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Wholesaling vs. Flipping Houses in 2019 - A Live Discussion With Stan Gendlin

 

Come see Stan Gendlin & Alex Martinez discuss Wholesaling vs. Flipping Houses!  Alex & Stan will go over the Pros & Cons of Wholesaling vs. Fixing & Flipping Houses so you can roll into 2019 with a head start!

Also discussed in this video:

  • The Current State of the 2019 Real Estate Market
  • Pros & Cons of Wholesaling Houses
  • Pros & Cons of Fixing & Flipping Houses
  • How Stan was able to go from making a minimum wage to now having a home overlooking Central Park in New York
  • The most common obstacles for beginner Real Estate Investors & how to overcome those obstacles
  • How to get the most out of any REIA (Real Estate Investing Association) Meeting
  • How to find Cash Buyers in your area

 

In case you like to read, here's a transcription of the video:

Alex: Three, two, one. We should be live now. What's up, guys? It's Alex Martinez with Real Estate Skills and today I got Stan Gendlin. I'm over here in San Diego. Stan's over there on the East Coast in New York. How you doing, Stan?

Stan: I'm doing great. Super pumped to be here with you.

Alex: Awesome. Glad to you have you here today, man. So everyone knows, Stan and I have done 50 plus deals together; wholesale, fix and flip deals. I thought there's no better person to talk to for today's topic, which is wholesaling versus fixing and flipping houses as we move into 2019, because the market's changing. But we'll get into the pros and cons. If you've never even heard of wholesaling, fixing and flipping, don't worry. We'll talk about it.

But let me give you a quick background on Stan, kind of who he is. He's the founding member of Gendlin Homes, and that's based out of South Carolina and they do acquisitions, fix and flips, wholesale deals, and actually have gotten to subdivision development, bigger and bigger deals. Since 2012, Stan's definitely done over more than 70 million in real estate deals, which is pretty awesome. So, wanted to bring Stan today. He's someone I go to. We talk about this real estate stuff all the time, so we thought, "Hey, why not bring it to everyone else, share the knowledge we have, talk about wholesaling, fixing, and flipping?"

Stan: Yeah. Super pumped to be here. I think this is such an important topic to talk about. Regardless of what's happening in real estate or where you are in your life, wholesaling is something you could do pretty much at any time of the real estate cycle. Anytime, no matter what's going on in the economy, wholesaling is always something that works and it works really well. So, super excited to talk about it today.

Alex: Yeah. For those that are just hopping in, whether you're a beginner and you've never done a deal or you've done 1,000 deals, you'll still get value out of this. I think it's important, let's take a step back, explain what wholesaling is for those just hopping in. It's a form of real estate investing where you get a property under contract. Think of like a house. You get it under contract, but we're not fixing and flipping that deal as a wholesaler. What we're doing is that we're actually getting under contract and selling the rights of that contract to a fix and flipper, someone who wants to fix and flip it. And you actually get paid a fee, something called a wholesale fee, for selling that contract.

Now, the average deals that I've seen, average deal size is about $10,000 per deal. Long and short of it is that for a wholesale deal, you're not using capital to buy that deal. You're not buying the actual deal. It's very quick turnaround time. Little to no risk when done the right way. And then Stan, you've done lots of fix and flips. How about you kind of just explain fix and flip is.

Stan: Yeah, fix and flips is essentially you buying a house and you doing some sort of repair on it usually. It could be from just carpet and paint to a full renovation where you're bringing the house down to the bare walls and starting from scratch, and then selling it for a profit on the market. That's a much longer process. You do need your own money regardless if you're borrowing money or not. It's definitely a lot more complicated than wholesaling. And like you mentioned, even though we have gotten into a lot more complicated deal of something, we never, ever give up regardless of what we're doing as wholesaling. It's always something we keep in our tool belt, and we're probably always wholesale, because it's just the best and easiest way to make money in real estate.

Alex: Absolutely. I completely agree with you. With wholesaling and fixing and flipping, it's something that there's that quick turnaround time. There's little to no risk. Stan, you and I have both seen too, we've probably both seen companies that solely focus on fixing and flipping.

Stan: Right.

Alex: They can run into cash flow issues, because when you fix and flip a house, it could take three to six months for this house to sell, and then you get paid a lump sum payment. But you're not getting paid from a fix and flip deal until you sell that actual house.

Stan: Right.

Alex: So, those deals take months and months. They are larger, larger, usually larger profits than a wholesaling deal, but wholesaling, like Stan says, something that you always want to be doing, and that you can be doing in an up market and down market, in a neutral market. Because we're not actually buying the actual house. We're wholesaling it. We're getting it under contract, selling that contract. There's always going to be sophisticated investors around that are making money in an up and down market fixing and flipping houses. They can always wholesale, too. Right?

