Wholesaling from the Hammock?

Here’s a comment from the most recent article on free & clear house data ( http://briandickersonflips.com/blog/?p=37) from Pete Lucke in Iowa, which was off topic, but a very good question, so I pulled it out here to address separately:

Pete in Iowa says:

Hey Brian,
Great info on Free & Clear homes!!
I was on a newsgroup the other day and read a pretty interesting thread about “virtual” wholesaling……please let me know your opinion.
Here’s the link
http://reiplace.com/newsgroup/read.php?1,156111,156232#msg-156232

Thanks,
Pete Lucke
Des Moines, Iowa

May 16th, 2008 at 1:27 pm 

Pete, that is a very interesting thread, with some credible conversation. I get a lot of questions regarding virtual wholesaling, and certainly have an opinion, which probably falls in-between the two opinions there.

Here are my thoughts on the topic and the post there

#1  I’m a systems guy. I built systems, I use systems, I believe in their importance to growing a business. I have personally experienced systems freeing me from much of the business, from using pre-screening mechanisms, to having virtual help doing my final screening and appointment-setting, to having others doing the work of buying and selling. I’m not the only one… I have many investor friends in the same boat.

#2  On the topic of folks claiming they’re buying 20 houses per month, I’d say it could be done for sure. And most would be “minis” or lose money, after overhead is figured in.

I’m not a hype guy, maybe it’s the Midwestern way. I always tell my Clients, I’d rather you buy 1 house per month, at a huge profit, than a bunch of “minis.” It takes a certain amount of work to buy each house, whether you’re making $3,000 or $100,000, let’s say it’s 30 hours over the course of the deal.

So, if you’re doing 5 deals a month, on the “mini” side of the scale, let’s say at $3,000, that’s 150 hours of work for $15,000. Not bad by corporate standards, but why not do 1 deal for $25,000 instead?

In the first example, you average $100/hour. In the second, $833/hour.

You must decide where you will focus… volume, or profitability. Define your business model, then hold every potential deal up to it. Saying “no” more often will make you more successful by maintaining your focus and improving your positioning as the expert. This focus will also increase your competence and confidence.

#3 What about “virtual wholesaling” specifically?

I understand why it appeals to investors, especially in areas like Florida, to be able to invest in a market outside your own.

I have seen a number of investors, including friends of mine, attempt to invest in remote markets, always having it not work out in the end, and reverting back to investing in a local market.

That said, I’ve successfully used many “virtual” services in my business (I regularly outsource, and use virtual assistants). I think using more systems and automation is definitely worthwhile, and with that as a goal I give the concept two thumbs up. I’ve just never heard of someone living in the Carribbean, investing in Detroit. If you have, I’d love to hear about it (heck, sign me up!). Expanding to nearby markets or setting up remote offices are more likely to be successful.

What do you think?

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