How I Turned a Side Hustle into a Million Dollar Real Estate Wholesaling Business in Less than 2 Years
For most of my adult life, I earned a respectable six figure income in sales. I was a corporate America junkie, grinding out the 9-5 in what seemed like a never ending rat race. In 2019, I earned a modest 130k from my W-2 income. Fast forward to July 2022 and my real estate wholesale business is generating over 100k per month.
In 2021, that allowed me to:
- Pay cash for a duplex
- Buy 2 cottages on Lake Michigan which will be Airbnb’s
- Complete a 120k renovation so we can refi and pull our cash back out
- Payoff a $70,000 loan on a vehicle that we now own free and clear
- Payoff a $40,000 loan on our boat that we now own free and clear
- Payoff a $20,000 loan on our camper that we now own free and clear
- Close on a $1.2MM construction loan for our new primary residence
- Buy a nice pair of sunglasses 😎
- Still have plenty of disposable income left over to re-invest in the business
Not Your Typical Sob Story
I don’t have the typical sob story of hitting rock bottom and living in my parents basement at the age of 30 with no money. Some of those stories have to be made up anyway, right? Hard to know who is being genuine these days.
I’ve always had a steady job but lived paycheck to paycheck most of my life. I’ve been through the massive credit card debt phase. Always struggling to save any money.
Sure, I could have subscribed to the Dave Ramsey lifestyle and lived well below my means but I have a hard time living a lifestyle that limits pleasure. I want to be able to travel with my family, go to fancy restaurants, live in a nice house, drive a nice car and have nice things. That’s just me.
You need money for those things. Unless you are a doctor, lawyer or CEO, most corporate jobs only pay you enough to get by. It’s no surprise why so many people look for side hustles to supplement their income.
I’ve tried other side gigs like selling on Ebay and renting out our camper. The extra money was nice but for the amount of hours worked it didn’t make sense. Ever heard of opportunity cost? Time is money.
The Beginning
I discovered wholesaling in 2019. I knew about the concept but it always sounded too good to be true. Selling contracts to other investors for a fee? You’ve got to be kidding me, that’s not real.
I’ve always been self-taught. Mostly podcasts and books. I specifically remember listening to a podcast featuring Tom Krol. He was telling his story about how he got started in wholesaling and how his business took off. I love Tom Krol. His energy, passion and attitude is contagious. For whatever reason this podcast really motivated me to take action.
Not long after that, I ramped up the self-education and finally took action. I bought a list and mailed out 300 handwritten letters. I’ll never forget that. It literally took me a week.
I started getting calls a few days later. It was a mix of “take me off your list” and tire kickers. I didn’t know how to handle the wise asses. I specifically remember this one guy who kept yelling at me in this heavy accent “what’s your offer!?” I told him I needed more information and he yelled “what’s your offer” again. He eventually hung up.
You definitely need to have thick skin. I came from a sales background so it didn’t really phase me. This wasn’t my first rodeo dealing with rejection. It’s all part of the sales process.
My First Wholesale Deal
I didn’t get my first deal from that mailer. In fact, it wasn’t until my third mailer that I got some real traction. What I learned real fast was you have to make multiple offers to get a deal. If you have a passive approach and are afraid to make offers because you think they will be insulted or say no, you’ve got it all wrong.
Some wholesaler’s say it takes 10 offers to get a contract. For me it’s about 4. I guess I’m just that good. I also don’t like to waste my own time.
My first deal came from a 17k offer. It was a house located in a lower income area. It definitely needed some TLC. The seller lived in Georgia and just wanted to cash out. I’ll never forget making that offer. I thought to myself, there is no chance in hell this guy is going to accept this. In fact, he will probably be so offended that he won’t ever talk to me again.
To my surprise, he called me back and countered at 19k. My jaw dropped. Did I just put together a deal?
Wholesaling is a Mindset Shift
It took a while until I understood the logic of a motivated seller. It’s really a mindset shift. There is a reason these sellers are speaking with you. There is usually motivation. Whether you figure out what it is or not, it really doesn’t matter. If they have motivation and like and trust you, they will work with you. And they will sell you their house at a discount.
Finding a Cash Buyer
Back to my first deal. We ended locking this one up for 18k. Now the fun part, finding a buyer. I had a few contacts. Before I got started I did some networking with a few experienced investors. One of them was Charlie. I remember Charlie telling me he bought in Muskegon.
I called him up, went over the details and gave him a price, 28k. I had no idea if that was too high, too low, or what. What I did know was many wholesalers aim to make 10k per deal. So I figured it was a good starting point.
Later that day he stopped by the house. He called me back and said he liked it but there was evidence of termites in the basement. Oh, sh*t, I thought. Termites. That doesn’t sound good. He asked me if I noticed. I said I must have missed it.