Stan: Exactly, yeah. But like you said, any type of market, you could definitely wholesale. Even now, it's a very uncertain time. There's a lot of things happening in the economy and real estate. It's going up, it's going down. Interest rates are going up, which makes houses more expensive to buy. But wholesaling works perfectly fine today, just like it did a couple years ago when the market was running up, so it works in any type of market.

Alex: Yeah. I think there's lots of pros about wholesaling. I love it. I lean towards it more than fixing and flipping. What's special about fixing and flipping a house, buying it, renovating and resell it, is that you can take something from a simple idea to a reality and be creative with that. I think that something's extremely cool as an entrepreneur. You want to create something, put it out in the world, make the world a better place. That's what you can do with fixing and flipping. With wholesaling, it's not as tangible as that. But ...

Stan: Yeah, like you said, fix and flipping is definitely a lot more involved. My wife, who's my partner in my business, we started together ... she is, was running that side of the business and she loved it, she was great at it. I was absolutely terrible, so fix and flipping is not for everyone. It's a completely different skillset. There's a lot more risk that goes into it. But wholesaling, pretty much anyone can do.

Where again, fix and flipping just takes a lot of skills, it's a lot more people to deal with: contractors, realtors, buyers, sellers, inspectors. And just, wholesaling you're dealing with very few people, there's way less risk, takes way less time. And, typically, like you say, you don't have to risk any of your own money and you can do it whether you have a lot of money in the bank or no money in the bank.

So, again, tried and true in any kind of market and any skillset.

Alex: Mm-hmm. The way I like to look at a smart real estate investing business now is focus on the wholesaling, but then cherry-pick the best deals, with the largest profit to fix and flip. Is that-

Stan: Absolutely. Yeah, that's what we're doing now 'cause the economy's kind of uncertain right now, we're not sure what's gonna happen next year and it's just ... it was a little to risky to try to do every single deal like it was a couple years ago, when the market was going up so fast that you bought a deal, even if it was very tight on the profit, there was not too much, by the time you finished it, the value of the property went up a ton. So, we're just in a different type of market. Like you said, you've gotta cherry-pick the very best deals to fix and flip, 'cause it can be risky today when it comes to rehabbing properties, but wholesaling, that risk is gone, so we're definitely just cherry-picking today.

Alex: Awesome. Yeah, what we mean by cherry-picking is essentially the ones with the largest meat on the bone. The largest profit. Those are the ones you want to fix and flip. That will mitigate your risk, that way, if things go wrong on a fix and flip, we haven't even talked about the things that can go wrong during fix and flips. Maybe you analyze a property and you think the future price is gonna be 500,000 dollars, for example. But when you go to sell it, maybe it sells at 45. Well, that 15,000 deficit directly eats at your bottom line. And, not to mention, let's say you estimate repairs at 50,000 and ... you forgot you gotta replace an HVAC. There's 3,500-5,000. You gotta replace ducting, another 1,000. Before you know it, repairs go up 10,000. And that's-

Stan: That's kinda like you're talking about. It's a scary thing about rehabbing. There's a lot of things that can happen in a longer period of time that you can't control. Like this year was almost the perfect storm of things that can go wrong for rehabbers. The cost of supplies went up tremendously; the cost of labor to do the work went up a lot; interest rates went up, so home prices went down; inventory went up, so home prices went down. So all these different things were happening and if you're doing a six month project, there's just no way you can get out of it fast enough sometimes to take that little bit of loss when these things change.

I mean, a small increase in interest rates, I think, reduces the value of a house by 3%. And like you said, on a 500,000 dollar house, that's 15 grand and there's just nothing you can do at that point. The house just ... now's just worth 15,000 less all of a sudden. If interests rates went up just a quarter of one point. And that happened four times this year, and it's supposed to happen a couple times next year too. So-

Alex: Yeah, that's what they're saying: two or three times probably an increase next year?

Stan: Right.

Alex: Awesome. And, for people that haven't studied the real estate markets, it's cyclical. It goes up and it goes down and the Fed corrects things. But you can make money in either market, it's just that you need to understand that real estate is not always just gonna appreciate constantly forever. It is cyclical; it will, it will always go up and be linear over time, but there are up and down markets. Doesn't mean you need to be afraid to get into real estate. Just, you need to educate yourself and protect yourself and understand that.

I think, I like studying the history of real estate. I think it's fascinating. I think it's really ... if you wanna get into real estate, it's something important to understand.

Stan: Absolutely.

