"I remember we were sitting there and I start crying. And I was like, 'This is so, like, I don't know how much longer we can do. Like, every day is like trudging through the mud.' And as I'm crying, literally, like having meltdown. Lucas's phone rings and it's that guy." - Hannah
Hannah and Lucas started their real estate wholesaling business out of boredom during the COVID-19 pandemic. Despite having no experience, they've closed 129 deals and are now doing it full-time without ever having a "real job" after college.
In this blog, you'll learn:
- How they made $750 on their first deal and $30K on their very next one
- The pros and cons of wholesaling vs flipping
- How you can get started wholesaling with limited funds
From $750 to $30K in 30 Hours
Hannah and Lucas began wholesaling in January 2021 in Minneapolis, Minnesota, where it was -30 degrees outside. With a budget of only $300 per month, they started building lists and cold calling in both Minneapolis and Milwaukee.
On one of their cold calls, they got connected with a seller who wanted to sell his vacant lot instead of his house. The YouTube videos they were watching said vacant land is worth about 20% of ARV (after repair value), so with an ARV of $80K, they thought the lot was extremely valuable.
They put the property under contract for $1500 and were confident they could sell it easily. But when they posted it on Facebook, investors started commenting that they could buy lots from the city for only $50 - $100. However, a buyer from California ended up purchasing it from them for $2250 - netting them a $750 profit on their first deal!
A month later, they missed out on another potential deal due to "analysis paralysis", leaving them broke and depressed - until they got an unexpected call from a seller with a fire-damaged house inherited from a family member.
They immediately went to check out the property and put it under contract for the full asking price of $100K because the repairs sounded extensive. They posted on Facebook that night and within 36 hours had a buyer sign a contract for $145K - locking in a $30K profit!
The buyer did end up closing after 3 months. During that time Hannah and Lucas paid $3800 out of their own pocket for dumpsters to clear out the burned property, not realizing that technically wasn't their responsibility as the wholesaler.
As Hannah says:
"You don't know what you don't know."
Transitioning to Full Time
They continued wholesaling throughout 2021, scaling up rapidly to complete 129 deals in their first two years. Along the way, they also started buying rentals and "following the carrot" by trying their hand at flipping houses.
2022 was overwhelming trying to manage the rentals, flipping, and wholesaling all at once. So for 2023 they've decided to focus exclusively on wholesaling again.
When asked why they ultimately chose wholesaling over flipping, Hannah explained, flipping was way more stressful:
- Managing contractors was a nightmare
- Appealing to retail home buyers is totally different than institutional investors
- They hated waiting for the right buyer in an uncertain market
- Tiny flaws that never bothered them were now huge issues
They much prefer the speed of wholesaling - where 90% of buyers come in with cash and close quickly.
Plus, the quick payouts from wholesaling allow them to build cash reserves they can use to invest in rentals later on.
Key Takeaways
A few key takeaways if you're interested in getting started wholesaling yourself:
- You really can start with almost no money. Hannah and Lucas began with just $300 per month for marketing.
- It helps to "fake it til you make it" with confidence, but don't be afraid to admit what you don't know.
- You only need one buyer who sees value - the rest don't matter.
- Focus on speed and efficiency over maximizing dollars per deal when you're new.
- Build enough cash reserves through wholesaling to support other strategies like buy & hold rentals.
For a deep dive on how to analyze real estate investing deals, be sure to listen to Episode 71 of the DealMachine podcast.
About Benjy Nichols
Benjy has been a media specialist at DealMachine for the last 2.5 years. He produces, writes, shoots, and edits our media content for our member's DealMachine and Real Estate education.