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Eric Medemar
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For some strange reason people are always wondering what kind of money they can make wholesaling real estate. Here are the basic factors that will determine how much you can make wholesaling.
The price of the home- Typically higher priced homes will have more room for profit then lower priced homes. Example: if you can find a home for 50% FMV (Fair market value) and sell the home for 70% FMV then you would have a 20% spread. 20% of $100k is far more than 20% of 20k.
The motivation of the seller-With all things being held equal, the lower the price that you can put the home under contract for, the greater your profit potential will be. Example: If you can buy the home for 50% FMV and you have buyers that are willing to buy homes at 70% FMV, your profit will be far greater than if you put the home under contract at 60% FMV.
The motivation of the buyer- Owner occupant buyers will typically pay far more for a home than another real estate investor. Owner occupant buyers are willing to pay more simply because they are looking for a home to have as their principal residence rather than as an investment property.
I have personally dealt with different variations of all of the above. When conditions have been have been perfect, meaning I had a very motivated seller and a very motivated buyer I have made up to $28,000 on a single transaction without the need for cash or credit. That is one of the reasons why I decided to become a full time real estate wholesaler.
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If you pay close attention to the way we treat learning in our society, you will quickly realize that after our formal education is complete, many of us consider our learning to be “done”. Having said that I have a recommendation to all high school seniors and college graduates across the U.S, KEEP AWAY FROM THE CAP AND GOWN. All formal education seems to end with the cap and gown, and all learning seems to end with the formal education, therefore stay away from the cap and gown and you will stay away from the end of formal education.
Once your formal education is complete, the fun learning should begin. Now is the time to start learning about the things in life that truly interest you. Move over Pythagorean theorem, Pi, and amoeba dissection. Bring on the self discovery, new hobbies, and self improvement.
If you think learning is boring try spending an afternoon with a 2-5 year old. Listen to the questions, watch their mind working, or watch as they discover something new around every corner. Far too soon these human sponges will be well on their way to disliking learning just like you. Once our school system gets their grimy little mits on the little learning sponges that we call children, thing go down hill quick.
Once our children enter school learning becomes a forced activity and all creativity involved in the learning process is left for art class once a week. Now when our little learning sponges aren’t interested in learning about a particular subject, at a particular time, they are labeled ADD, a disruption in class, or slow. It is not long before their little learning sponge minds start creating the child logic short cuts like.
I used to learn without getting in trouble..
Now I get into trouble if I don’t learn at a particular pace.
When I get into trouble I don’t feel loved.
When I don’t feel loved it makes me sad.
So maybe if I stop learning, I can’t get into trouble for not learning fast enough, because after all this learning stuff seems to lead to pain every time. (Sure we get the occasional good job when we do something right, but when we do something wrong the whole world seems to end).
Having said that, is it any wonder why so many of us stop learning once our formal education ends?
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Over the weekend my wife and I went to see one of those crazy hypnotism comedy shows. You know the shows where they get like 20 people to come up on the stage and make fools of themselves while they are hypnotized.
One of my favorite tricks of the evening was when the hypnotist convinced this 300 lb Hulk looking dude that he could not lift his left foot off ground. Here was this man, who on an average day could probably squat 600 or 700 lbs, but when hypnotized he could not life his foot no matter how hard he tried. His face was beat red, he was sweating buckets, you could clearly see that he was trying with all his mite but that foot would not move.
Why couldn’t this massive muscular dude move his foot? Experts will tell you that when you are under hypnosis the hypnotist is speaking directly with your subconscious. Without your conscious mind making all of the decisions about what you can and cannot do, your subconscious mind is much more open to suggestion. This 300 lb guy could not move his foot simply because he didn’t think that he could.
How does this relate to you? If simple thoughts could render the Hulks foot useless, how could your thoughts about investing success be affecting you? Have you convinced yourself that you can’t achieve success as an investor for one reason or another? Is the market too bad? Do you need more money first? What limiting beliefs do you have about what you can achieve? Have you hypnotized yourself into limited success without knowing it?
If your a struggling newbie your answers to the questions will move you closer to the root cause of your problem. Even if your a seasoned investor, you are likely to have some limiting beliefs about how big you can grow your business. Once you uncover your limiting beliefs, you simply need to notice when that little voice inside starts trying to convince you of your limits. Instead of getting in a pushing match with the little voice, simply ask “How do I know this is true?”. If there is no way of knowing whether or not something is true, you simply need to dismiss what the voice has to say and move on.
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Over the holidays I had the pleasure of speaking with one of my coaching students about a closing that he just finished. This was no ordinary closing, this was his first closing since he had started living his dream of becoming a real estate investor. Ever since Jay was about 15 years old, he said that he had been fascinated by real estate investing. Coming from an extremely humble beginnings Jay knew that college most likely would not be an option for him. Jay saw real estate as his only escape from the traditional 9-5 blue collar jobs that his parent had worked so desperately hard at for most of his life.
Jay did not do particularly well in school, he was more of a daydreamer. Of course our school systems don’t offer many rewards for daydreamers. Instead the daydreamers of our world are poked and prodded until they become like everyone else. Luckily for Jay he had a strong will like his mother. When the bad grades arrived Jay did not see them as reflecting on him. Instead he looked at his “Bad grades”as an indicator that he was doing something right, because from the looks of things being just like everybody else didn’t look so rewarding.
I asked Jay what advice he had for other rookie investors who are currently struggling to keep their faith about investing during these “Troubled times”. His answer was no less than perfection, “Troubled times, I guess I didn’t know we were having troubled times Eric. Maybe while I was daydreaming about what could be, I forget to pay attention to how bad the market supposedly is”.
Then this once labeled “Slow” 22 year old man said one of the greatest lines I have ever heard. He said “Eric just a minute, let me run into the dining room and grab my check, maybe my check can tell you about our troubled times”.
I cannot tell you how much I appreciated spending time on the phone with Jay. How many of you would be much better off being just a little “Slow” and decided not to listen to your friends, family and the media about how “Bad” our market is.
The problem with the “Bad market” mindset is that if you think the markets bad, then it is. Once your reality says the market is bad, then you severely limit your chances of accomplishing anything. Instead of seeing our real estate market as either good or bad, just see it as “The market”, then adjust your real estate investing strategies accordingly.
If you would like to learn more real estate investing strategies for investing in a slow real estate market please visit my site www.GreatGuruGiveaway.com