Alex: 'Cause right now, I mean ... Stan, you and I have been talking when the market's been going up for a long time. We're like, "It's gonna correct itself sooner or later." Like, know it's gonna happen.

Stan: Right, right. Yeah, 'cause essentially, every time the value of housing goes up, fewer and fewer can afford that same house. So, it keeps going up to a point, 'til a point, 'til few people can afford your basic house and then, prices have to come down, 'cause less people are buying. So, like you said, as supply goes up, the demand goes down. There's more supply so the values go down.

It is cyclical, but it is also very, very local. Sometimes values won't go up over time, you know, like the example, probably everyone knows of Detroit where all the companies, all the jobs have left, so values have gone down and down and down. Or like where we started our business in South Carolina. When the market was going down, all these companies were moving to the area, so home values were stable or going up, when the rest of the country was going down 'cause all these jobs were created. So you really need to understand what's happening in your area if you are gonna fix and flip. 'Cause real estate is really localized too.

Alex: Absolutely. And, that's one of the biggest things I've learned from Stan. I've learned a lot from Stan, but his ability to do research and research local markets ... and I definitely admire you for that 'cause I've asked you, "Well, how would I go about researching that exactly?" And you're like "I just use Google."

Stan: Right. Yeah, I mean. It's not really that hard. But, it just really takes some understanding of what happens when companies move to an area, what happens when companies leave area. You know, technology's changing, so certain types of industries are going away. When we moved here in New York, a week and a half ago, and I'm walking around: retail is just empty all over the place. I mean, online retailers are just killing the regular stores and it's wild, you're walking around New York and there's empty storefronts everywhere. And there's basically restaurants and then there's medical places and that's it. No one's walking around and shopping and buying average ... you know, your every day things. Everyone is just ordering on Amazon.

So, you really just need to understand in technology, in your local market. There is a lot to it and that's more important if you're fixing and flipping. When you're wholesaling, because you're in and out so quickly, very few things will change in that one to two week time period, so you don't really need to have that much local knowledge when you're wholeselling. That's why it's so great for anybody from beginners to experts.

Alex: Yeah. And, I mean, especially as a beginner; I mean, Stan, I've worked with people, helping people to start wholesaling, and within three weeks, they've been able to do their first steal. And, you can't really do that with the fix and flip. No matter what, you've got to buy it, raise the capital, renovate it, resell it. Don't get me wrong, there's probably been successful beginners doing fix and flips their first time, but if you wanna get started in real estate and you want to actively invest and make active income from real estate, then I highly recommend wholesaling to get started on that because, not only there's no risk, virtually no risk while doing it; you don't need capital, you can literally start with zero dollars; and then also, there's no risk, like I mentioned, but the quick turnaround time.

Stan: Right.

Alex: So, one more point, sorry, one more point is that if you wanna get into fixing and flipping, one of the things I think people brush over, is that when you wholesale a deal, you wholesale and sell that house to a fix and flipper. So you can learn the whole, entire process of fixing and flipping from that fixer and flipper that paid you. You can get paid to learn. You can check in on that deal, see how it's doing. You can get the numbers from the fix and flipper in the beginning of what they're estimated ARV, their future sales price, will be; what their estimated repairs will be; where they're buying it at.

And then you can do an analysis of where ... you know, after it's fixed and flipped, where it actually sold at. And now you can learn about your market and do all these things. It's kind of like a beginner flip, but you have no risk whatsoever and I think that each wholesale opportunity, you should look at that as a learning opportunity. If you wanna fix and flip and graduate to that and cherry-pick the best deals like Stan and I were talking about. You know, as you get into wholesaling, understand there's a path that you can get to. Just use every deal as a learning experience.

I know for me, my first deal was a wholesale deal. Every wholesale deal I look at that way and try to extract as much value as I can from it.

Stan: Right. Yeah, for me, I take the path of working for other people who were rehabbing to learn the whole process. And that's one of many ways to learn like you said; but, the way you were doing it ... describing just now ... definitely one of the best ways to do it. If you can learn how to wholesale and start wholesaling in the next thirty days, which is really easy, there's so many humble investors out there that remember how they got started, so they'd be more if you gave 'em a deal and you said, "Hey, I'll give you a little bit of a discount on this one. Lemme learn the process of rehabbing," or "Hey, I'll bring you the next one first before I bring it to anyone else if you just let me follow the process and learn." There's many people out there that are super humble and wanna help others and will more than happily allow you to follow that process with them and kinda learn along the way. So that's a great idea.

