Real estate is known to be one of the best ways to become financially independent. After all, 90% of all millionaires have their money tied up in the real estate. So it must be a pretty reliable and stable investment. But the problem is that you are not yet a millionaire and you have no idea how you will be able to begin investing in real estate. Then you learn about a segment of real estate investing called wholesaling. You are sure that all of your financial woes are behind you. You are not spending your money. You are just making deals and collecting a profit from each sale. What could be easier?
But the truth is that to be successful in the wholesaling business, you will need to invest your time and effort to learning the ropes and developing your niche. But with hard work, and the ability to avoid the following five pitfalls, you can build a very successful business wholesaling real estate. But you need to stay clear of these five mistakes:
- The fastest way to lose money might seem like a really good investment, but it is not. Never fall for the 30-day course that will teach you all you need to know to make millions in the real estate biz. You can spend anywhere from $5,000 to $50,000 or more and walk away with no more knowledge than if you had studied free material on the web. This is not to say that education is not essential. It is critical to your ability and success as a wholesaler. But you can learn on your own and for little or no cost.
- Leads are going to make or break your business. But you don’t need to spend a fortune to gather or buy a massive list of names. Instead, work on growing your list of contacts and networking to gain qualified buyers. Lists with thousands of names or email addresses are worthless. Focus on quality, not quantity, and be willing to start slowly and grow in a productive manner, not just in a rush to gather names.
- Legal issues can be costly, but they happen from time to time. It is essential that you consult with an attorney for legal documents and maintain perfect records and files on all of your projects. You hope never to need an attorney to represent you in court. But you always need to know a good one just in case and be ready to prove that you followed all rules, laws, and guidelines.
- Because we just mentioned legal fees, this is an excellent time to say that you should consider legal fees as a part of your overhead. And as such, there should be a little bit on every deal that goes into your legal defense fund. Think of legal fees like insurance. You never want to use it, but you have it because it is smart to protect yourself and your business.
- Make sure to include an inspection period in every contract. Any earnest money you have down on a property can be lost if you have not left sufficient time for an inspection. This is just a result of poor planning and should never happen. But you would be amazed at how many people lose money this way.