Do You Know What A Wholesale Deal Is

On today’s podcast episode I talk about understanding what a wholesale deal is. 

Would you be able to recognize a wholesale deal from a house for sale? They are not the same.  

Regardless of whether you want to wholesale real estate, fix and flip houses or buy rental properties you need to be able to understand what a wholesale deal is, and why someone would sell their house at a discount. If you have limiting beliefs or excuses of why you cannot own a rental property, then I will share with you a mind exercise that I sometimes use with my students that will help you overcome limited belief mindsets (like not having enough money to buy a rental property). 

Here is the exercise

Imagine your own mother inherited a million dollars and she wants you to buy single family rental properties for her. So you don't have to worry about having the money to buy rentals because she has the money. And you don't need to worry about having credit since you are paying cash (with her money).

So now all you need to do is go out and look for a rental property. In your mind it sounds easy because in your mind there are now no obstacles to you buying that rental because you don't need money and you don't need credit.  

But the exercise is a little bit more tricky than that. Your mom gave you specific instructions. She said that It's very important that you maximize the income that she gets because she needs that income to live and pay her bills. And she also told you that she does not want to lose any money.

Start off with eliminating the excuse in your mind that says “I can't buy rental properties because I don't have any money”. Eliminate the excuse in your mind that says “I would like to buy rentals but I don't have good credit.

Money is not the obstacle to you building wealth or buying rental properties. Neither is having good credit. The obstacle is understanding how to find a good wholesale deal at a discount.  

If mom has $1 million to spend, why can't you just pick up the phone and call a real estate agent and buy some rentals for her? 

Because she told you:

"I don't want to lose my money, and I need to get as much income as I can because I am using this money to pay my bills".

You can't leave the money sitting in cash at the bank since at 5% inflation your million dollars would be worth just $950,000 next year. She told you that you cannot leave the money in cash or buy stocks bonds and mutual funds. You have to buy single family rental properties.

So you could buy one property for $1 million or 5 properties for $200,000. Which one would you do? Most people who want to buy rental properties would call up a real estate agent. But can a real estate agent help you?

Remember mom said:

1. I don't want to lose my money

2. I want to get as much income as possible

3. I cannot invest in anything other than single family rentals

Why can you not call a real estate agent and get a good deal on a rental? Because the agent will go on the MLS and look for rental properties for sale. They will be showing you RETAIL properties listed at RETAIL PRICES (or higher). So for example they may show you a $200,000 house that has a tenant in place that you could purchase. 

But if you purchased this property at a retail price, and then decided you wanted to get rid of it a few months later, you would immedi