For years, wholesaling real estate has been peddled as an easy, low-cost entrance to real estate investing.
In some cases, course-sellers have even described it as a mindless and straightforward way for anyone to get rich quickly.
And while the wholesaling business model is full of opportunity and riches, it’s not as easy as some people would like us to believe.
There are, after all, challenges.
In fact, at Carrot, we’ve built a good portion of our business around helping people understand the pros and cons of wholesaling real estate and how to overcome the challenges.
Once you know how to overcome the challenges, it is a remarkable business model that can support you and your family well into the future.
Here are 7 of the biggest wholesaling real estate challenges of 2023 and how to overcome them
1. Saturated Markets
Because of all the successful real estate investors creating courses and selling their knowledge about wholesaling online, many markets are becoming saturated with competition.
In fact, before 2004, there wasn’t much online talk about wholesaling real estate.
Google Trends shows how popularity has risen (and is rising) for the term “real estate wholesaling.”
The good news is that most of that competition is made up of wanna-be entrepreneurs who will be here today and gone tomorrow.
Only some of that competition is going to stick around.
Still, in most markets, there’s no shortage of wholesalers vying for the deals you’re trying to secure.
How can you compete in such a saturated environment?
How can you cut through the clutter?
Here are a few ideas…
- Unique Marketing — The fact is, most of your competitors are marketing in very similar ways. They’re not just sending direct mail but very similar mailers. They’re not just running Facebook Ads but similar Facebook Ads. Ask yourself this question: how can you market in a unique way that helps your business stand out from others? Finding a less-served niche, driving for dollars, and cold calling are three ways that you might differentiate yourself and find off-market deals that your competition has overlooked.
- Search Engine Optimization — When someone looks for your service in Google by typing something like “Sell my house fast in [MARKET CITY],” who do they find? If they find your website, you’ll collect more leads than your competitors on autopilot. At Carrot, we specialize in helping you rank for high-value keyword phrases in your market. Learn more here.
2. Low-Quality Leads
High-quality leads will be worth the wait if you’ve put aside the necessary budget to secure deals and are consistent with your advertisements.
Still, stumbling through swaths of low-quality leads to get to those high-quality leads is a common problem for wholesalers.
It costs time, money, and energy.
The goal, of course, is to generate fewer low-quality and more high-quality leads.
How do you do that?
You can’t avoid all the tire-kickers, but here are a few strategies for closing more deals with fewer leads…
- Search Engine Optimization — With normal outbound advertising, you interrupt potential prospects when they’re doing something else (Facebook ads, for example). SEO is different because people come looking for you and your service. That almost always results in higher-quality leads and more deals. Go here to learn how you can use Carrot to get your website ranking in Google.
- Follow-Up — 90% of the time, deals close during the follow-up process… not during the first phone call. That’s why following up with each lead at least 5-10 times is essential. That might seem like a lot of extra work if the leads are low-quality… but you might be surprised at how many leads become high-quality after adequate follow-up. Go here to learn how Carrot can help you manage your leads.
- Build Your List — Rather than targeting general probate or out-of-state owner lists (i.e., the same lists your competitors are targeting), try building your list by driving for dollars. This will increase the quality of your leads and give you access to an untapped market.
3. Inconsistent Deal Generation
Where are all my deals?!
We just finished talking about the obstacle of low-quality leads… but what about inconsistent deal generation?
After all, your business can’t survive if this month is excellent and the next is terrible. You need leads coming in every single day, week, and month of the year to close some deals.
And it’s not just leads for lead’s sake.
Consistent wholesaling lead generation equals consistently closed deals and predictable monthly revenue for your business… which is critical.
So, how can you generate deals consistently?
Here are some ideas…
- Understand Your Max Cost-Per-Deal — Do you know how much it costs to close one deal? Once you know how much you should spend to acquire a single deal, you’ll be more confident in running ads and sending direct mail every single month. Just keep an eye on your ROI.
- Search Engine Optimization — SEO is perhaps the most effective strategy for consistent lead generation. If you stop sending direct mail or running Facebook ads, the leads stop coming in… but not with SEO. So long as your website ranks and people search, you will get phone calls from high-quality leads. Go here to learn how Carrot can help you rank in search engines.
- Consistent Marketing — Don’t send your direct mail all at once. Also, don’t dump your month’s budget into a single quick-fire ad campaign. Instead, spread your budget and marketing campaigns out over more extended periods to ensure that you always have fresh leads coming in.
4. Market Brand Awareness
If people aren’t aware that your business exists, they won’t come to you when they want to sell their home… plain and simple.
People must know and like your brand if you want to succeed, especially in a competitive market.