Then he asked me if I had any room. My first thought was “Yes! I have it for 18k so as long as I sell it for more than that I make money!” Good thing that was just a thought. Somehow, I was able to maintain my composure. I said, “I have a little, how about 26k?” I almost cringed when I said it. Only a 2k discount for a termite infested house in a bad area? What was I thinking?
First Deal in the Books
Then he said, “sure that works”. Whaaaaat? He accepted? No way. Did I just get my first deal? This can’t be happening. I was elated. On cloud nine. I kept my cool again and discussed details. Title company, close date, EMD. I was somewhat prepared.
I even did this cool thing and made the tenant sign an estoppel certificate. This allows the tenant and buyer to agree on current lease conditions, since there was no lease on file. The seller was impressed. Thought it was slick. Oh the beauty of google. Give this newbie a pat on the back.
A couple weeks later we closed the deal and I made $8,000. I couldn’t believe it. I just wholesaled a house. So, is wholesaling easy? Not so fast. On to the horror story of my second deal.
My Second Wholesale Didn’t Come as Easy
Do you know that feeling when you really want something and you are willing to overpay?
I just closed my first deal a couple weeks ago and was still on cloud nine. I thought I could wholesale anything. Couldn’t wait for the next one.
This next seller wasn’t budging on price despite being motivated to sell. I’m sure if I pushed harder, I could have got him down. But instead, I simply agreed to his asking price.
I started the process of showing it to investors. Mistake #1: I didn’t do a very good job of being transparent with the seller. He thought the “inspection” period would be my contractor and a couple partners coming through. After 4 days of walkthroughs with multiple people, he started asking questions.
None of the buyers would take it. The price was too high. My contract did have an inspection contingency. So I was covered there. Unfortunately, that doesn’t make the conversation any easier. I had to have that tough conversation with the seller. He wasn’t happy.
JV Wholesale or Co-Wholesale to the Finish Line
Because I was a new wholesaler my buyers list was small. So I had another wholesaler send to his list. JV wholesaling or co-wholesaling is a good strategy to help you move deals. Especially when you are new to the business.
This guy claimed he had 600 buyers. So we had plenty of exposure. The highest offer we had was 17k less than what I had for. Not good. After a long week of more walkthroughs and uncomfortable conversations with the seller, we finally got them down to 93k. Our buyer came up to 95k, so we each made 1k.
My second deal was easily the most difficult deal I’ve done, to date. It’s also the smallest assignment fee (1k) I’ve made on any deal.
The lessons learned? Priceless. Those darn Mastercard commercials are embedded in my memory forever.
Be careful not to get a big head after an easy wholesale deal. Always make decisions based on the numbers and not your emotions. Every deal has a number. Not every seller will let their property go for that number. That’s ok, move onto the next one. There are plenty motivated seller leads out there, you just have to find them. That’s where marketing comes in!
I Started Doubting Myself
After my second deal, I was exhausted. I started having feelings of self-doubt. Is this really what I want to do? Starting a business is never easy. Everyone has to take their lumps initially. I knew I could power through this but I really had to ask myself those tough questions. I felt like there was something unethical about what I did. That seller had to drop their price by more than 14k to get the deal done. If that’s common in wholesaling, I’m not sure I want to sign up for this.
I kept circling back to my first deal and remembering how smooth it went. How do I get more of those deals? How can I prevent another disaster like the last one? I decided I couldn’t give up yet. I’ve put in too much time and effort learning this business and even though that last one didn’t go smooth, I still made 9k total with my first 2 deals.
Ramping up my Marketing
I sent more mail. One thing I’ve learned in my journey is it’s all about consistency. If you are not consistently marketing, your lead flow vanishes quickly. It took me about a year to fully understand that. I would send out a couple mailers and get some leads one month, but skip sending out any mail the next and sure enough, I had no leads. It’s common sense but it’s so easy to get comfortable after a couple deals and forget what got you there in the first place.
Direct mail was my MO for a while. It was about 6 months and 4 deals later that I decided I needed a website. Let me rewind. I had a website, but it was ugly. My brother convinced me to use Square Space. It was a nice little website builder, but I had no idea what I was doing. I quickly threw together a half-assed site, and didn’t get traffic. That’s when I discovered Jerryll Noorden’s SEO for Real Estate Investors.
SEO for Real Estate Investors
This guy knows what’s up. If you think about it, it’s common sense really. What do people do when they need to solve a problem? They google stuff! How do they find you? It all depends on where you rank when someone types something into a google. The best and cheapest leads are organic. They are free. But your site will need to be optimized to rank for the top keywords. That’s where SEO comes into play.
