The Science of Flipping - Wholesaler's BIGGEST Mistake

Episode Date: April 14, 2022

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One thing I truly believe, you cannot be a one-trick pony. So if you are out there either just getting started, maybe you're wholesaling, maybe you're flipping, the key here is don't be a one-trick pony. And I'm speaking directly to you wholesalers or wholesalers that are trying to become wholesalers, want to be wholesalers. I'm speaking directly to you.

Hey. directly to you. Yo, yo, welcome back to the Science of Flipping podcast. I'm your host, Justin Colby. This episode is going to be about the biggest mistake wholesalers make when they're ready to transition into flipping deals, buying rentals, or just becoming a well-rounded investor. You see, I believe in one thing after 14 years, almost 15 by the way, of doing this business, almost 2,000 transactions, hopefully hitting it this month way, of doing this business, almost 2000 transactions, hopefully hitting it this month. One thing I truly believe, you cannot be a one-trick pony. So if you are out there either just getting started,

maybe you're wholesaling, maybe you're flipping, the key here is don't be a one-trick pony. And I'm speaking directly to you wholesalers or wholesalers that are trying to become wholesalers, want to be wholesalers. Ialers that are trying to become wholesalers, want to be wholesalers, I'm speaking directly to you because there is a major mistake that I've seen so many times in students of mine, other investors, people trying to break into the industry that I want you to avoid. And this is the episode that I'm going to go over that. Now, if you are listening to me on iTunes, I love it. Make sure you give me a five-star review right there on iTunes.

I'd greatly appreciate that. If you have yet, I think you might be the last person, but if you have yet to go over to YouTube and subscribe to my YouTube channel, then you have to do that. I drop five videos a week, all things real estate, business, entrepreneurship, mindset. Get over to my YouTube channel. You will absolutely love it. Completely free content for you to digest, especially if you're a real estate investor. Go to youtube.com forward slash Justin Colby. Subscribe and make sure you're liking this video because the YouTube gods love that. Now, what I will tell you the biggest mistake is, I'm going

to wait and build it up for you guys a little bit. I want you to hang tight and listen to this whole episode because it's really important. Now, if you're a wholesaler, I love wholesaling. But one thing I'll tell you is I actually got started in reverse, meaning I actually got started fixing, flipping, wholetailing, if you will. You see back in 2007, 2008, the world economically, real estate wise was crumbling and banks didn't know how to deal with these short sales. And so ultimately we had to go find a way to quote unquote, buy a deal. Well, what I was able to do is line myself up with transactional funding. Now, transactional funding is still around. It didn't go anywhere, but I'll tell you, you know, it's not as needed anymore, right? We have plenty of lenders

nowadays that won't charge you as much as transactional funding because it's really expensive, right? Anywhere from one to two to three points per loan, right? So if you borrow $100,000 for 24 hours, they're going to charge you $1,000, $2,000, $3,000 for 24 hours of a loan. So anyways, I got into the business a little backwards. I didn't start wholesaling as so many of you guys have. Now, doesn't mean I did it the right way, but I'll tell you the thing that I realized out of the gate was money was everywhere, everywhere. And so for you, if you're an active wholesaler and you're saying, Justin, I just need to

do more deals so I can make more money so I can start rehab flipping. I love it. And you should be doing more deals. You should never stop wholesaling ever. Okay. And then from that point, I want you to understand this. You don't need more money and especially you don't need your own money. Okay.

There is a lot of money out there. I just gave you one quick example of transactional funding. There are hard money lenders. There are private money lenders, but here's what I want to tell you right now that you can do today. And here is the biggest mistake that you are making. If you have not yet gone and done this, They are companies that will give you personal and business lines of credit. If you're actually doing deals, making money, and you have an entity up and running, then the business line of credit could be $100,000, $150,000. It could be quite large. If you're just getting started, you could still get a small business line or even a personal line. By the way, credit cards are incredibly useful in this position. That is not your own money.

I get emailed mail, like real snail mail, all the time from, maybe I even have one, from like Citibank will send it to me. Chase will send it to me, like 0% promotional interest rate for 18 months, right? You've been given $25,000 at 0% for 18 months. That's crazy. It is literally free money. And what you can do in those examples is you can do cash advances, right?