Alex: Yeah, absolutely. You know, one thing about wholesaling that I want everyone to understand too is that you've gotta have great buyers and great investors like Stan was talking about. There's definitely ... there's those humble investors out there, but you need to find 'em. Not every buyer for your wholesale deals is created equal. So, definitely always find quality buyers, develop relationships with them, create win-win scenarios with your buyers as well. Understand that this can be a long-term relationship where you guys are friends for years and doing business deals for years. Every financing partner ... well, I like to call them financing partners; any cash buyer I work with, I say, "Hey, can I work with this person for five years?" And I look at this person as someone who can pay me multiple six figures in one year. 'Cause that's the truth when you have a good buyer.

Stan: Yeah, that's true.

Alex: Usually, I've seen ... the best buyers you work with usually do 80-90% of your deals 'cause you have that relationship, you guys just click, they respond quickly to you. So, you definitely want to develop that type of relationship with your buyers because you're almost at the will of those buyers. The better relationship, the more trust you have with those buyers, the more money you're gonna make, the more deals you're gonna close. So, I don't want you guys, if you're listening ... don't forget that. Not all buyers are created equal.

Stan: Yeah, and some of the ones we work with, have become some of our closest friends, we partner with them. I mean, there're so many opportunities to build those relationships and do a lot of great things. Some of our closest relationships in business and personal have come from people that have bought properties, that we regularly sell properties to, and now, they're our close friends. We hang out, we do things together, we still do a lot of business together. So, there's great opportunities, especially if you can become a good wholesaler and you meet a buyer that's just really good at rehabbing, which again, is very difficult. Maybe they have access to a lot of money and you can be the guy that's maybe bringing the deals to the table and maybe they're like, "Hey, you bring me the deals, I'll do all the work, we'll split profits." That's another awesome way to build relationships and make more money without you having to learn the fix and flip process.

That was one of our first relationships when we started our business. We had this awesome guy, he was a builder in town and he was just ... rockstar renovator, rockstar builder. And we were just really good at finding deals and also designing the projects. So, you know, it was just an awesome match and it worked out really well. And we hated the rehab process per se 'cause it was very deft, a lot of people to deal with, we weren't experts at it; but, we were experts in designing the projects and finding them and getting money and it was just a matching of two personalities. He loved rehabbing, he was great at it ... it wasn't our strong suit, but it was such a good match, so, depending on what you could be good at or what you love doing, there's so many complimenting personalities out there with buyers you can meet that you can just create amazing relationships and do great things and never even have to learn how to rehab the actual properties.

So, yeah, you're right, I mean there's different kinds of buyers, but those relationships should really be grown and cherished, 'cause you never know where they can take you.

Alex: Yeah, absolutely, and if we have some more advanced listeners too, maybe you're already fixing and flipping and you want more deals, then you can definitely develop a relationship with the wholesaler, take what Stan just said ... like Stan said, they're awesome at designing the properties and they're awesome at finding the properties, there's a lot of power in that; but, there's a lot of power and responsibility in managing the renovation and getting it on time and on budget. So if you're a fix and flipper and you want more deals, create partnerships with the wholesalers and vice versa.

Not all buyers, not all fix and flippers are created equal and definitely not all wholesalers are created equal. There's a lot of amateurs out there, don't know what the heck they're doing. I talk to a lot of aspiring real estate investors every single week who have no idea what they're doing, so it's just like anything else, there's just a lot of agents out there that aren't that great, so you wanna surround yourself with the good ones. And then, once you find those people, stick with them, work with them, build long-term relationships, build that trust. I think if you go into real estate being genuine, building long-term relationships, I mean it goes such a long way when you understand, "Hey, this is a long-term game and there's really no reason to be out of real estate."

If you go into it with that mindset, you're gonna be golden, or at least for me, I've talked to a lot of people who had that get-rich-quick mindset where they may burn bridges, they may make very quick, rash decisions, but ... and I could see how people do that all the time, because were talking about wholesaling where people can make 10, 20k + in less than two weeks and that's real, but you don't just wanna do that one time ever. You wanna do that every single month consistently and keep doing it and keep doing it.

And then, for us, what I've seen, Stan, about 15 offers gets you about 1 deal as well. So, anyone getting started in wholesaling, fixing and flipping, once again, this long-term game ... I like playing the long-term game; but you gotta submit multiple offers and I think that the amount of income that you make in real-estate investing as a wholesaler especially is directly correlated to the amount of offers you submit.

Stan: Right, and even if you're like in a market we're in where you teach a lot about wholesaling on on the MLS. And some, a lot of people in this country are in smaller markets, where the MLS doesn't have that many listings. And that was one of the first things we ran into when we moved to South Carolina, 'cause we were ... our whole strategy in San Diego was just working off the MLS, which is where agents list their properties. And, I remember in San Diego, there was a hundred twenty to about a hundred fifty new listings every single day.