Investor Carrot Website
I quickly ditched my pathetic excuse for a website and bought a Carrot site. Investor Carrot provides “out of the box” websites that are already SEO optimized to produce motivated seller leads. They also give you all the content so you can get rolling right away.
In theory these sites are great. However, there are hundreds of people that have Carrot sites in your market. There are thousands of sites across the US. The “out the box” content is all the same.
Don’t expect your site to rank right away. You need to rewrite the content and customize your site with your own branding. You will need to make it stand out and be credible. That’s where Jerryll’s SEO program came in.
Investing in My Business
I bought his course in early 2020. At the time, the 10k price tag was a big deal to me. I only had a few deals under my belt and maybe 25k in my bank account from those deals. But something told me this was a good idea.
Fast forward almost 2 years later and it’s paying off in a big way. I get 8-12 FREE organic leads per month now and convert these leads at a much higher rate than any other marketing channel. These sellers are motivated. They have intent. They pulled up google and searched for local companies that buy houses (this is my site!) Those are the leads that you want!
Another tool I highly recommend is Semrush to determine what keywords you have the best chance to rank for. It’s extremely easy to use and basically tells you exactly what people are searching for on google. There’s your cheat code on what keywords you should try to rank for!
Semrush isn’t cheap – I pay for the guru plan and its $230/month. However, if you plan on taking your website or blog to the next level to drive traffic it’s definitely worth it.
My Lakeshore Homebuyer site didn’t bring in leads right away. It took time, so I had to find leads using other channels. Direct mail continued to be my main marketing channel throughout 2020. I probably spent between 20-25k on direct mail that year. I closed a lot of smaller deals and also spent way too much time closing them. I’ve been in sales a long time and it always seems like the smallest deals come from high maintenance clients. This is also true in wholesaling.
The Importance of Time Management
What I’ve also learned is taking a chance on a deal with a smaller margin can create a lot more work for a small payout. When I’m rolling and things are going well, I usually fall victim to this. I’m having a great week, closing a bunch of deals and I’m on a high. Sure, I’ll put this below average deal under contract, I can sell anything to my cash buyers!
When you make this mistake, you kill your productivity and cost per deal.
That Darn Lakehouse
In 2020, I put a small lake house under contract for 120k. It was an older house, but it was on an all sports lake and other houses were selling for 200-500k. Sounds like a great deal, right? Not so fast my friend… The water level had been on the rise over the past couple years and this house was already built pretty close to the water. Water was coming onto the deck and was within inches of getting into the house.
Lake levels fluctuate over the years, especially here in Michigan with lake effect precipitation from Lake Michigan. So a gambling man may bet on the water going down since it had been on the rise for such a long time. There had also been discussions of the township implementing a drainage system. There were just enough reasons for me to think an investor would take a chance on this house at a discount and look to flip it or turn it into a short term rental / airbnb.
Boy was I wrong about that. No one wanted it. Even at a discounted price of 125-130k (with my assignment fee included), I didn’t have any takers. I had plenty of interest. It wasn’t hard getting people out to see it. After a few weeks I had to have an honest conversation with the seller. He was a good guy and completely understood why the high water was a deal breaker for most. But he liked me and wanted me to keep trying.
Desperately Trying to Find a Buyer
I ended up making ads on Craigslist, Facebook and even Zillow. Finally, I got a bite. This guy wasn’t easy though. He wanted inspection after inspection and then wanted to do a land contract. If you know anything about wholesaling land contracts usually don’t work. We got creative and eventually put a short term land contract deal together with a 3 month balloon. Needless to say, this entire process was exhausting and took a long time.
That deal was a great learning experience in a lot of ways. I’m glad it happened. I definitely learned my lesson on how not to wholesale if you are trying to build a million dollar business.
Work smarter, not harder, right? I’m getting better at working smarter but not so much the latter 😀
Climbing the Success Ladder
2020 was a great year. I proved to myself I could do this business. I made over 100k in revenue in 2020 doing a lot of smaller deals and not being that efficient. I spent about 20k on marketing. I got most of my leads from direct mail but the website leads started picking up towards the end of the year.
I also spent an insane amount of time re-writing almost all of the content for my website. Even re-wrote content for nearly 60 city pages. It took time but it was well worth it. It set me up for 2021.
So how did it blow it up in 2021? Great question. I worked hard. I’m not claiming that it all came easy. In my experience, starting a business and succeeding takes grit, determination and hard work. Especially in the first year. You are laying the foundation.
Once I realized the correlation between spending money on marketing and getting deals assigned, I gradually increased my marketing budget in 2021. Spent more on direct mail, started SMS marketing and the web leads continued to trickle in at a higher rate.
I had heard great things about SMS / Text blast. I started with RESimpli and when they removed SMS marketing I moved over to Launch Control. I had success with both but use Launch Control exclusively now. I like it because the CPL is low. I spend $297/mo and then another $75/week for my virtual assistant to manage the conversations.