So let's just say you need some money for a remodel. Maybe you need a down payment. Maybe you just need earnest money for a remodel. Maybe you need a down payment. Maybe you just need earnest money deposit to get it locked up so you can get all your ducks in a row. Maybe that's what you need. Now, I would be a big advocate of this, right? Meaning I've gone, you know, nearly 2000 transactions, nearly 600 flips. And I would say 90 to 95% of the deals that I did as flips, I never used one of my own dollars, not one. And this is the big mindset shift that I think most, if not, I would say very most wholesalers don't realize is you don't need your own money. You

don't have to wholesale so you can transition into being a rehab flipper. That's just incorrect. In fact, I bought 14 rentals just last year alone with none of my own money. And I would tell you, you need to make this diversification of your business. I believe in four different things. There are four pillars of this business. Okay. One is your network. You're only as strong as your network, right? The old saying your net worth is as good as your network. You're only as strong as your network. The old to understand your exit strategies. Make sure that you realize whether it's a wholesale, rehab flip, wholetail, buy and hold. And number four is going to be something that is more common now, which is diversify. You don't need to be in just your backyard. You can be in tertiary markets. You can be national these days. Very easy to do. Now, let me give you,

right now, I'm going to give you a resource. This resource is incredible. So make sure if you are listening, you write this down, rewind it. Make sure you listen to this because this resource can give you the personal and business lines of credit. It is primecorporateservices.com forward slash TSOF. If you're watching this on YouTube, you will see it on the screen. It'll also be linked in the comments below, but that is primecorporateservices.com forward slash TSOF. This is a company I use for a multitude of reasons, like estate planning, corporate credit, entity setup. I do all that with this company, but they're great at being able to help people get personal lines of credit, get business lines of credit.

Do not think that there's not enough money for you to become a rehab flipper, or maybe even to buy your first rental. Like I've said, if you've had a business up and running, you might get a business line of credit that's large, really large, right? Also, you might get a business line of credit that's one, two, $3,000, depending upon your experience. Either way, the money is there. What I think the biggest mistake most rookie and new investors who are getting into the game and are going into this wholesaling business because they don't need money or credit is just incorrect. There's quite literally money

everywhere. That resource, primecorporateservices.com forward slash TSOF is an incredible resource. Primecorporateservices.com forward slashO-F. Stand for the science of flipping, by the way. I get that question. What does T-S-O-F stand for? The science of flipping. So when you are going out and building this business, the thing that you actually need to be thinking about most as you make the transition into remodeling is pillar number two, understanding your market, understanding how to analyze the market. What are the comps look like? What do you think that you could actually get the ARV to, right? What is the potential is the word I'm looking for, for that property. So pillar number two is going to be huge, right? That is

the thing that you need to be focusing on. If you're trying to get from a wholesaler into a flipper, you do not need to be focusing on the money. The money is everywhere. But I'll tell you, get started and go build that personal line of credit. Go build that business line of credit. Go do that now so that way you can start to scale, right? Pillar number five that I don't talk a lot about because I think a lot of people try to rush to this is scaling your business, right? Hiring, building out more properties, doing more, scaling your business, scaling the people, scaling the deals, scaling the revenue. But you can get there if you start today by realizing there's money everywhere. Start

today by going in, getting more personal lines of credit, going getting business lines of credit. Leverage is huge. I leverage all of our deals, whether it's a rental, whether it's a fix and flip, there's always leverage on my own home because I can actually do more and make more money doing that. So don't be short-sighted. Don't do what most wholesalers and rookie investors do,

which is I need to do more deals. I need to make more money before I can start flipping. That's just incorrect. You're not thinking right. You've never heard me tell you this, right? But now you have. So if you like this, give me a thumbs up on YouTube. Give me a five-star review.

But go to primecorporateservices.com forward slash T-S-O-F. And that way you can actually start to build this. Listen, even if, let's just say you get $1,000, $2,000, $3,000, $4,000 line of credit, business line of credit, even in that example, that's not a ton of money, you now have a little bit more money to make offers stronger.

You guys watched my knockout offers training. If you haven't watched it, it's right here. It's actually on YouTube, knockout offers, and it's how I structure my offers to remove my competition, knock them out of the way, right? That money, the $1,000, $2,000, $3,000 can be a great help, could be a great advantage when you're making these offers. So go watch that training as well. We'll link it right here. It is here on YouTube.

But understand, start today doing that because money is absolutely everywhere, right? It is incredible how many people don't realize how much money is out there. Again, capital partners, hard money lenders, credit card, cash advances, personal lines of credit, business lines of credit. It's incredible. So don't make that mistake. Go out there and become an incredible, well-rounded investor. Don't be a one-trick pony. Have diversification, which is one of the pillars that I believe in so, so much, which is the fourth pillar. You don't need to do just one simple thing.

Hopefully, this encourages you to take some massive action. If you don't know, I believe in three things, commitment, intention, and action. This hopefully can rev your engines enough to take action. Go to primecorporateservices.com forward slash TSOF. At least go start building your personal and business credit at very minimum, but also realize you can actually become a rehab flipper at the same time that you're wholesaling.

I'll see you guys on the next podcast. Peace.