Posted on: November 04, 2016

The #1 Reason Why Most New Wholesalers Fail

I’ve said it before, Wholesaling is easy, Wholesalers are difficult. Ever hear of the term “Super Hero Syndrome”?

In this short episode, I share with you what I believe is the #1 reason why most new Wholesalers fail.

Unfortunately, some of you listening to this episode might be surprised by what I’ve got to say here. Some of you may agree with me, while others might resist it.

If you want to TRULY explode your Wholesaling business (and your life), you may have to change a some things.

I hope this Podcast is a wake up call for a few of you out there. Tuff love!

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Episode Transcription

Tom Krol: One of the ways that new wholesalers fail or what I should say is how people who are doing deals, they end up ultimately failing. You’ll hear about these guys or girl like they did really well and then all of a sudden they kind of just like disappear and they kind of got out of wholesaling and you’re trying to figure out why. One of the number one reasons why this happens is because they become the expert. So here’s the deal when you become a real estate expert as a wholesaler, what happens is the entire business is on your back. You are the guy or the girl who does everything.
And the way this happens is you’ll see this all the time. These people, they can make money, there’s no doubt about that. They can definitely make money, but they’re doing everything themselves and they have like multiple acquisition strategies to acquire properties at a discount and they have multiple like case by case on how they exit from the property. Sometimes they’ll do a rehab, sometimes they’ll do an assignment of a contract, sometimes they’ll do a double close. They have all of these ways of really deep diving the industry.
Here’s the deal. Your wholesaling business should run without you. That’s the whole point of the word business is that it’s unearned income. You set up all these processes and then it runs without you. If you’re not sure as a wholesaler if you have a job, if you’ve created a job or if you’ve created a business, all you have to do is go to Fiji for three months. If your business stops producing income when you’re gone, that is a job. If your business continues to produce income while you’re in Fiji with your beach, your feet in the sand, and you’re on the beach, that is a business.
It runs without you. It’s unearned income, which is what we’re all shooting for. So here’s the deal. One of the ways that you can absolutely guarantee that you’re going to have inconsistency in your business and get burnt out and create a job and not create a business is by becoming an expert. If you want a good model to follow, Ray Kroc of McDonald’s. Read the book, Michael Gerber, The E-Myth, or there’s another one, Sam Carpenter. There’s all kinds of books on automation and building a business. There’s Scaling Up, which is a great book.
There’s Gino Wickman from Traction. I can think of so many books I’ve read about automation, and here’s the key. The number one mistake that people make is they become the expert. Remember this, if you want to master your craft as a wholesaler, it’s not the real estate investing side of the business that you should be mastering. It is the business ownership that you should be mastering. So the very simple thing is do not become an expert. You want to follow instruction, create processes that get a particular result, document them, and then hire other people who are robots to do what you do.
Ray Kroc and McDonald’s, there’s a reason why the 16-year-old kid in Miami can make the same exact Big Mac as a 16 year old kid in Anchorage, Alaska, or San Diego, or Chicago, or New York, or Dallas. The reason is because there’s a picture of a cheeseburger on the cash register. Because you’re taking the decisions away. McDonald’s doesn’t have a whole bunch of restaurants with five star chefs who are making their own decisions. Single way of getting properties under contract, single marketing channel, single exit strategy.
Now, will there be instances where somebody says, well, yeah, but on this one particular deal, I made more money because I did things this way? That’s great, but the problem is that’s on you. You’re becoming an expert. Here’s the deal. If you really, truly enjoy real estate as a hobby, then do it as a hobby, but don’t bother your wholesaling business with it. It’s like if you really are like, hey, I really enjoy real estate, I want to really deep dive it as a hobby. I mean, personally, I’d rather spend time with my friends and family and go on vacation and do things like that.
But if you’re one of those people, you’re like, I love it. This is what I want to do. This is my hobby, do it separately from your wholesaling business. Allow your business, your wholesaling business to be a consistent source of deals and of a pipeline of deals that is consistently producing revenue. The way you do that is with systemizing and delegating processes, systemizing and delegating processes. That’s the way you have consistent income. When you say, forget the systems, I’m going to be Tom the man and I’m going to wear that man hat and I’m going to do the marketing myself.
And I’m going to do all the reports myself and I’m going to get the property under contract and I’m going to deal with the cash buyers and I’m going to do this and I’m going to do that. I’m going to go to the title company and I’m going to learn about all these multiple exit strategies so I can make as much money per deal. The problem is not that you won’t make money, the problem is you will make money. So you’ll think that you’re doing great, like, I’m doing these deals. It’s great. The problem is you’re creating a job. Why not just get a job and make it easier?
So that’s really the message for today is absolutely 100% do not become an expert in your wholesaling business because otherwise you’re going to have to hire experts. And the thing about experts is they don’t want to work for you. They want to work for themselves. So they met might work for a little while, but when you have multiple eggs, everything’s like a case by case and there’s no standardization and you’re the expert and you’re having to come in because you want to leverage every deal for as much money as possible. That’s a huge problem.
So don’t become an expert in the whole suddenly business. Allow that business to just blossom on its own through systemizing and delegating processes. That’s the key. So don’t become a real estate expert. This business has nothing to do with real estate, very, very little to do with real estate. It’s more of a pawn shop. Don’t forget that wholesaling houses can be up and running in no time consistently producing huge profits and you’ll have nothing to do. You’ll be amazed that it’s like, I think I heard, I think it was Ron LeGrand said.
I think it was Ron LeGrand. He said something like the less I do, the more I make. That’s exactly how this wholesaling business is really and truly. It’s amazing. It’s amazing. One of the only things that I do now is I cherry pick the pipeline. I go in and look at the pipeline. I cherry pick the best deals for the highest ROI deals for my rental portfolio, and that’s really it, honestly. I look at the KBR reports, the campaign reports. That’s about all I do in the business. It’s amazing. I love it. So that’s the key is I am not a real estate expert.
I am not a real estate expert. I am not a real estate expert. Again, so all right, good luck. Don’t become an expert. Remember, mastering your craft is mastering your business, not real estate, not the topic of real estate. The fact that we wholesale houses is totally inconsequential. You could wholesale cars, Rolex watches, Super Bowl rings. It doesn’t matter what you wholesale. We just happen to do houses because that’s where the margin is the biggest, but it’s totally inconsequential to this business. There’s way more important things than real estate.
I hear Lucas crying in the background, so I’m out. All right. Talk to you guys soon.

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