Now, when we got to South Carolina, there were fifteen to twenty five listings every single day. I was like, "How the heck are we gonna grow a business with that few listings?" But that's where you get on the phone with a lot of agents, start building relationships, and you're just gonna get all these things called "pocket deals" which are deals that are not yet on the MLS, they may never be on the MLS, and you're building relationships with agents and other ... maybe wholesellers in your market that will bring you deals before anyone else even knows about them.

So, like you're saying, you've got to really create that momentum, and that takes place by just being on the phone constantly when you're getting started. Have lunches with new agents, have coffee in the morning, then have lunch, then grab a dinner, and grab a drink in the evening. And just see who you really mesh with and you could create a lot of really great relationships really quickly and start generating opportunities for yourself really, really quickly. Just by creating that momentum and just not sitting around waiting for deals to fall on your lap.

Alex: And I wanna repeat what you said ... the developing of relationships, being on the phones as much as you can in the beginning, create that momentum. 'Cause what I've seen, what I like to call it Stan, is the "snowball effect," in that the first three, six months if you're starting on the MLS, getting deals off the MLS, or wherever you're at, you're in a new market, you're starting wholesaling; that three to six months is a grind, I mean, you're getting started, you're creating that momentum. But after that three to six months, like Stan said, you're gonna have agents contacting you with pocket deals, off-market deals and that's all going back to the long-term mindset thing.

If you understand that, put in that work initially, you will get those extra benefits added on. But it's called the "snowball effect" because in the beginning, you don't see that snowball going down the hill and getting bigger- it's really really small. But then that momentum happens and now, you're getting deals. So I have some students that have three to five agents calling them a day with potential deals; either on-market, they some information about a deal or off-market. But it's real, it's tried and true And once again, if you get into this saying, "Hey, I wanted to give this three, six months, a year 'til I think about doing anything else." If you do that and you just commit, then you can be successful.

Stan and I have both seen too many people be successful in real estate ... it's not a miracle when you get deals, it's very calculated.

Stan: And a lot of times it could just be about simply timing. Like we're talking about talking to agents like for instance, I'm walking around here and I pass four, five different restaurants where they're trying to get me in. They're standing outside like in San Diego downtown, "Hey, come have dinner here." Well I'm not that hungry, but I pass by that fifth restaurant, and now I'm hungry and I go in and eat. Did they do something special to get me in? No, I was just hungry at the time.

And a lot of times, it's the same thing with deals, you just call an agent and they just happen to meet with a seller and now you're calling them on the phone and they're gonna tell you about it before they've even had a chance to list it. That's happened so many times, that's why it's so important to be on the phones constantly when you're first getting started. Because you never know where a deal can come from, right? You might call an agent that sold one house last year, and now they just got their second one and it's a great deal for you ... you never know. That's why it's good to be on the phones when you're first getting started and just calling all the agents you can, building as many relationships, not just waiting for stuff to be listed on the MLS and fall into your lap.

So, that's how you separate yourself from everybody else that's sitting around and waiting for stuff to be listed on the MLS.

Alex: Yeah. One little trick I like too, I got a 20,000 dollar wholesale from this. Brokers and agents, they meet at broker caravans, where they show their property. I went there one time, and at the end, they kinda do "asks, needs, and wants," for people. I stood up and I'm like, "Hey! You know, I'm a cash buyer, wondering if you guys have any deals that you wanna close quickly? I can close in one day, a week, two weeks, whatever you need, thirty days, I'll make it happen." And then got some snickers and people laughing at me and people were like, "Oh, I want a deal too."

But then I got approached after that by an agent who had an off-market deal that they didn't want to put on the MLS. Ended up being a 20,000 dollar plus wholesale deal. It's just like that, you've gotta put yourself in those situations, you never know where they're gonna come from. You know, when we talk about being on the phones, we're asking about deals, we're asking if people know about any deals coming up on the market, we're asking, "Hey, does this price work? If not, what price does work?"

Stan: Right.

Alex: And, Stan, you're one of the people that say, "Hey, you gotta ask for what you want in life." Right?

Stan: That's right, yeah. I think a great book ... I think we both read it, was it "The Aladdin Factor"?

Alex: Yeah, exactly.

Stan: Alright. You've gotta for ... you've gotta ask for things, you know? If you go to a restaurant and you get seated by the bathroom, just asked to be moved to a nicer table, most people don't do that and then they just end up sitting miserably eating their dinner or lunch. So, that's a great book ... I probably should reread that. Highly recommend. Called "The Aladdin Factor." Great book.

