches their buying criteria. If that is the case, you can become the one person that understands their criteria. Now, instead of approaching potential sellers as someone with no experience and no money, you can say, “I am the acquisitions person for XYZ.”
Exchanging Your Time for Money
Essentially, when starting out as a wholesaler, you can make up for both a lack of experience and lack of money through teamwork. Find a person or a group/company that provides the money and experience, and you provide value with your time. There are basically an unlimited number of ways you can leverage your time in order to make money. Stephen knows a closing coordinator, for example, that doesn’t have any money or mobility. But, they exchange their time by coordinating closings via phone calls and makes $1000.
Another example – Stephen is starting to focus on how to be more knowledgeable on specific subjects in order to be able to recognize more wholesaling opportunities. And for the subjects that he doesn’t understand, he at least wants to know the right questions to ask and who to ask for the answers. He is compiling a list of different experts, like specialized attorneys for divorce, probate, title, etc., and expediters at the city level, so that if a potential buyer has a question or problem that he can’t solve, he knows where to turn. This puts him a big step ahead of everyone else that only comes in an asks, “how much money do you want” or “what is your deal criteria.”
Expanding your knowledge is also advantageous because it allows you to focus on how to structure a deal on a transaction-by-transaction basis, instead of trying to force every deal into the one strategy that you know. So, when faced with an unknown situation, you have the knowledge (or who to ask) and the creativity to try to make the deal work, rather than having no choice but to walk away.
What is Stephen’s Best Ever Advice? Try not to treat people like numbers. Once you start approaching transactions that way, people will know that you actually take pride in what you do, that you are always looking for ways to help others, and that you are always preparing for situations before you run into them.