The Science of Flipping - Is Wholesaling Profitable?

Episode Date: August 20, 2021

The #1 training and coaching system to launch, grow, and scale your investing business!𝐋𝐞𝐚𝐫𝐧 𝐌𝐨𝐫𝐞: http://www.thescienceofflipping.com Become a 𝐓𝐒𝐎𝐅 𝐈𝐍��𝐈𝐃𝐄𝐑 and get access to exclusive training and resources:https://insider.thescienceofflipping.com 𝐈𝐍𝐒𝐈𝐃𝐄𝐑𝐒 𝐆𝐄𝐓 𝐅𝐑𝐄𝐄 𝐀𝐂𝐂𝐄𝐒𝐒 𝐓𝐎: ✔️ Science of Flipping Academy  ✔️ All the systems and software I use in my business✔️ All the tools you need to run your business ✔️ All my Scripts, Contracts, Spreadsheets✔️ Special Discounts✔️ And Much More... 𝐇𝐚𝐯𝐞 𝐚 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧?Get immediately connected with a team member on messenger:http://split.to/tsof-messenger 𝐁𝐞𝐬𝐭 𝐑𝐞𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐅𝐨𝐫 𝐖𝐡𝐨𝐥𝐞𝐬𝐚𝐥𝐞𝐫𝐬✅ 𝐁𝐞𝐬𝐭 𝐑𝐞𝐚𝐥 𝐄𝐬𝐭𝐚𝐭𝐞 𝐒𝐨𝐟𝐭𝐰𝐚𝐫𝐞: http://bit.ly/tsofsoftware✅ 𝐁𝐞𝐬𝐭 𝐃𝐫𝐢𝐯𝐢𝐧𝐠 𝐟𝐨𝐫 𝐃𝐨𝐥𝐥𝐚𝐫𝐬 𝐀𝐩𝐩: http://bit.ly/tsofd4d✅ 𝐁𝐞𝐬𝐭 𝐒𝐤𝐢𝐩 𝐓𝐫𝐚𝐜𝐢𝐧𝐠 𝐒𝐞𝐫𝐯𝐢𝐜𝐞: http://bit.ly/tsofskiptrace✅ 𝐁𝐞𝐬𝐭 𝐓𝐞𝐱𝐭 𝐁𝐥𝐚𝐬𝐭𝐢𝐧𝐠: http://bit.ly/tsoftext✅ 𝐁𝐞𝐬𝐭 𝐃𝐢𝐫𝐞𝐜𝐭 𝐌𝐚𝐢𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞:: http://bit.ly/tsofmail✅ 𝐁𝐞𝐬𝐭 𝐃𝐚𝐭𝐚 𝐏𝐫𝐨𝐯𝐢𝐝𝐞𝐫: http://bit.ly/tsofdata 𝑾𝒉𝒂𝒕 𝒕𝒉𝒆 𝑷𝒓𝒐𝒔 𝑯𝒂𝒗𝒆 𝑻𝒐 𝑺𝒂𝒚 𝑨𝒃𝒐𝒖𝒕 𝑱𝒖𝒔𝒕𝒊𝒏: “Justin is one of the best trainers in this space. He really gives everything to his tribe.”– Brent Daniels (TTP) “Justin’s ability to connect with people and help them understand what he is teaching, is unparallelled”– Kent Clothier (REWW) “We have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.”– Sean Terry (Flip2Freedom) 𝐀𝐛𝐨𝐮𝐭 𝐉𝐮𝐬𝐭𝐢𝐧:Justin Colby is the founder of The Science of Flipping Podcast and The Science of Flipping Coaching Program and is an active Real Estate investor having flipped over 1500 homes in multiple markets across the U.S. Justin runs an 8-figure real estate wholesaling business that closes 20+ deals each month in multiple markets across the U.S and has helped 1000s of clients learn how to become successful real estate investors. Justin subscribes to the philosophy of "Wholesaling To Wealth" and is the foundation of his coaching program which teaches you how to get started wholesaling or streamline and scale an existing wholesaling business as well as build long term wealth through wholesaling, flipping, and building a rental portfolio. Subscribe To Justin Colby:http://youtube.com/justincolby View All My Videos:https://www.youtube.com/c/JustinColby/videos  