Okay, that makes sense.
But how do you increase brand awareness in your market?
How do you become the person people go to when they need to sell their home fast?
Here are some ideas…
- Brand Your Clothes — It might seem silly, but putting your brand logo on a t-shirt or hat can go a little way toward increasing brand awareness in your community, especially if you wear that clothing to public events or sell it to people who also love your business. The more people who see your business icons, the more people who will think of your business when the time comes to sell.
- Spend Time In The Community — It’s hard to overstate the importance of spending time in your community. As the icon for your business, the more people who know you, the more word-of-mouth and referrals you will generate. Get out there, be someone who people expect to show up, and you might be surprised at how much that helps to grow your business’ market authority.
- Content Marketing — Social media and your blog are great places to improve your company’s brand awareness. And the best part is that you can do it all from the comfort of your office. If you’re a Content Pro or Advanced Marketer Carrot member, we make it easy; you don’t have to worry about creating your blog content. We’ll give you blog posts ready to rank in Google and built to attract targeted leads every month. Find out more over here.
5. Fast Lead Response
How quickly do you respond to leads when they come in?
It turns out that quick follow-up is extremely important. Who knew?
Research shows that the longer you wait to respond to a new lead, the less likely you are to contact them.
You’re 100X more likely to close a web-based lead if you return their call within 5 minutes.
MOST INVESTORS FAIL AT THIS!
Responding quickly to your leads is so important that one of our most successful members, RJ Bates, has instituted what he calls the 5-second rule in his office. Someone has to answer the phone within 5 seconds, or there’s a penalty.
So, how are you going to respond to leads quickly?
There are two parts to this.
First, you must know that a new lead has come in immediately. With a phone call, that’s easy — answer the phone. But what about leads that come through your website? You need to know within seconds when a new lead opts in so you can contact them ASAP.
And second, you need to be able to contact them quickly.
Carrot makes this dead simple. With a few clicks, you can set up text message notifications so that you receive a text whenever a new lead opts in on your website.
This automated text even includes the lead’s contact information and their answers to critical opt-in questions. That way, you can call them immediately and try to make them an offer.
6. Ineffective Advertisements
Not all advertisements are created equal.
Some ads will bring you lots of leads and deals at minimal cost, but others will fall flat.
To run a sustainable business, you need to find a strategy for running effective ads consistently, day in and day out.
Here are a few ways to consistently create high-quality and high-converting ads.
- Create New Ads — Many people spend a lot of time trying to create the perfect ad the first time around. But the reality is that every ad you create will resonate with some people and fall flat with others. So, the real trick is to become prolific at creating ads. Create new ads, and you’ll quickly learn what works and what doesn’t.
- Change Your Targeting — The targeting you use is, in some ways, even more important than the ad itself. Because if you’re running ads to people who aren’t interested in your service, you’re still not going to generate leads. So, play around with your targeting to see what works best.
- Our 3 Lead-Per-Day Training — Our 3 Lead-Per-Day Training is one of our member’s favorite training we’ve created. In it, we show you how to use Facebook, Google, Craigslist, and SEO to generate three leads daily. Check it out over here.
- Peak At Your Competitors — You might not know this, but Facebook now allows you to look at any page’s Facebook ads… past and present. Just click on Page Transparency and go to the ad library to see what your most successful competitors are doing. Maybe you’ll learn a thing or two.
7. Market Competition
We already talked about the challenges of operating in a saturated market.
But the reality is that you’re not just competing with other real estate investors. You’re competing with real estate agents as well.
And this might be an excellent opportunity to apply an old saying: “If you can’t beat ’em, join ’em.”
Why not create a mutually beneficial relationship with other investors and agents in your market? You can refer leads to each other when it makes sense, and both build your business.
This won’t always be possible, of course — you’ll have to compete with some businesses whether you like it or not, but why not team up with those you can?
It will make building your own business that much easier.
Wholesaling real estate is an excellent business model.
It might not be precisely what some popular gurus and coaches would have us believe it is, but it is an effective method for building a sustainable business in the long run.
Remember to focus on what you can control.
Setting a “2 deals a month” goal might be setting yourself up for failure…
Set goals based on controllable actions:
- Number of calls per month
- Number of letters sent out
- Amount of marketing dollars spent
- Number of buyers added to buyer’s list
You can’t fully control being #1 on Google, but you can control the keywords you research, video VideoPosts, and SEO pages you create.
Wholesaling real estate is also relatively low-cost to get started and low-risk, but it still comes with challenges — namely, the 7 mentioned above.
You now know how to overcome those challenges — so stop making excuses and start building your business!
Did we miss anything? What challenges are you facing? Let us know in the comments!