How to Wholesale Your Way to $250,000 Profit in One Year
Wholesaling can be a great entry point into real estate investing, a way to gain supplemental income while pursuing another real estate niche, or a full-time profession. Most of the real estate investors I’ve interviewed on my podcast got their initial start as wholesalers, so it’s a strategy that any investor should understand and be capable of performing.
One individual that’s achieve very high levels of success as a full-time wholesaler is Cody Hofhine. In fact, he is on pace to assign over $1 million worth of contracts this year. In our recent conversation, he provides a 5-step roadmap on how he started a wholesale business from scratch and earned over $250,000 in the first year.
Step 1 – Have an Abundance Mindset
The first, and most important step to success in any business is to adopt the right mindset. Before Cody found his first deal, spoke with his first seller, or added the first name to his buyer’s list, he read two books: “The Four Spiritual Laws of Prosperity” and “The Go-Giver, Expanded Edition: A Little Story About a Powerful Business Idea.” Upon completion, he made the commitment to adopt an “abundance mindset.” Essentially, this means that if you focus on giving and helping other people, you end up getting a huge return on your investment. Whether it’s donating X% of your income to charity or giving a huge tip at a restaurant, he is always scanning for opportunities to contribute.
Having this abundance mindset and helping others as often as possible will start to rollover into how you wholesale. Cody never meets with a potential seller and tries selling himself. He goes in there with the sole intention of helping. He has replaced the word “sell” with “help” in his mental vocabulary. When he has that mindset of always looking for ways to help other, the byproduct is walking out with the contract.
Step 2 – Build a Big Buyer’s List
Many newbie wholesalers come to Cody and say, “how do I find my first deal? What is the best way to find my first deal?” However, if you don’t have the end in mind (in the case of wholesaling, this end would be having a cash buyer) it doesn’t matter how many deals you have or how good the deals are because you won’t be able to sell it to anyone.
Therefore, before even finding your first deal, you have to build a cash buyer’s list. Then you are able to easily sell those properties and do whatever you need to do in order to make a profit.
Step 3 – Learn the Legal Rules
Wholesaling is a great tool to make a lot of money, but it is governed differently in every state. Make sure that you wholesale according to your state’s law. The best way to accomplish that task is to hire a great real estate attorney.
You will also want to find a great title company. You don’t want to personally do a closing, nor can you, so it is important to find a title company that is well versed in performing the type of wholesale closing that is legal in your state. After you have found a real estate attorney, they are usually already tied to a good title company as well, so it is a win-win.
As for the rest of your team, Cody recommends that in the beginning, get out there and learn to wear all of the hats. Get your foundation set first, and then focus on delegating aspects of your business to team members.
Step 4 – Find Phenomenal Deals
Finally, after all of the foundational work is accomplished – you’ve adopted the abundance mentality, built a buyer’s list, and learned the rules – it is time to start finding deals to wholesale.
Cody’s favorite and most effective method for finding deals is direct mail marketing. However, there are endless marketing strategies to choose from. Pick a strategy that you are most comfortable with and then make the commitment to adhere to that strategy week after week.
Step 5 – The Secret to Stellar Seller Conversations
Cody believes that wholesaling is simple. If there is anything complicated about wholesaling, it is the wholesaler. It can be as easy as always remembering that wholesaling is a people business.
If someone responds to a piece of marketing, they are doing so for a reason. As a wholesaler, it is your job to find out why they reached out to you and not the hundreds of other wholesalers, investors, or real estate agents in the marketplace. The best way to accomplish that is also very simple: ask and listen.
Whenever Cody meets with a potential seller, he sits down with them for a minimum of 30 minutes and only talks about them. In doing so, he quickly builds a level of trust, and since people do business with people that trust, this gives Cody an advantage over the competition. After 30 minutes, transitioning to discussing the deal is an easy conversation. Now, he is on a friend-to-friend basis, which is a situation that most other investors aren’t going to achieve.
To replicate Cody Hofhine’s success and earn over $250,000 in your first year as a wholesaler, the 5-step process is:
- Adopt an abundance mindst
- Build a massive buyer’s list
- Learn the legal rules
- Find phenomenal deals
- Master seller conversations
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