In my conversation with R.J. Bates, who focuses on wholesaling and has done over 100 transactions, he outlined what has allowed him to both net $840,000 in profits after all expenses in the past 12 months and replicate this business model in other markets: building relationships and maintaining integrity.
R.J. believes that the key to his wholesaling success can be attributed to the solid relationships he has created and his ability to make sure that he never puts his integrity at risk, even if it results in having to pass up on an awesome deal. The majority of R.J.’s clients are out-of-state investors, so since they don’t know anything about the market, they put a lot of trust into R.J.’s capabilities. In order to ensure that he maintains the investor’s trust, R.J. relies on:
R.J. has lived in his target market his entire life, so he understands the areas, neighborhoods, and subdivisions inside and out, as well as where to and not to invest.
In order to ensure that his numbers are as accurate as possible, R.J. relies on the solid relationships that he has formed. First, unlike many wholesalers who work with multiple agents, R.J. has created a very close relationship with a single agent. She is actually more of a business partner than a real estate agent. In R.J.’s eyes. having one agent is advantageous because the financial analysis process is extremely repeatable for each transaction. R.J. can trust his agent to pull the comps the same each time by adhering to the same sets of criteria, like only looking at properties that are within a certain percentage of square footage, that sold a maximum of 90 days ago, etc.
Also, R.J. has built solid relationships with contractors. In combination with his construction background, this not only helps him understand where the rehab estimate numbers are coming from, but he can also use his expertise to know if the quotes are fair or if they are being pulled out of thin air.
Everything goes back to building relationships and maintaining integrity with his investors because this has allowed him to create a solid business in his home market, but also it is allowing him to replicate his business model in other markets. Since the majority of R.J.’s investors are passive and out-of-state, they expressed their interest in investing in other markets, one of which being Seattle. Seattle is an extremely hot market, but it is hard to acquire properties, so there is a huge demand for wholesalers to find off-market deals. Therefore, R.J. is in the process of replicating his business model in the Seattle market.
His first and most important step was finding a reputable real estate agent to be his boots on the ground. R.J. tasked his current real estate agent with the job of finding a new agent and discovered that Facebook was the easiest and most efficient way to accomplish this task. R.J.’s agent posted a message to large, nationwide realtor groups, stating the success she was able to achieve with R.J.’s business in the last 12 months and asking for anyone from the Seattle area that has experience working with investors to reach out to her. As a result of this post, they were able to quickly acquire 15 to 20 leads from agents in the area, who explained how many deals they have done, what opportunities they are looking for, and what their long-term career path looks like. Using this information, they were able to narrow down the field to a couple of potential candidates, and ultimately, selected an agent that would work within their Seattle business model. Through this relationship, R.J. was able to find a title company that he felt most comfortable with and will begin the process of finding off-market deals and wholesaling them to his investors.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.