Why Wholesaling is the Best Business Model to Exist in 2024

What's going on everybody? Um, we're gonna have an amazing day. I don't really feel amazing, but I realized that when I don't feel good— also, what the fuck is going on with this lighting? We gotta move this, we gotta figure this out. Maybe I think it's my camera, it's just something fucking crusty. Oh yeah, I think that is it. Oh yeah, way better. Okay, so I don't really feel amazing today, and I've realized that whenever I don't feel great, the way to get me to feel great is to do shit. So here we are doing shit. I know I'm gonna feel great after, but we got the Total Human vitamin D3, sourdough preserves. Hell yeah, bro, that's what it's all about. I already know what I'm going to journal about today, and I am going to expose the secrets of why wholesaling truly is the best business model. And newsflash, it's not because you can make a shitload of money fast and because really anybody can do it. That's not even the thing. There is a secret reason why wholesaling is the best business model, because it is the thing that can literally create generational wealth. I'm going to really get my thoughts down so I can explain this to you guys in the best way possible. And you're going to see afterwards, you're like, oh yeah, no, that makes sense. Tyson has got a— I'm thinking, you know, 3, 4 steps ahead here. And, uh, yeah, so excited to show you guys that. We're gonna have a banger day. Yeah, we'll see you in the car. All right, boys, so I pretty much put down all my thoughts on a paper of why wholesaling real estate is the best business to get into. And I'm going to explain to you guys in a very concise way that if you put to pay attention to is seriously going to help you level up, and you're going to understand how we got to be thinking 5, 10 years ahead. Okay, so let me start off by saying that number one, my top is down, so hopefully this footage is not completely useless because it could very well be because of how loud it's going to be. But here's what I'm gonna say. Wholesaling real estate is not the best business model because it's definitely the fastest way to get to $20,000 a month. It's really just a great way to get to $80,000, like a million dollars a year. Um, it's not because that the barrier to entry is super low and anybody can do it so long as you're over the age of 18. It's not because it can be done entirely virtually. No, it's none of that. The reason why is because among teaching you sales, marketing, and things like that, you are going to learn how to find the best discounted real estate deals. The best real estate deals available you're gonna be able to find, because that's what wholesaling real estate's all about. It's finding great deals so you can then sell them to somebody else, and they're really easy to sell because they're great real estate deals. But here's the way the, the, the— here's the way the life goes as a wholesaler. You learn to wholesale, you find your first great deal, you wholesale it, you go make a lot of money, you become hooked, you do it a bunch of times, right? All of a sudden it's been a year later, you've made a bunch of money. But the problem is with wholesaling real estate, that money is all earned income. Meaning you get paid, or you have to pay a motherfucker of taxes on it, okay? And then you pay your tax bill and you're like, okay, I need to figure out how to not have to pay that much tax anymore because that sucks. So then you learn about two things. Number one, you're going to learn about the fact that loans are not taxed, and I'm going to tell you why that's important to you in a second. And you learn about what depreciation is, and I'm going to explain that to you as well. So first First, why does it matter that loans aren't taxed? Well, let's say that you find a house that is worth $100,000, but the owner's willing to sell it to you for $30,000 because it's gonna need some work to be worth, you know, $100,000. But instead of wholesaling it, you buy it yourself for $30,000, and then you go put $20,000 into the property. You now have Right? You're into a property $50K, you have a property that's worth $100,000. Now, could you go sell the property for $100K? Yes. You're going to pay realtor fees, you're going to pay closing costs, you're not going to own the asset anymore, and most importantly, you're going to get just messed up on taxes because more than likely you're going to be paying short-term capital gains. Even if you pay long-term capital gains, whatever, you're going to be paying a lot of money in taxes for selling that property. So, What do you do instead? You go to the bank and you say, I would like to refinance my property. They look at it and they say, yep, looks like this property is worth $100,000. We can give you 80% loan to