Wholesaling Is NOT A Long Term Investing Strategy

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This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now, here's your host CEO of We Close nodes, Scott Carson.

Good morning, good afternoon, good evening, everybody. Welcome to this episode of the Note Closure show. As always, Scott Carson. Excited to be here today. Today's topic might be a little controversial. I mean, it might piss some people off, which, you know me, I don't mind mixing it up and telling it how I think and how I really believe things should be. But that's just me. All right, today's topic is something I did, a short video and I got some responses to it. I thought, you know what, I had a nerve. I need it to be a longer episode than just my normal YouTube short. And the short idea was like, wholesaling is not an investment strategy. It's definitely. Well, it is an investment strategy, but you're really not investing. It's not a wealth building strategy for sure. And my opinion is not opinion on it. So I'm going to straight share with you some facts about wholesaling. Okay. Wholesaling, yes, it's great if you want to start off dipping your toe in the water and working to try to make some money flipping paper, flipping contracts and you can wholesale a piece of property. You can wholesale. No, nothing wrong with that. But here are the things that are the lies that are being told out there. I know very few wholesalers that are doing big things now. There are some. I got some big friends that have great education. They're wholesaling property in different parts of the country. They're doing pretty well. And that's fine. It's totally fine. But with wholesaling, you're not really buying anything. If you are buying and then wholesaling as part of your business, that's a different story. Okay. But unfortunately, I get bombarded with phone calls and people, hey, I want to dive into notes. I want to dive into real estate. I don't have any money, so I want to start wholesale. And I asked him, why do you want to start wholesale? Well, I don't have any money. I said, okay, well, let's take that money picture out. Let's just take that. If you had money, would you buy? Well, yeah, I would buy. Okay. Would you invest for the long term? Would you invest for cash flow? Would you invest in stuff that's longer where you make more than one to three points or just a few, you know, some wholesale fees. Well, yeah, I would. Then stop the insanity. Keep. Here's the thing. If you're going to be a wholesaler, a, a really good wholesaler knows what that deal will hold, knows the repair value or the roi, knows that selling it to you at the percentage he's selling it or he or she's selling it's a good percentage to you he leaves, they leave plenty of meat on the bone. Okay. But when you look at how a wholesaler pans out as far as profit margin, a wholesaler is often making the least amount of money on transactions. That's because they have the least amount of bets, usually some time. Usually they don't have the property in a contract. Usually. Sometimes they will put the property in your contract and they've put an option fee down or something like that and they're trying to make that back. Plus. But good wholesalers, people at wholesale stuff are having to do what they're. They're working off of a list. They're building a buyer's list. They're building a list of potential investors that can buy that deal, hence fund that deal. They're building a database of investors or funders because every investor I know is a buyer, a seller or a funding source. Now, yes, most investors want to buy for their own portfolio, but when you start building a database and you start marketing yourself at local real estate clubs, it's much more effective to market to your audience that you're into this deal, that you're buying the deal for yourself versus trying to flip a deal. Like, I get text messages from investors all the time. Oh, I got this great deal. I'm like, it's not a great deal at 90 cents of value. It's not a great deal because your comps are way off or your repairs are. It's not 10 grand, it's 100 grand. So wholesalers, while you might make some quick cash, which is great, and I understand you often need cash to pay bills or your bootstrapped financially. I get that. I've been there, done that, and wholesale, plenty of real estate. But here's the thing, ladies and gentlemen. The first deal I did wasn't a wholesale deal. First deal I did was I bought from my portfolio. I either took the deal down subject to and got some existing financing on short terms or I had an option on it and then I sold that option, technically wholesaled it. But I was limited in my wholesaling because I Let my buyers dictate to me what they'd be willing to pay. If I want 50 grand, they narrowed it down to 35 grand. If I wanted 15 grand, they narrowed it down to 5. Not that the deal wouldn't hold, but sometimes I was motivated to take a big discount because I had somebody that could close the deal. I get that, but that's a fear, that's a fear tactic that a lot of wholesalers buy into. Oh, I got to go with the person and close the fast. Yes, that's off of the need. But if you're buying the deal and you had people that you were marketing to to buy your