How Much Money Can You Make In Wholesaling Real Estate?
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How Much Money Can You Make In Wholesaling Real Estate?


Alright, my friends. Kris Krohn here.
Welcome back. And today, I’ve got a special treat because I’ve brought Jerry
Norton here. And we’re going to talk about how much money you can really make in
the game of wholesaling real estate. If you’re a subscriber, you’re going to
notice that today’s video is going to be different than some of the others
because I wanted Jerry to share with us one of his most successful deals that
he’s ever done, how much money he’s made on max. I want him to share the least
amount of money he’s ever made on wholesaling. But most importantly at the
end of the video, I’m going to have him break down a very simple formula. All the
time in real estate, people always talking about “Crunch the numbers.” Jerry
has got the magic formula and it’s so simple that seriously, my daughter in
elementary school can… It’s like a fifth grade math. It’s 5th grade math. Hey, you can
always go back watch it a couple of times if you’re a little get a little
lost you okay. But this is going to be a treat today because this
is all about how you can make some crazy money. And at the very, very, very end,
we’re actually going to show you how you can access all of the best deals in the
country right now for free. So, check it out. Jerry, first of all for our viewers
watching it, when we’re talking about how much money can you make wholesaling.
Quick definition, what is wholesaling? Well, wholesaling is not the same as
fixing flip. So, I want to make sure everybody’s really clear. We’re not
talking about buy it, fix it, sell it. We’re talking about get a contract and a
sign or flip your contract to another investor. So, basically this is the
in-between part. You find a really good deal and then before you actually buy it,
fix it, flip it and make money, you’re actually skipping that whole thing
saying, “Uh-uh, I found it. I got a piece of paper that says I have the right to buy
it. And it’s got such juicy profit. I’m going to give it to somebody else.” So, how
much money have you ever made on actually not even doing the deal dude?
Just even like, “I found a deal, I gave it to somebody else.” Like what did you get
like a $5,000 check? A $10,000 check? No, I mean that’s common. I mean, that’s pretty
normal to get a 5 or 10 thousand dollar check in wholesaling. And I’ve done
lots of those. But this one was a juicy one. It was a $65,000 wholesale. Okay dude, hot
dog. That’s cool. Yeah, this is a really, really fun story because it wasn’t
actually a residential property. It was a commercial property and I’m not a
commercial guy. It just kind of fell in my lap. What happened was an agent that
would bring me a lot of deals, they brought me this deal and they say, “Jerry,
I don’t know how but I got this listing from the bank. It’s an REO. It’s
it’s a bank owned property. And it’s actually this retail building.” And I said,
“You know what? I’m not really a commercial guy. I don’t really know that.
I just do houses.” And he says, “Yeah, but I got it for a great deal. It was listed
previously and like another MLS. So, it’s not even in the right place. No
one really saw it. And here it is. Like I got it. You got to check this out.” So, I go
to this property, I’m like, “Okay. Well, you know, I don’t really know how commercial
works but let’s just get a contract.” And the agent said, “I need a $10,000 earnest
money for you to get the contract on this.” So, I said… Usually I said, “Okay, give
me a couple days to get you there earnest money.”
Okay? Because I didn’t want to I don’t want to put that money down right now.
Okay. -Actually, I’m loving hearing this because, commercial fell into
my lap. And then I made crazy money on it. So, I’m loving where this is going. -Yeah.
-So, you didn’t even want to come up with the ten grand. -I was too scared, yeah.
So, I got a contract. I have to put this earnest money. I got you know a couple
days. Here’s what I do: Right next to that building is an identical building like
same color brick, same size, everything. And I’m like, “I wonder if whoever owns
that building would want this building.” So, I walk in the front door and there’s
a psychologist. I just guess. There’s a couple retail, you know, things. And he was
a psychiatrist. And I go up to the reception and I say, “Hey, so I’d like to
talk to the owner of this building. Um, you know, I got a contract on the
building here next door.” And she goes, “Oh, you know that’s Dr. so-and-so. Here’s his
card. Want you call him.” So, I call the guy. He had been trying to buy that property
for a long time. And just couldn’t put it together. You know, didn’t happen.
-Sometimes in real estate, it really comes down to… We know that it’s going to
be available but it’s not. We know it’s going to be available. Sometimes months goes
by. We know it’s going to be available but it’s not. And then there’s this moment
where it’s available, you snatch it. -Yeah. -And there was all these other people
waiting for it. Like this guy. -Right. So, I had the contract for 285, okay? So, I sit
down with this guy and this was nuts. He invites me into his office. And he’s got
this big cushy chair and he says, “Have a seat.” And I’m like, “Oh crap, if I lay
down, it’s all over. He’s going to like hypnotize me and take my deal.