value, which means the amount of value, $100K, they'll give you 80% of it. So they give you $80,000, a loan for $80,000, right? Boom, you get an $80,000 loan. So the $50K that you originally spent to buy the property and renovate it is now back in your pocket. You just got paid a $30,000 tax-free check for buying a rental property. Okay. Now, not only that, but you still own the property. So you're renting it out. It's making you money every single month. Plus, 10 years down the road, that property is now going to be worth, let's say, $500,000. Right. So it's like a little mini piggy bank that you're just sitting, waiting for it to fucking be worth way more money. But not only that, is when you bought that property and you saw it needed $20,000 worth of work, you ordered what's called a cost segregation analysis. Now, a cost segregation— and now we're getting into some really high-level stuff here, okay? Just bear with me. A cost segregation analysis is when a professional will come and basically deem how much depreciation you can take out of the property right now, okay? And what I mean by that is the IRS basically says that real estate has a useful life. So for single-family residential, I think it's 27.5 years, and for commercial property, I think it's 37.5 years, something like that. But basically, it says that you can depreciate a little bit of your property every single year for 27.5 years, and then theoretically, at the end of 27.5 years, the property isn't worth anything anymore because it's used its useful life. Right? If you bought a property and just didn't make any repairs to it for 27.5 years, it wouldn't be worth anything. It's basically the point, as I understand it. But there's something called accelerated depreciation where you do a cost segregation analysis which says, look, yes, a property is going to lose the value of its useful life over 27.5 years, but different things are going to become less useful at different times. For instance, a roof is going to last me longer than a piece of carpet in the house, right? So what a cost segregation house allows you to do is figure out everything that you can depreciate right now, and you can take all that depreciation in year 1 rather than over the life of 27.5 years. So basically, you're going to get a fat tax write-off. Mustang. You're going to get a fat tax write-off right, from this cost segregation analysis. So while you're buying this rental property that you got paid $30,000 to buy, you're also wholesaling, making money. But now you're buying these properties, you're doing these cost segregation analysis, you're getting big write-offs. So all this money you're making from wholesaling, all this earned income, you're able to write it all off because you're buying properties and you're doing cost segregation analysis and you're taking all your depreciation upfront. That right there is the ninja moves. That's why real estate investors just don't pay taxes. See, it's one thing to do a cost segregation analysis on a house like that that's worth $100K. What happens when you do one on something you just bought for $50 mil, right? And all of a sudden you have, you know, millions of dollars of write-offs, right? It's millions of dollars you can make that year and not pay taxes on. Or you can roll it over, you can take a loss. You could say, I lost $5 million this year. On paper, you actually made a shitload of money, but because of all your write-offs, you lost money. So now that's how many years that you just don't have to pay taxes, right? It's pretty gangster. And it's all completely legal. This is all in the IRS tax code, you know? Now look, I'm not going to claim to be an expert on this. This is what I'm now dipping my toes into. I'm trying to figure out, hey, I got all this earned income. I got to make that less. So that's why I'm looking at buying rental properties and I'm trying to depreciate them and all this stuff. So as I get into more of these, we'll do some case studies, right? So that's why you want to be subscribed so you can see that stuff as I What is going on? Anyway, yeah, so those are the ninja moves. That's why you want to learn how to wholesale real estate. Anyways, we're pulling up to the gym right now. My shoulders are still absolutely just messed up and it really sucks. I think it's actually, I think I'm gonna have to go to the D word. The doctor. I don't like going there, but I think I'm gonna have to about this shoulder issue because this is— it's messed up, boys. It is messed up. But, uh, yeah, anyways, we're gonna do some like chest or whatever I can do, just probably burn it out. It's all right, we'll get a fat pump anyway. And you know we're gonna do our cardio in the sauna. But anyway, we'll catch you guys later when we hop on the phones, we start making some money.