deal, if you just simply tweak your message, tweak your mindset more so than anything else, and start targeting investors to fund your transaction. You start building a funding list instead of a buyer's. The two are similar. They're very the same thing. Okay, you go out to rea club, meet, you grab cards, business, you talk what they're looking for. Because many investors are willing to partner with someone, they don't want to do the deal themselves, they will often fund the deal. So a lot of people, you add your database, may not have a lot of experience, but they've got the capital to write a check for you or to fund the deal and gladly make a percentage. Percentage 6, you know, 6 to 10, 6 to 12% in rare cases there that and you still be able to dive in, do the deal and make the lion's share of profits. Because if you're just wholesaling, you're going from deal to deal to deal. There's no long term wealth. And yes, you can have some bigger profits. I've had wholesaling fees of 100 grand before. Okay, I've had wholesaling fees of 50 grand, 15 grand, the least one has been 500 bucks. Okay. But on these things, and we still wholesale, occasionally when we're buying portfolios of notes, we'll take in a couple for ourselves and wholesale a couple off. We'll co bid and charge the co bidders with us a fee for us to negotiate the transaction and everything for ourselves, we kind of get called it wholesale. But here's the thing. If you're sitting out there and you don't want, I just want to get back into wholesale. I just want to wholesale. Really? You're not building any long term wealth. You are basically every week or every deal trying to go find something and you often are going to underbid that asset because you're afraid that if you get it offer. Except you really got to get a good deal and you are missing out on some great deals. And if you were to take the deals down yourself and in private capital and you marketed the deals to your database for private capital, I'd be willing to bet that you could raise several hundred grand by doing the same things that you're doing now, trying to find buyers for a wholesale deal. And I don't care whether it's real estate or not, but if you change the mindset, hey, I've got a deal I'm looking for funding on. Okay, short term funding, 6 months, 12 months, whatever it might be initially, depending on where you're at, that I'm willing to pay an above average return. Yeah, I'd be willing to bet that you would get people that would respond to what you're looking for. And like I just sent it really right before I sent, before I jumped on and recorded, I sent a text message alert, not to 800 people. And you know, one of the great things about it is that we pulled together and people have opted into things and said, hey, I'm interested in funding deals or I've got some money to make some things happen. And so I sent a text message, hey, I've got a short term deal, six months or less than a Florida REO. If you've got 50 to 100 grand, let's talk, you can run by Friday. And I've already had three people respond that want details on, of course they've got to have the 50, 100 grand and can fund by Friday on the stuff. So the great thing is people have already started responding. Now, these would be same wholesale buyers, but people are like, I've got money, I need to put something to work. Because here's the thing, here is the magic that most wholesalers forget that they and don't realize that they have. In real estate investing, you've heard the term he who has the gold makes the rules, right? Well, in most cases, the gold has been the money. And that's where new investors come in. Like, I don't have the money. That's the gold. I don't have it. So I'm just gonna agree to get rid of this deal real fast. Make a little bit. Okay, I get it. If it's a deal you don't really want to take down. If you want to make something off of nothing, that's. That's different. It's a deal I don't want to take down, that's great. But I see too many wholesalers Flipping deals or wholesaling stuff out there on deals that they should be holding on to long term for cash, either rentals for note deals or reos that they can take down, fix and flip themselves versus just wholesaling. Okay? The most important thing that you can do is realize that the gold is not the money. The gold is actually the deal. So people are looking for deals and if you have a really good deal, you know the numbers, you know the, the ROIs, the profit margins, that kind of stuff. The beauty is that if you know that and you express that, say, hey, I'm buying a deal, I'm looking at this deal and here's the numbers, here's the strategies, here's the great thing about it, is that that confidence will come across and people will work with you. Okay? You don't have to have the most amount of expense. You just got to know what the hell you're doing. And we all got to start somewhere. If you're partnering with another investor, Hey, I got an investor for partnering ideal. I need some money to fund this, the half of the deal or I need some money to fund this deal and I've got a guy that's going to hold my hand through the deal. I got a coach that's going to hold my hand through the numbers. If the numbers make sense. Of course, if the numbers don't