What's up guys, welcome back to my podcast. I am Justin Colby and on this episode we are going to talk about is wholesaling profitable? It continues to be a question that people are asking and I want to make sure you understand why it is profitable. With that being said, if you are not watching this podcast, you need to be. Go over to youtube.com forward slash Justin Colby and make sure you start subscribing because I take the podcasts that are usually on iTunes and I actually bring them right over to YouTube. So then at least you can see me. In fact, funny story, if you watch my last episode, I actually match with the wall, like identically. The only reason you can see me is because my bald head. Anyways, funny story, good reason to go over to youtube.com forward slash Justin Colby. So let's dive in

here as this podcast is always about making sure your real estate investing business has the right tools, systems, processes to implement to be profitable. That's really what we're here for, right? Because otherwise, we'd all just get a job and so be it. So let's talk about it. And my ultimate answer is 100% emphatically wholesaling is massively profitable if you do it right. So I paused for a second because that is the key. There's like a little asterisk there that you actually have to do it right. And yes, I talk a lot about KPIs and knowing your numbers. And that is a big component of this, like a big component of this. But the other part is what I'm going to talk about is being unaware of your like P&L. What are you spending money on?

And is it giving you a return? So for example, I actually had a great coaching call this morning with some of my top students, and they were talking about this marketing budget that they want to put together so they can bring in more leads, etc, etc, bring in more acquisition people. And actually stopped them, I slowed them down. I said, let's hold on, hold on. What are we trying to achieve? Are we trying to achieve more deals? Are we trying to achieve more dollars? Right? So it's deals or dollars. Sometimes it's both. But the reason why this episode is so important is because most people, especially when starting, they don't actually know the difference in profit and loss, right? And then they, again, watch someone's YouTube,

listen to someone's podcast, you know, maybe they have incorrect coaching, but they go into this world, into the space of real estate investing, specifically wholesaling, and they start spending money before they're making money. And they're spending a decent amount. But then they get discouraged because in 30 days or 45 days or 60 days, they actually don't make any money. So they get discouraged. They say, whoever on YouTube I watch is wrong. Whoever I listen to on podcast is wrong. Whatever coach I have is wrong. They're terrible. It's awful, right? But they actually aren't looking at it as a business. And that's what I want to talk about on this episode is looking at this business as a business. It doesn't matter how

much you spend. It doesn't matter how much you make. It matters that you combine the two and you make more, right? So I would say most people get into the space and they start marketing. They start cold calling, texting, direct mail, pay-per-click advertising, you name it. And they don't really know sales and conversion. And they're trying to make it up because whoever they listen to is all about leads, leads, leads, leads. Which, by the way, I myself will tell you is all about leads. But getting leads and being able to convert those leads are two separate things. So it's really about how are you going to make it profitable? Let me give most of you newbies and even some of you guys that are experienced a couple tips to make it more

profitable. First, start doing deals that cost no money. Are you actively doing deals with other investors and agents alike to make money? Whether you co-wholesale, maybe you buy and flip a property from a wholesaler, maybe you wholesale a property from an agent, maybe you buy and flip a property from an agent, maybe you buy and hold properties from either. But ultimately, this costs $0 for you to do business with a wholesaler or a realtor. So that's free. You got to focus on free first. The other way to go free is start calling for sale by owners.

Or start calling, you know, failed listings, expired listings, canceled listings, figure out why they didn't work. What happened there? They had motivation to sell, but they didn't sell. So why? How can you provide value to that homeowner that maybe they weren't getting when they put it on the market for the MLS. So those are free. All of this is free, right? Now, in terms of calling expired listings, canceled listings, yeah, you might have to do some skip tracing. I get it.