Alex: Every time I read that book, I get back in that mindset and I just start asking for crazy stuff and, majority of the time, you get it. Majority of the time.

Stan: Yeah, it's wild. I remember when I first read that book and I would go to have lunch with a guy I worked with when I first got into real estate and he would always ask, "Hey, do you have anything for free? Can we do a buy one get one free on this slice of pizza?" And he would always get free food and I was always like "What the heck?" So, it absolutely works. I gotta reread that right away. I'm so happy you brought that up.

Alex: Yeah, man. It works. Quick sidenote, I did that with my brother on a plane one time, we both wanted drinks on an airplane and I said, "Hey, watch this." And I said, "Can I get this drink? And you have a buy one get one free, right?" And they were like, "Yeah, of course, we can do that for you." So-

Stan: Incredible.

Alex: Just stuff like that, but now you've gotta bring that to real estate. "Hey, you've got a buy one get one free?" Well, good, Stan. What other pros and cons do we have? Nitty gritty and wholesaling, you know, we've talked about a good amount.

Stan: Yeah, I mean I guess it's really hard to come up with cons on wholesaling because, you can make as much money as you want ... and yeah, you know make more money rehabbing, but you can also get into wholesaling other types of deals. Whether it's land or commercial properties. It works just as well in those industries. So you really can make as much money as you want in wholesaling. Now, you definitely should graduate up to that, or you could start right into commercial or land and just learn that first. That's something we graduated into about two years ago, now we sell a lot of land to builders and that works really well for us. So, there's a lot of opportunities in wholesaling. Can't really think of any cons.

With rehabbing, I just think, the learning curve is very high, and I would definitely not recommend getting into rehabbing just without any education at all. You need to definitely have some mentor, some sort of education 'cause there's so much going on in a rehab; you know, from understanding how to hire contractors and understanding what houses to buy, how to analyze them. How much work to do on the house, understanding city regulations. There's just so much to go into it.

So, it can definitely be burdensome and you might wholesale a house and make let's 10,000 dollars and the rehabber spent six months rehabbing it and he makes 40. Yeah, 40 sounds great, but he spends six months of his life doing that and you probably wholesaled four, five more houses in the meantime and made just as much money with no risk. So, I'd say that just for rehabbing the biggest con is it definitely is a learning curve. You can't just jump into without any education, or I wouldn't recommend it. 'Cause you can lose your shirt for sure.

Rehabbing is definitely something you should graduate into and educate yourself whether it's partnering with someone or getting a mentor. And it is pretty capital-intensive, whether you're borrowing money from family, investors ... it always is gonna cost more than you think when you do a rehab project. 'Cause there's always monthly bills you have to worry about paying whether it's utilities, insurance. If you're borrowing money to rehab houses usually you gotta spend the money yourself before you get reimbursed by your investor. You know, selling the house can take a couple of months, again, that's probably the biggest con. Just the learning curve on rehabbing, but wholesaling, I really can't think of any off the top of my head.

Alex: Yeah. Thanks for that run-through, Stan. Yeah, I was wracking my brain: what are the cons for wholesaling? I was trying to think, and really, the only main one that I could come up with is, and this is more if you're a beginner, you're kind of at the will of your buyers, and if you don't have any quality buyers that can buy your deal, you can leave some money on the table.

That's really the only con I could think of.

Stan: Yeah, I mean, that's not even too bad. You don't make as much money, right?

Alex: Yeah, you don't make as much money, you just cancel the contract. That's really the worst that can happen.

Stan: Right, and a lot of times, I like to tell people to start building your buyers' list first before you have your first deal. So you can negotiate and get a property under contract at a price you already know you can sell it. Cause you already know what your buyers want. So, it's kind of doing it backwards. You're fist finding your buyers, understanding what they want and then finding a property to sell to them. So, I personally like to do it better that way, 'cause you're building a buyers risk and you're not putting properties under contract, potentially pissing off agents or sellers 'cause you can't sell them or perform. So it's nice to get a one or two solid buyers and then try to target properties that you know they want and can actually buy. I don't know, what are your thoughts on that? Is that kinda how you teach people?

Alex: Yeah, exactly, 100%. Exactly that. Like you said, you don't wanna find a random property out in the boonies that nobody wants and then you get under contract, you spend all this time and now you're contacting buyers, no one wants it, no you have to go cancel the contract, agent's not happy, your buyers are like, "Why did you waste my time, I don't even want this deal?" Whereas, if you would've just spent even like a week, or a day, or two days, just finding buyers. And what I like to focus on is three quality buyers in your area. So we're not talking Nash. We're not talking webuyhouses.com, anything like that. We're talking sophisticated investors in your area. Three of 'em first, you know the zip codes, you know the areas they wanna buy. That way, like Stan said, you can find the exact deals that they want. And so now you're increasing the likelihood of getting paid more money and actually closing this wholesale deal significantly.

