The Hardest Part of Getting Started in Real Estate Wholesaling
Struggling to kick off your journey to financial freedom? Today we dive deep into why getting started is often the hardest part of real estate investing with one of our podcast hosts Ryan Haywood. We'll discuss the challenges of finding deals, making contacts, and gaining momentum in the industry. Join us as we uncover the secrets behind successful real estate investing and share some amazing stories of deals that seemingly came out of nowhere.
Ryan's Journey as a Real Estate Investor
If you've followed along with our blogs or our podcast you may know a little bit about Ryan's journey. If not buckle up because we are going to give you a little rundown.
Ryan Haywood started his real estate journey in 2019 with a wholesaling challenge. During this challenge, he set out to find a rundown house that he could get under contract and post on Facebook Marketplace, earning a whopping $8,500 without using any of his own cash or credit. Little did he know that this challenge would be the start of an incredible journey that would lead to almost 400 deals and a thriving real estate business.
Reflecting on his journey, Ryan admits that he never saw himself as someone with enough knowledge and experience to help others. However, with hundreds of deals under his belt and a deep understanding of the industry, he now realizes the value he can bring to fellow real estate investors.
His initial goal was to use wholesaling real estate as a means to escape his nine-to-five job, but it has since evolved into something much bigger. Today, Ryan and his wife run a successful real estate business alongside their rental properties, and their lives have been transformed in ways they never imagined.
Juggling Real Estate and Parenthood
In addition to his flourishing real estate career, Ryan has also experienced the joys and challenges of parenthood. Upon completing his 30-day wholesaling challenge, Ryan and his wife welcomed their newborn son into the world. This significant milestone marked the end of Ryan's corporate job and the beginning of their new life as full-time real estate investors.
Finding Properties: The Early Days
When Ryan first started his real estate journey, finding distressed properties was the initial hurdle. He quickly learned to identify key signs of distress, such as boarded-up windows, damaged roofs, overgrown yards, and cluttered porches. These visual cues became invaluable in identifying potential deals and targeting property owners.
To connect with property owners, Ryan used various strategies, including driving for dollars. This involved physically driving through neighborhoods and jotting down addresses of rundown properties. Once he had a list of potential leads, Ryan would then send postcards to the property owners expressing his interest in purchasing their properties. This simple yet effective method played a crucial role in generating leads and opening doors to potential deals.
The Power of Networking
While Ryan's early deal-finding strategies were effective, he quickly realized the importance of networking and leveraging connections. During his wholesaling challenge, Ryan was introduced to a trash cleanup crew hired by the property owners. Little did he know that this connection would lead to a significant deal opportunity.
One day, the crew contacted Ryan about a mobile home park that was up for sale. This park used to be a thriving mobile home community, but over the years, the individual lots were sold off. One investor had purchased eleven lots, and upon deciding to sell, reached out to the cleanup crew for recommendations. The crew immediately thought of Ryan, knowing his interest in distressed properties.
Ryan recalls contacting the seller and negotiating a deal. While the initial price was $50,000 for all eleven lots, upon visiting the property, Ryan realized the extensive work required to clean up and renovate the area. After renegotiating the price to account for the additional costs, Ryan secured the deal and began the process of transforming this dilapidated space into a profitable investment.
The Advantages of Mobile Home Parks
Investing in mobile home parks presents unique opportunities and challenges. In Ryan's case, the lots were already rented out to tenants, generating a monthly cash flow of $1,200. What makes mobile home parks particularly attractive is the minimal overhead costs associated with renting out the lots.
As the tenants are responsible for their individual homes, Ryan only needed to focus on maintaining the lots themselves. This model significantly reduces expenses typically associated with repairs, renovations, and other property-related costs.
Moreover, the rental income from the lots provided a solid return on investment, surpassing the commonly used 1% rule for evaluating rental properties. In this case, with a $50,000 investment, Ryan was able to generate $1,200 in rental income each month, surpassing the 2% rule. This remarkable return on investment showcases the potential of investing in mobile home parks and highlights the advantages of renting out the land rather than the structures.
Renegotiating the Deal
Upon visiting the property and witnessing the true state of disrepair, Ryan realized that the initial price of $50,000 was too high. He had to renegotiate with the seller, explaining the additional costs and potential pitfalls associated with the extensive work required. While the seller was initially unhappy with the proposed price reduction, Ryan effectively communicated the necessary adjustments to align the deal with the true value of the property.
Renegotiating a deal is a common occurrence in real estate investing, and it is essential to approach these situations with transparency and open communication. The inspection period within a contract allows investors like Ryan to investigate the property thoroughly and renegotiate the terms if significant issues arise. This safeguard ensures that investors are protected from unexpected expenses and potential pitfalls.
The Power of Connections
Ryan's success in finding deals extends beyond his own efforts. As a result of his networking and open communication, he receives leads from various sources. From the postman who comes across his marketing materials to friends and family members who stumble upon potential deals, Ryan emphasizes the importance of sharing your real estate goals with others. By doing so, investors can tap into their existing network and find unexpected opportunities.
Building relationships, whether through conversations, social media, or community involvement, is a valuable asset in the real estate investing world. It not only opens doors to potential deals but also establishes a reputation as a reliable and trustworthy investor. Sharing your goals and aspirations can lead to invaluable connections that expand your reach and propel your investing career forward.
Consistent Marketing and Persistence
In the real estate investing business, consistency is key. Ryan highlights the importance of staying true to your marketing strategies and persistently seeking new leads. While the market may fluctuate, and certain months may be slower than others, maintaining a consistent presence and keeping your marketing efforts alive will ensure a steady stream of leads.
Even during slower periods, investing in marketing and lead generation is crucial to keep your business thriving. Ryan shares that January and February were slower months for him and his team, but by remaining committed to consistent marketing efforts, they were able to bounce back with five closed transactions in the following month. This persistence and dedication to the process allowed them to stay on track and continue their growth.
Building and Managing a Construction Crew
As Ryan's real estate business expanded, so did the need for a reliable construction crew. Rather than relying on buyers to handle the renovations and repairs themselves, Ryan and his team recognized the opportunity to offer a comprehensive service. They began connecting their buyers with trusted contractors who would oversee the renovation process.
This approach not only ensures that the properties are fully renovated and ready for occupancy but also provides a valuable service to buyers who may not have access to reliable contractors themselves. By coordinating the rehab process, Ryan's team maximizes the value they provide to their buyers and significantly increases their profits.
Beyond the assignment fee earned from real estate wholesaling deals, Ryan's team monetizes the renovation process. By offering the rehab services as an additional service, they can generate even more profit from each deal. This business model allows them to earn a percentage of the total renovation cost, while also paying their team members and ensuring quality work.
This monetization strategy enables Ryan to increase his overall profit per deal and provides a comprehensive solution to his buyers. Rather than simply wholesaling properties, they offer a turnkey service that includes both the property and the renovation, streamlining the process for their buyers and maintaining excellent control over the quality of the renovations.
We hope this deep dive into Ryan's journey and some of the deals he has had along the way inspire and help you on your journey to financial freedom. Sometimes you might be unsure of the process or your path along the journey to financial freedom.
That's okay! We will continue to bring you resources along the way to help point you in the right direction. If you are just getting started in real estate be sure to check out the DealMachine Real Estate Investing Podcast to learn from seasoned investors and experts in the industry. And as always, Happy DealFinding!
About Samantha Ankney
Samantha has been a media specialist for DealMachine for 1.5 years. She produces, edits, writes, and publishes all media that is distributed to the DealMachine and Real Estate Investing community.