So, I’m sitting on the edge of my chair. And he goes, “So, what do you want for the building?” And
I said… You know, I’m thinking, he who names the price first loses, right? So, I
say, “Well, what do you want to pay?” He’s like, “Well, what do you want for it?” “Well,
what do you want to pay?” And no one wanted to put a number. So finally, I’m
like… -Gold nugget, by the way. -Yeah. Never name your price. Let them name
their. Well, he wasn’t going to. So finally, I say, “385” Okay? And remember I got it for
285. And 385 was still a great deal. Like he, you know. And he says, “No way. I’ll pay…
I’ll pay… The most I’ll pay for it is 300.” Here’s what I do. I stand up I stick out
my hand I say, “Nice meeting you, I’m out of here.”
And he goes… This is literally he says, “Whoah, whoah, whoah tough guy. Sit down, sit down, sit
down.” And so, we ended up settling at… What’s 65? -350. -350. Yeah, we end up settling at 350. And I did a true
assignments, right? Meaning, I just… I had my contract. I told him, “Look, we’re going to
close in 30 days, I need a $10,000 earnest money like right now.” -Okay. Now,
why do they need a $10,000? -Because you had it under the contract and you had your 10k earnest money. -So, I took his 10,000 which I turned around and paid the, you know,
the bank for my earnest money. So now, I got nothing. Not a dime out of this thing.
30 days later, we go to closing, check for $65,000. Just like that.
-Dude, that is freaking awesome. And here’s what’s cool about it: It’s… A lot of times
this business, it’s just being at the right place at the right time. And not
afraid to get out there and get a contract. Now, I had a 10 day due
diligence on that thing. Meaning, if I couldn’t have find a buyer, I could have
gotten out of the contract. -Yeah. But dude, here’s the thing that I noticed here. You
are uncomfortable with commercial but you said, “Let’s just take a couple of
days.” You looked at the person next door and you actually tracked them down and
sat in her chair. You are willing to walk from the deal when you didn’t get the
number that you necessarily wanted. Like you did a number of things that take a
little bit of gumption. That’s the word I was thinking. Some gumption. And dude, made the
whole deal happened. You got paid $65,000. How much, how many hours did you put in that whole
thing? -Oh, I think, End to end? Five or six maybe? -Five or six hours $65,000.
Dude, I like making $10,000 an hour. That’s what I did on most of the
deals that I do. That’s freakin awesome. -Yeah. -But listen in all fairness, let’s go
the other direction, right? It’s not like everyone has just overnight success
without sometimes, licking their wounds. -Yeah. What was the worst amount
of money you ever made? Before we share this formula. Because by the way, I’m
telling you right now, what I do in real estate, my mind, I go into… I get in get
into some really complicated calculations and how I do things. And the
way that Jerry’s about to break it down for you, you are going to lock pen
and paper. You’re going to want to write this down.
Because it’s going to be super, super valuable. But real quick, worst deal? -Yeah.
So, first of all, there are a lot of measures you can take to minimize your
risk. Especially wholesaling, right? But in in real estate, let’s face it, I think
your audience is big boys and girls. There might be a time where you lose
money on a deal. And I want to give you permission and tell you, “It’s okay, right?”
If you’re doing big checks and you’re doing this right, you should make a lot
of money. But every now and then… -It doesn’t go your way. -It doesn’t go your
way. And if anybody tells you different, they’re just blowing smoke, right? I know
you’ve done the same thing. If you’ve been in the game long enough, you’re
going to do a bad deal and that just happens. It’s part of the business. -I’ve
made a lot of money but I’ve also lost seven figures. -Yeah. And that sucks.
And I have to on some big fix and flips, right? I thought, you know, but on whole sailing…
-That’s why you’re going to benefit from us. -That’s right. It’s like, “Please don’t step in our
pitfalls and our… Don’t make our trial and error mistakes.” -I’ll tell you…
Seriously, learn from the guy (-That’s right) that
have done it right and learn from the guys that have done it wrong. That’s when
you’re going to learn what you need to know. -Kris, I would give my right arm when I
got started. Yeah. I literally would give my right arm.