That’s peanuts compared to what I spend on direct mail leads. There is definitely more follow up and nurturing required to convert the leads, but I think it’s worth it. Out of the 46 deals I closed in 2021, 16 came from texting.
Here is the breakdown of where my leads cam from:
| Leads by Source | Deals |
| Direct Mail | 17 |
| SMS | 16 |
| Organic SEO | 9 |
| Google PPC | 1 |
| Referral | 2 |
| 1 |
Now listen to this. I spent over $25,000 on direct mail in 2021. Compare that to $9400 spent on texting. That’s $1,470 CPD (Cost per deal) for direct mail vs $587.50 with SMS. What lead source do you think I should pump more marketing dollars into? 🤔
I think I need to have a meeting with my marketing department! (so basically a meeting with myself…)
The organic leads from SEO is what I’m most excited about moving forward. I closed out 2021 on a serious roll and a lot of that momentum came from website leads. Optimizing my website and making my business credible was a huge stepping stone for me.
Building Buyer Relationships
While it’s obvious finding motivated seller leads is a major aspect of wholesaling, establishing relationships with your buyers is equally as important.
I would not have finished 2021 like I did if it wasn’t for my buyers trusting me. Once you have 8-10 solid buyers who are always looking for the next deal, moving deals starts to become easy. Some say all you need is 1 good buyer to be successful. I’ve turned down this partnership request numerous times because I believe in healthy competition. I also want to keep building my brand and blast out deals every week. If I ever became exclusive with one buyer, it would look like I fell off the map in the eyes of my other buyers.
A funny thing starts happening when you consistently send out great deals. Buyers start fighting over your deals. Buyers start taking them down sight unseen. They forgo the inspection because they trust me.
Over the past 6 months, over half the deals I’ve sold to cash buyers have been without an inspection. Sometimes minutes after I send out an email blast, I get a text or phone call from a buyer saying they want it, send the assignment.
The more deals you do with your top buyers, the more they trust you, the more they buy from you. There’s no negotiation. I name my price and they pay it. They know how fast I sell my deals and know how many buyers I have that don’t need an inspection contingency.
Meet Joe, the Stubborn Buyer
There’s this one guy, his name is Joe. Good guy, been in the business for a while as a wholesaler and house flipper. He’s interested in almost every one of my deals, but he always wants to see them first. Even when he does see the house, he always offers me less for them.
Oh, the joy I get when I type an email back to him that I sold that same deal minutes later for full asking price. We still haven’t done a deal together because I think he’s too stubborn to pay full price for anything. At least now he knows the drill.
The reason I’m telling you this is Joe represents about 80% of the buyers on my list. They have unrealistic expectations of what a deal looks like in 2022. They only want safe deals where they know they can make an easy 50k. Don’t let those buyers waste your time.
Partner With the Big Guns
Find the big guys, the flippers who have big goals. The guys who want to flip 100 houses. Those are the buyers you want to partner with. They won’t waste your time. They will make quick decisions and may even sign on the dotted line without seeing the house. Foster those relationships and that will be a huge element of your success in this business.
I’m telling you, this is equally as important than finding motivated sellers. When you have 8-10 of these buyers hounding you for deals, it makes moving deals so much less stressful. It also gives you a lot more confidence when you’re negotiating with motivated sellers. Buying power, my friend!
Finding Efficiencies
As we bring in more leads, secure more contracts and sell them to buyers, the key to our continued success and growth will be streamlining our processes. In 2022, I’ve hired a 2nd acquisitions manager and our deal flow is ramping up quickly. Instead of closing 3-4 deals per month, we are suddenly closing 7-8 deals per month. At this point, I still don’t have a dispositions team so I’m handling all of the marketing and selling to our cash buyers, communication with title companies and scheduling closings. All on top of managing two acquisitions managers, keeping up with my own leads and appointments, constantly reviewing deals, still working another W-2 (part time) and raising 2 young children. Needless to say, I am overworked!
From here, I have two options. I can keep hustling like crazy and work within the business. This is essentially a very high paying job. But it’s still a job and requires A LOT of my time. Even more than 40 hours per week.
Is it worth it? For some, sure. Especially if you are young and have the time and energy. It’s a great experience working in your business for as long as possible to learn the ropes. Plus, your margins (and take home pay) will be higher since you won’t need as much staff.
The second option is to hire and train the right people to do the work for you. At some point, all business owners will want to do this. For me, it’s sooner rather than later. After all, my “Why” was to have financial freedom and be able spend more quality time with my family. All the hard work I’m putting in now is by design to get me to this end goal.
Related: How to Start Wholesaling Houses
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