Looking for that low-barrier entry into real estate investing? Wholesale real estate might be exactly what you are looking for. So are you ready to learn how wholesaling real estate can transform your life? Let's take a look at Colton's story.
Colton Fast started wholesaling real estate in 2020 and has already completed over 75 deals. Some of his assignments have netted six-figure profits, with his largest deal bringing in $125,000. In this post, we'll provide an overview of Colton's wholesaling journey and strategies for finding motivated sellers and closing profitable deals.
Getting Started in Wholesaling
Colton got his start in wholesaling from his younger brother who had already been investing in real estate for a couple of years. After seeing his brother's success, Colton was motivated to quit his W-2 job and jump into wholesaling full-time.
He started generating leads through cold calling and eventually found a seller who had remodeled his house but wasn't able to sell it for the price he wanted. The impending tax obligations motivated the seller to want to offload the property quickly. Colton contracted the house for $4,500 and closed just before the new year, proving to himself that he could make money wholesaling real estate.
Finding Motivated Sellers
In the beginning, Colton and his brother purchased lists of motivated sellers including tax defaults, pre-foreclosures, expired listings, and absentee owners. They segmented the data based on Colton's analytics background and targeted each type of seller appropriately through their cold-calling team.
Now that their business has grown, Colton mainly focuses on pre-foreclosure leads. He uses a combination of calls, texts, emails, and mail to reach distressed homeowners facing auction dates. The messaging highlights their pending auction and offers solutions to avoid foreclosure. This targeted outreach to highly motivated sellers has resulted in some of Colton's biggest deals.
Maximizing Profits
Over time, Colton has increased his average assignment fee per deal, breaking through limiting beliefs about how much profit can be made on a wholesale. After getting started with smaller $5,000 deals, he and his brother gradually moved up to $20,000, $40,000, and eventually over $100,000 on a single assignment.
A key strategy Colton uses to maximize profits is taking properties to the MLS through flat fee listing services. This retail exit strategy allows him to get the highest possible price for the home and keep the spread between his wholesale purchase and the retail sale price. Being able to pay motivated sellers more by selling for retail is a competitive advantage in his market.
Lessons Learned
Colton openly shares that he made a costly mistake on a 6-plex flip deal that he still hasn't fully recovered from. Despite having a profitable wholesale offer on the table, he decided to capture the full profit himself by fixing and flipping the units. However, mismanagement of the rehab process and an unexpected market downturn resulted in major delays and budget overruns. In hindsight, he wishes he had simply wholesaled the property and compounded the profits into his core business.
For newer investors, Colton suggests staying focused on your strengths and not getting distracted by shiny objects like flips or rentals too early. Perfect wholesaling first and let it fund future investments in assets and passive income streams down the road. Don't take your time and capital away from your core business too quickly.
Key Takeaways
- Start generating leads ASAP through cold calling, texting, driving for dollars etc. Get your first few wholesale deals closed. Prove the business model works.
- Target motivated sellers like pre-foreclosures, expired listings, and absentee owners.
- Increase deal size over time by breaking through limiting beliefs on profit potential.
- Maximize profits with retail exit strategies like flat fee MLS listings.
- Stay focused on your core wholesaling business before branching into flips/rentals.
Colton Fast provides an inspirational case study of scaling up profits rapidly in wholesaling real estate. By targeting motivated sellers and maximizing exit strategies, six-figure assignments are possible within the first couple of years.