When I got started, if I would have had a mentor like you, then I could have
learned what not to do. Not just what to do but what not to do. Because I made so
many mistakes that I… A lot of them I didn’t have to make. -Yeah. Right. So anyway, yeah, I
did this… I did this wholesale deal and I realized into my into my deal, I’m
talking to these, you know, cash buyers. And I’m like, “Oh-oh, I don’t have a good deal.”
I thought I had a deal. I don’t have a good deal. What do I do now? And my worry
was, “Hey, if I back out of this deal… (Which I could of) I’m going to lose a lot of
goodwill with this agent who had brought me the deal. Because this agent had fed
me a lot of good deals. -Yeah. And my worry was,
“Hey, if I go back on this deal, they’re not going to be happy. I mean, they’ll figure
it out, they’ll put it back on the market and find a new buyer and it’ll be okay
and maybe the relationship will be fine.” But I didn’t want to risk it. I didn’t
want to burn a bridge. -How many deals had you done with them before? -About 20. Maybe
22 deals. -And how much money would you say that you had made all… Hundreds of
thousands. -Okay. So, hundreds of thousands of dollars. What were you going to
have to eat to walk away from this one? -I had a buyer that was willing to… I would
I would lose about three grand to just just to do the deal. And it was like, “Done,
I’ll do it. Let’s do it.” -So, $3,000 was worth the price to pay for
the multiple six figures that you earrned with this relationship. -I probably would
have lost 25,000 on that deal. You what I mean?
-And I’ll tell you guys some right now. So, you lost 3,000 deals, you could have
walked away with it. And you had your… You had your risk metrics put in place. You
could have walked but the relationship… But I want to just take a moment just
say, “That’s actually why Jerry is on this video.” Is as I’ve had a chance to gauge
his character and who he is as a human being. Who he is as a father? Who he is
around his children and his wife. As I sat down and my family’s been over this
house. And we’ve had dinner with them. Had a chance to really get to know him on a
more intimate basis. And you know, you’ve noticed, there’s not a lot of guests I
put here on my channel. Because frankly, I’m a skeptic out there making sure that
I’m only working with the best of the best. Right now, when it comes to the game
of flipping, you know, Jerry’s a great guy to learn from. So Jerry, here’s what I
would love for you to do. Will you break down your formula for us on the white
board here and help our team here get as much value as we can. Give you as
much value and saying, “Okay, show me how to do it.” -Yes. let’s do it. So, the first
thing you need to know is when you’re putting together a wholesale deal, right?
There’s all this math to do. Because you got to think about well I got to
buy a property or I got to get a contract and then I got to find a buyer.
And what are they going to want it for and then maybe there’s repairs. And all these
different things. And so, you could like wrack your brain with a calculator and
spent all this time like running all these numbers. And it’s all a waste of
time. You don’t have to do that. So, what we’ve done is we come up with a really
simple formula. Here it is. Here’s our formula. We call this the 70% formula.
It’s written up here. Now, if this looks like, “Well, that looks like some advanced
math.” It’s really not. It’s simple. We’ll break it down. So, let’s talk about what
we’ve got up here. First we have ARV. Now, that just stands for After
Repair Value, okay? So, that’s the number that the house will sell for once it’s
fixed up. -Okay, because when you buy it, it’s probably going to need some repairs,
you’re factoring that and later it’s… What is this thing really
potentially going to be worth when I’ve put my hand on it or my team’s repair it.
-That’s right. Okay, so we start with that ARV number. So you have to know. What is
this property worth fixed up, right? So we have that number. Then what we’re going to
do is we’re going to times… Like on your calculator, multiplied by 0.7. Now, when
you multiplied by 0.7, think back to your… You know, elementary math. That’s the
same as taking 30% off the top. -So, it’s basically helping you find 70% of this
value? -Yes. We do a sample in a moment. So we kind of break that down where it’s
taking equivalent to making sure there’s a 30% margin. There’s a reason for that?
We’ll talk about what the 30% covers. But you take 30% off which is
times 0.7. Then we have to subtract out the repairs. Now, this is a variable
because every deals different. So, could have $5000 of repairs or
a thirty thousand largely. -Yes. So, you put that number in and then when you run
that math through, that equals now your buy price. -Okay. So check it out. Yet the
the total thing that you think it’s going to be worth. What is the home or
project or property going to be worth, we got to subtract out a margin for a
reason. We’re going to subtract the repairs and that’ll tell you what you
need to buy it for. This is important because if you guys are going to bring a
deal to Jerry and say, “Jerry, I know that you’ll give me $10,000 if I
bring you a deal.” This is important video for you to watch to make sure you
understand, “Alright. How do I know that I’m actually bringing a deal that is
attractive to an investor like Jerry or somebody else?” -So, let’s just break
down real quick what the 70% covers or the 30% we take off.