Like, your odds increase so much higher. I agree with you 1,000%.

Stan: And how do you typically teach people to find those three people?

Alex: Yeah, so, there's multiple ways. My number one way is meeting them at a real estate investing association meeting. Because that's where you're gonna find different fix and flippers, sometimes they do case studies right into the whole group, so you're like, "Oh, there's someone local in our area that I can work with, that probably wants deals."

That's number one-

Stan: And typically I've found, in those groups, especially if you're new - you don't know who to talk to. Go to the person who's running the group or is speaking in the front and be like, "Hey, who's really doing a lot of deals here?"

That's smart, going to those groups really works well and they're pretty much in every market, right.

Alex: Yeah, so. Every market. I've got some videos on youtube on how to find buyers in one minute or less. I've ... I was kind of frustrated and heard so many people saying that they couldn't find the buyers for their deals ... saw something called a "Google Ninja Trick" where you type in key words that a motivated seller would want to type in-

Stan: Smart.

Alex: Like, sell my home fast, Ft. Mason, if you lived in Ft. Mason, that city. So you type that in, and now a sophisticated investor will blog about that topic because they want motivated sellers to find that, or they have ads for that. And now, you can just go to their website, give 'em a call, their phone number's right there.

Sometimes, there're smart wholesalers that have the website, so you need to filter through, but if you just do that ... you spend an hour doing that, you'll find more than enough buyers that you need for your particular area.

Stan: That's smart, yeah. Okay. I'm gonna take that one, it's a really good idea, I like it. What was the third way?

Alex: Third way, I like if you're just driving around, and you see other bandit signs, just call those bandit signs.

Stan: That's smart.

Alex: Yeah, just doing that, keeping it simple. What about you? You got any others?

Stan: Typically I like to take phantom properties that I may or may not own and post them for sale on Craigslist or on Biggerpockets or on Facebook groups for local investors. And people will reach out to me and be like, "Oh, yeah. It's already under contract," but now I've got their contact info and I'm starting to build my buyers list too. So, that works really well if you post just a juicy deal online, I know it's little bit deceptive, but, hey, it's one of the best ways to meet new buyers 'cause you're putting out a really juicy deal out there and all the good people are gonna bit on it. So, it's a really quick way of building a list.

Alex: So, golden nuggets right there. So Stan and I get a lot of people reaching out to us, asking questions, we don't wanna hear that finding buyers is one of your main issues after that little talk we just had.

Yeah, and so ... also, I've surveyed close to a thousand people in 2018 and some in 2017; another main issue for most people, what they say is their biggest obstacle to get into real estate investing is capital too. I'm happy we were able to talk about wholesaling and make it very clear, you don't need capital to get started on wholesaling.

So, I'm sure you've seen this too Stan, sometimes if you wanna be a real estate investor and even an entrepreneur and you haven't taken action yet; six months, twelve months, whatever it is ... you may need to look yourself in the mirror and say, "Hey, am I keep making excuses and comping up with different obstacles?" 'Cause these obstacles really aren't that big when it comes to real estate investing and I think that anyone that wants to be an entrepreneur, that wants to be a real-estate investor ... there's gonna be stuff that comes up all the time. And like we've talked about, you need to be a professional problem solver.

If you have questions, being an entrepreneur or investor, you need to find the people to talk to: mentors, whoever it is, go network. And also, just use Google, man. Like, use Google for questions you have. If you go into real estate investing with that tenacity and that ability to constantly learn and you understand that: hey I'm gonna be a professional problem solver as long as I'm a real estate investor, entrepreneur, wholesaler ... you're gonna go a long, long way.

Stan: Yeah, and I'd say probably the people that are watching out there, having the toughest situations in life, should probably be the most motivated to get into this. Whether it's you grew up broke, parents couldn't afford a college, or working a dead-end job, or you have kids that are sick, or any other health problems in your family, or you need money for something urgent ... I mean, you can make a lot of money doing this in 30 days. And you can really solve a lot of your problems pretty quickly. So, I mean I would definitely urge those people that are watching that have that fire to solve some serious issues in their life ... whether, you know Christmas just went by and you couldn't afford to buy your family anything. Or your girlfriend or spouse or whatever. Or you're suffering through the holiday season from being sick. wholesaling can definitely solve a lot of peoples' problems very, very quickly and I'm hopeful that those people are fired up enough to reach out to you or just learn how to get started immediately. 'Cause again, you can make 5, 10, 20, 30, thousand dollars in the next thirty days.