If you're gonna call for sale by owners on Zillow, for sale by owner.com, yes, you're gonna have to do some skip tracing, but the fee is gonna be very, very nominal. So maybe it's not 100% free, but the point is you're not spending five, $10,000 a month to do it. So that is the first thing. The second thing is focusing on conversion. Let's say you are out there spending money. You're doing cold calling. You're doing texting. You're doing pay-per-click advertising. You're

doing direct. You're doing any of it. you're spending money like real money. Are you actually converting the leads that you're bringing in? So most people, most people that get into the space, they focus only on bringing in leads. I need more leads. I need more leads. I need more leads. I totally get it. And by the way, I need more leads. I'm saying the same thing you guys are saying. The difference being is I also focus on conversion. How do we convert more of the leads we already have versus forcing our hands to drive in more leads? And that's a big component

of whether you're gonna be profitable or not. So for example, I bring in 100 leads a week cold calling and it costs me roughly seventeen dollars maybe eighteen dollars per lead but it also costs me anywhere from three to five thousand dollars to convert that deal so I know based around my conversion ratio if I'm bringing in the amount of leads I need I'll be be able to 3, 4, 5x my marketing spend because I know where I need to be converting those leads. So it comes down to understanding your numbers. As I said, it's not always about that, but at least that can highlight where the breakdown is in your business. So I really spend a lot of time making sure that we're converting the right amount

to be at minimum 3x profitable if I spend a dollar I want to make three back and so that is the the lagging indicator which is I brought in enough leads why am I not actually converting them so are you actually studying sales did you hire a sales coach are you working with a coach on how to convert more leads? Do you even understand how to underwrite the property? Do you actually know those things? Do you know what ARV is versus as-is value? Do you know what your buyers are actually willing to pay versus what you're going to contract at? Do you know some of these things? And lastly, I just brought it up, is buyers. As a wholesaler, if you don't have real buyers,

I mean buyers that buy and flip and buy and hold, not more wholesalers, real buyers, that can execute on their contract, if you don't have them and you don't know what they will pay for a property, then yeah, you might be leaving money on the table. I can't tell you how many times over the years, I've done this for 14 years. I can't tell you how many times I've had another wholesaler within my deal. So what does that mean to me?

That means we didn't price it right. That means that wholesaler had a buyer I didn't have and was able to remarket it above my price and make money. By the way, I'm actually okay with that because I made the money I wanted to make. They made a little extra, but ultimately, your key is finding the buyer who will be willing to pay top dollar. If you don't have that and you're not constantly working at that, then sure, maybe wholesaling's not gonna be profitable for you. But if you focus on these three things

that I'm talking about right now on this episode of the science of flipping, and by the way, make sure you get over and watch this last video. I mean, I am quite honestly matching the wall. Anyways, go to youtube.com forward slash Justin Colby. If you are not doing these things, then yes, it might not be profitable.

If you focus on these things, you absolutely can be profitable. But it's about being consistent. It's about understanding these three metrics. And ultimately, it's about doing the work. Are you trying to outsource it and bring up a bunch of costs and hire people and put in operational costs? That's a doing the work. Are you trying to outsource it and bring up a bunch of costs and hire people and put in operational costs?

That's a recipe for failure. If you're not putting $250,000 in your pocket every single year, don't go out and hire a bunch of people. Don't go get office space. Don't go spend a bunch of money. Put the money in your pocket, do the work. That's my biggest advice.

If you are interested in me maybe holding your hand, teaching you, actually walking you through this blueprint, I would tell you to go to thescienceflipping.com forward slash. No, just as that, just thescienceofflipping.com. Then there's an application. Fill out the application. Some of my top advisors will talk to you and we will feel out whether you and I

are a good fit for coaching. Otherwise, besides that, I will see you on the next episode. Peace.