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Photo courtesy REISift
Opinions expressed by Digital Journal contributors are their own.
For the majority of young entrepreneurs, the most significant barrier to entry in the real estate investment market is the hefty upfront costs of finding and purchasing their first property. Most don’t know that wholesaling exists as a low-cost entry alternative, and the ones who do may not know the best strategies that make it exceptionally lucrative.
Real estate wholesaling, in short, is an investor strategy whereby the wholesaler enters into a purchase contract for a home, finds a willing investor to purchase the contract at a higher price, and the difference in price – potentially 5% to 10% of the property price – is kept by the wholesaler as the “ wholesale fee”. The best properties for this kind of transaction are usually distressed with owners who are reluctant to invest any of their own time or money and aren’t keen to work with a real estate agent.
Tyler Austin, CEO of real estate data management company REISift, and Tommy Harr owner of Real Side RE Community are two excellent examples of how wholesaling can transform a career in the industry. Austin and Harr both have generated millions of dollars in revenue and acquired hundreds of investment properties.
While many entrepreneurs idolize this level of success, Austin shares that, “There was absolutely no glamor when we started. We were just trying to find our niche in real estate and a way to get rid of our massive debts.”
At the beginning of Harr’s career, he and a partner had been able to purchase a 100-year-old mansion with the intention of flipping it. After 18 months of living on the property through renovations, going over budget by more than $80,000, and switching real estate agents, Harr and his uncle suffered a loss of $100,000 on the project.
Austin’s future began while he was listening to a podcast episode on wholesaling. Under $80,000 in debt, The REISift CEO was inspired to take a risky investment using a government travel credit card to fund his first direct mail campaign to find absentee property owners. Returning from a three week work trip, Austin’s post office box was filled with responses and three months later he received a call that led to closing his first deal, worth around $15,000.
Looking back now, Austin and Harr’s best piece of advice for young entrepreneurs is to start small and educate yourself.
“It’s important to begin with smaller, more manageable deals that can build experience and confidence before taking on bigger opportunities.” Harr continues, “The industry is constantly evolving so it’s not just a best practice, but necessary to stay up to date on real estate trends, new strategies, and the best technology to manage your business.”
Both Austin and Harr credit REISift with enabling their businesses to have a constant growth trajectory. Finding that first breakthrough property and scaling upwards can all be achieved with REISift because it creates incredible efficiency and quality in data management. Not only does the software clean up extensive market lists, it is able to generate strong, qualified leads through niche list stacking and ensuring that users have accurate and updated information on potential properties.
Most importantly, Austin had firsthand experience when he created REISift, so it was important to cater to both experts and beginners in the industry. The software provides expert-level tools like high-level wholesaling and property management strategies while also assisting beginners in understanding fundamental concepts.
“Knowledge is power. At this point in our careers, we want to focus on enabling younger real estate investors to break into the industry and be as successful because we know exactly how difficult it can be.” -Austin
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