make sense, you haven't done your work, shame on you. But if the numbers make sense, you know what you do? You keep talking to people. You keep talking to people. You start, you keep marketing at real estate clubs, you Keep Marketing on LinkedIn, on Facebook, all the social media websites, your email database. You've got to market a regular database because that's what makes an effective funder, somebody who's raising capital. Also makes sense if you are trying to start funding. But if you're a wholesaler, do yourself a favor, especially with what's going on in the market, quit selling yourself short. Quit saying I just want to wholesale because I'm scared. That's what you're saying. When people talk to me, I'm scared. I'm brand new. You. You know what? We all gotta start somewhere. And if you let fear, false evidence be real, and your imposter syndrome, they must be, well, I've never done a deal. I don't think I'd make it happen. Well, yes you can. You totally can. It's also the same scarce scare tactics I hear from people who have money. Well, I need to go prove concept. No, you don't need to Prove the damn concept. Concept's been proven for centuries about note investing, okay? It's not something brand new. It's not like crypto or Dodge Coin that's just made its appearance in the last few years. No investment around for a long time. You have to realize that you hold the key to your success. And wholesaling will never build wealth. Okay, yes, you'll make some cash issues, make fees, but if you're not building anything that provides cash flow to your rentals, performing notes, buying non performing rate performance, something that you can turn over, making profits and then turn around and lending that money out and making money yourself, you're just making quick profits. And these are just gonna be short term capital gains that you're gonna get eaten up in taxes at horrendous tax rates. Okay? So do yourself a favor, make the lion's share, Keep the lion's share of the profits by being an investor, buying a deal, buying a note, buying a property that you're going to take down yourself. Okay? You can partner with wholesalers to market, pay them a bird dog fee to send out to the database for invasive funders. A lot of wholesalers will do that. Okay, Run your deal by a hard money lender, see if they would fund the deal. At worst case, if that's potentially a deal for you, great. Usually not no business, but it's a traditional real estate. There you go, but stick, stay involved, get in the deal, raise capital. Do your numbers understand? If the numbers work, great. If numbers don't work, you either got to go back and negotiate better or walk away from the deal and go for another one. But you will, the whole world will change. You'll have on a whole different shade of glasses when you start approaching things like, I'm going to buy this, I'm going to raise the capital for it because I'm going to market for it. Because if you're going to market as a wholesaler, you might as well market to raise capital and just change your mindset, change a few words instead of wholesaling and looking for funding. And know your numbers, have the details and I guarantee you'll raise a lot of capital and you close a lot more deals and ultimately you'll make a whole lot more money and you'll be a lot closer to building wealth and hitting your wealth and financial goals along. So don't, don't sit around here. Don't let fear intimidate you. Don't let fear stop you from taking action. Don't let fear help you grow, because it's inside of those. Getting outside of our comfort zones is where we grow as people and individuals and investors. And if you're scared to raise capital, that is God saying, your little inner voice saying, hey, you need to raise capital. If you're scared to do something, then get out there and do it. Talk to somebody. What should you say? What can't you say? And market effectively. Get the word up, guys and girls. You all are so capable of so much more than just sitting. Being a wholesaler and being scared, scared to make offers, scared to do things. Take action. Start marketing today. Start marketing to your database. If you don't have a database, build one. You can buy a database from exact data or listed data. You can find IRA investors at the county records, the county appraisal districts and start targeting those investors. Start talking. Get that conversation going. It's always easy to raise capital when you don't need it. It's when you need it and you're behind the eight ball to it, it becomes tougher to do. So go out, take some action, everybody. If you have any questions, don't hesitate to reach out to me@talkwithscottcarson.com that's talkwithscottcarson.com let's talk. Stop. Let's turn you guys from wholesalers into real investors building long term wealth. That's where the opportunity lies, especially now. Over the next couple of years, you're going to see a lot of amazing deals at huge discounts. Don't be the man or the woman on the shorting of the stick wholesale and making a profit. Let's get you buying deals, buying wealth that can change your life, change your destiny, change your whole financial path for you and your future family. So go out, take some action and we'll see you on top, everybody. Bye, Sam.