Hello? Hello, Werner speaking.

Hey Werner, this is Tyson Smith with We Buy Homes Cash. Uh, we'd spoke last month about possibly purchasing your property over on Rudyard Road.

I don't have an answer. I cannot get my tenant out.

You can't get your tenant out, right?

That is the problem I'm having. Unless you were— you're interested in buying it with a tenant.

Um, that is something we could talk about. Does the tenant have a lease agreement?

No, no, there's no lease agreement.

Okay. Are you—

it's a month to month.

Okay, month to month. Are you in the process of evicting them or—

yes, yes, yes, yes.

Okay. And how, how deep into that process are you guys?

Well, I have it with the attorney and, uh, Waiting for the court to give us a date.

Gotcha. Okay. And after the court date, what's the next step there? Is that where they would either award you the—

Oh yeah, there will be no problem. They will award it to us. But I made a mistake. My attorney made a mistake. The court made a mistake. And the winner is the tenant. She should have been out a long time ago. And we all fucked up, in plain English. But it is what it is, and I cannot look back. I have to just go forward, and I'm trying very, very hard. Yeah. And I'm even sick of it, thinking about it, but I'm working on it. Very hard.

Yeah.

And it cost me a lot. It cost me a lot of money.

Well, the good news is that as soon as you're done with that, I'm going to pay you a lot of money for the house, right?

Yeah. Right. So keep in touch and call me in 2 weeks and hopefully I can give you a little better answer.

Okay. Assuming that, you know, all stays the same and that the tenant hasn't like made any crazy damage to the house or anything like that? Or is the deal—

No, no, she is not that violent.

Okay, good.

No, no, no, no, she is not in that respect. She is a single mother with 2 children, and the court apparently, they have changed a little bit the rules here in Cleveland, gives her extension after extension. And then I let it happen. I was nice to her and blah, blah, blah. So call me in 2 weeks.

Okay.

All right.

I do want to ask, is— how much are you— were you still looking to get for the house?

$41,000.

Okay, so our original deal will still be on the table then?

Yes. Right. Okay.

All right, well then I'll give you a call in 2 weeks.

Yeah, do that. Okay, thank you.

All right, sounds good. Thank you.

Yeah.

All right, so yeah, we, uh, I sent this guy a contract to buy his house for $41,000 and then he just started ghosting me. Now the reason why he ghosted me is because of this. Obviously, he's still working on evicting the tenant. Last time we had spoke, he was much more hopeful that it would be done by now. Now, quick little pro tip: we are not going to wait to call him in 2 weeks. We're going to call him in 1 week, okay? We got to stay on top of these people because I do not need to get sharked by somebody else who's there right place, right time. We're going to keep following up with this guy.

Hello?

Hello, Cleotis?

Yes, what can I do for you? Because you keep calling me like you don't understand I'm busy working.

Oh, I'm sorry, I was just calling to see if you were still looking at selling that property over on Westerhoff Avenue.

Yeah, it's $5,000, no questions asked. The house is worthless. If you're interested, then send me some information. If not, just move on.

Okay, what is the current condition of the property? I'm sorry, what is the current condition of the property? He hung up on me. He said $5,000. Should I just blind— what the fuck? Should I just send him a contract for $5K for it right now? Oh shit, I just closed my CRM on accident. You make a very good point, darling. Very good point. His name is definitely Cleotis. He's hustling an ice cream truck. He is like, you keep calling me like I'm not busy at work or something. I was like, how would I know, bro? You have to answer the phone and tell me this. You have to tell me these things. All right, let me look at his address right now. He said he'll sell for 5K. It's a 2-bedroom, 1-bath, 847 square feet. Okay, so let me show you guys this house real quick. Buddy's working, this guy's bothering him. I'm working too, bro. This is the house. Looks like the roof is gonna need to be entirely replaced. Look like all these windows are being replaced. Now I don't even know how old this is saying— I don't know how old the Street View is, but interesting, interesting for sure. Let me see, let me see what some other properties Alright, this is in the wonderful place of St. Louis, so— I think I'd buy this thing for $5,000. I'm not gonna call him back right now because I think we got off on the wrong foot. I'd probably like to call him after work. I think I'd buy this for $5K. I could probably sell it for like $11 grand. I'll take that. I'd make— I'll take a little $6,000 check. $6,000 is $6,000, dude. Let's see here. Mmm, dude, his name is on title. Like, this looks good. Yeah, I'm definitely— I gotta call this guy back, dude. I gotta, I gotta make this guy an offer. We gotta make him an offer for sure. I'm not gonna offer him $5K though. I'm gonna offer him $2 grand and then we're gonna work our way up. But, um, interesting. Not gonna call him back right now because he's definitely busy and at work and doesn't want to deal with my ass. So we are— we're gonna wait. We're gonna call him later. He's in St. Louis. What time is it in St. Louis? Are they in Central Time? Are they 2 hours ahead of me? What time is it in St. Louis? 4:33, okay, yeah, we'll call him in 2 hours. 6 o'clock, 6:30, he'll be home. Where do you find your leads? Batch Leads, Lead Solo. Um, 4:30, okay, you guys are awesome. $2K, he's gonna hang up, maybe. But don't call him again, and we'll be like, okay, what about $3K? Remember, every dollar I get it cheaper is more money in my bank account. I'm not gonna start at my max offer. That's rookie stuff.