I always tell people I'm happy I got into real estate as young as I did at 25, but I wish I got into it at your age. You were what, 18, 19?

Alex: 19, 20.

Stan: So ... you know, I went to college, I wish I didn't 'cause I didn't end up using it wisely; but, if I knew about real estate that young, I probably would've started and skipped college. Just 'cause you can really take yourself to wherever you want to be as fast as you want to be, just by how motivated you are. So, it's just a really cool path and even if it's not something you're passionate about, it's a great stepping stone to other things. Just to do real safe for a couple years, make enough money to get yourself into something else; and you don't need to be passionate about real estate, or good at it, to wholesale especially.

For most people, it's a stepping stone to doing other things. And some people truly love it, like my wife and I, we love doing real estate. We'll always do real estate. But it doesn't have to be your biggest passion for you to do it. Whether you wanna be a musician, an artist, or whatever, just being able to afford the things for you to have the lifestyle that you want.

You know, one of my buddies that I met when I moved to South Carolina, he wanted to be a musician, but it's hard for a musician to make money; and he was wholeselling and making a ton of money wholeselling and now he was able to play for fun because he wanted to, not 'cause he had to to make a couple of bucks to pay the bills. So, it's just a cool way to generate money and really be able to do things that you're passionate about without worrying about money.

Alex: Awesome. Yeah, I couldn't have said that better myself. We both started from humble beginnings. I was making sandwiches for 10 bucks an hour, 30k in student debt for when I started. I didn't even complete college 'cause I found real estate and knew I want to dedicate my time and energy to that. But yeah, if you put in the work, that's the ingredient, if you put in the work, you can make it happen, you can live the life you wanna live, no doubt.

I mean, Stan, talk so you're on the screen. Look at Stan's background.

Stan: Yeah, I just kind of remember looking at myself on this screen and seeing the ... just kind of remember all those people when I send the postcards. And they're like, "Oh, why would you send me a postcard, it's stupid, no one's ever gonna call." Yeah, but look at this. Someone obviously did call and it works. wholesaling works, bandit signs work, postcards work. So there will always be people who think it's stupid, or laugh at you, that you're wasting your money.

"Go get a job." "Go to college"

But, it obviously works. I've been doing this for nine years now. I know tons of people that do it successfully, so this view has kind of been a goal of mine since I got started. It's really cool to finally be able to earn it ... it took ten years of hard work, living in basements. I worked in a basement and then I lived in a basement of a house that we were rehabbing 'cause that's all we could afford when we first got started after we got married.

But you just put in the work, and you can have anything you want. Cause it does truly work, you just gotta have tenacity, work your butt off, have a goal, and not listen to the people that are telling you to quit.

Yeah, thanks for pointing that out. It still kinda gives me chills every time I kinda realize where I'm at from where I came from.

Alex: For those that join in, that's New York City, right there. Central Park.

Well awesome, Stan. I think we definitely went in-depth on this topic. I think anyone who wants to get started or has been in the industry for a bit, I'm sure you got a lot out of this. I wish I had this when I started out, it would've answered a lot of questions that took years to understand.

So, yeah just a recap, guys: we went through the pros cons of wholesaling, fixing and flipping real estate, if you guys enjoyed this, let Stan and I know. And, in the description, I put some of Stan's contact info, but Stan, do you wanna mention where they can reach you at?

Stan: Yeah, mainly on Instagram at Stangen9 Instagram, that's probably the best way to reach me. And, just follow me on Instagram, I'll be posting videos and content myself, along with Alex. And, we'll probably be putting out a lot of content, here, in 2019. So I'm really pumped to be working with you, Alex.

Alex: Yeah, you too man.

Stan: It's a relationship, what, five years in the making, now?

Alex: I think six or seven.

Stan: A long time.

Alex: Who's counting?

Well, awesome, Stan. Pleasure to have you on here, happy to have you as a friend, as a business partner as well. For everyone who's on here, this is Real Estate Skills, you can find us at realestateskills.com. We just talked about the pros and cons of wholesaling, fixing and flipping for 2019. I think you saw that the future is still definitely bright. That if you work smarter, not harder, you can still make money from fixing and flipping, but that wholesaling probably has a lot more pros than the cons side of things as we talked about.

So, I'll put this recording up so everyone can listen to it who wasn't here live. For those of you that were live, thanks for coming here, thanks for hanging out, let us know if you enjoyed it. Check out Stan on Instagram and check me out too, I'd love to follow you back and answer any of your questions.

I'll see you, Stan.

Stan: Alright, later.

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