Alright. So, let’s talk a little bit about this 30% that we’re taking
right off the top, right? So, there’s three things that that covers. And this is
really important because whoever does this deal, they’re going to have these
things. They’re going to all have it, right? You’re going to have closing costs when you
buy it and sell it, there’s closing costs. That’s commissions, -realtor fees,
prorations, title insurance, right? If you ever bought and sold real estate, there’s
fees you have to pay. -Okay. -So, we’ve done… And I’ve done this math a million times
and it comes in right around. Now, this is a this is a ballpark but we’re creating
a formula. So, about 9% of your ARV covers all of your closing costs
when you buy and when you sell, okay? The second thing is carry cost. And we
call carry cost, that’s just your cost of financing. Because there’s money that’s
going to go into this deal. If it’s a fix and flip. -If you borrowed the money from
anywhere, if it was a hard money lender, if it was a bank, -private money, yeah. It’s
always a cost for, “Oh, I borrowed that money for 60 days or 120 days.” And on
average that works up to about 6%. We’re going to budget 6% to cover that, right? Now,
if you’re self funding your own money, then you wouldn’t have that line item,
right? But we’re assuming that most people are going to get the money from
somewhere. And then the third thing is your profit, right? So, we have 15% in your
profit. That’s the most important number out of all that, right? And this adds up
to about 30%. -Now, if you take 70% and add the nine the six of
the 15, this is how you get %100. -Yeah. -So, you know what? What I
want to do, if you’re okay with it, Jerry, I want to now…
Let’s just do an actual example to make sure everybody gets it, okay? Yeah. Let’s just
say for a moment that someone buys a home that after it’s fixed up could be
worth $100,000. -Simple number. -Okay? We’ll go with $100,000. So, if
I were to multiply that by 0.7 then that $100,000 is going to turn into
#70,000, right? -Yeah. -And then I need to subtract my repairs. How much should we
shave repairs are on this deal? -Let’s just say 20? 25? -Okay, let’s
go $25,000 in repairs. So off of 100,000 and
then… -Take out your 30. -I take out my thirty which brings me to 70. From
70, I have to subtract my 25,000. That means that if
this house is worth 100,000, I need to be able to buy it for $45,00. -That’s right. Now, if I buy it for 45, that gives me
25,000 for my repairs and then the rest of this margin says,
“Closing costs are covered. Carrying costs are covered. I pay me profits”, right? I got I
get money out of this deal. So, for example, if we’re sticking with one
hundred grand. What that is… This is going to be $9000 for my
closing costs. This is going to be $6000 for my carrying costs.
And this is budgeting $15,000 as a profit. So, in summary,
let’s say that you found a house that you could buy for 45 if it only
was gonna take 25,000 of repairs. And afterwards, it would be worth
a hundred grand, then you would basically say, “Hey, on this deal, I got $15,000
budgeted for me.” -That’s right. -So, this is the formula that you use all the time
pretty much in all your deals? -Yeah. If there’s one variable that you would
change on any of this, it would be your profit. So for example,
if you’re like, “Well, I’d like to make a little more than 15. I oughta make
20,000.” Well then we’d have to change this to 20 which would change
this to 65. -Okay. -So sometimes I’ll use this 65 for me. -Okay, so
this is your 70% formula. Your 65% formula is if you make
this .65, this turns into 20%. Now, you have our profit.
-And that’s important to know because when people cut margins, let’s say I went the
other way. I went 75. It’s not coming here, it’s not coming here. It’s coming
here. That’s it. So, now you would make 10 instead of 15. -And friends, if
you’re going to do a deal and you’re going to put up money and walk through this
entire thing, 10% profit, I would say, “You
better know what you’re doing. You better have experience. You better
have an experienced mentor on your back.” Because one of the things that I love
that Warren Buffett teaches. (Golden Nugget for you.) He says that all the
money he’s made that 85 billion dollars that he’s worth is all about…
He does in business, what we’re teaching you in real estate. But he also does it
in real estate. Which is buy low, sell high. And the lower you buy and the more
you can sell for it, it creates a margin of safety. The bigger this number, it’s
not about you getting paid more. It’s also a measure of risk. So, the bigger
this number is, the less risk you’re taking because the more money you can
make. If something goes wrong, you can eat into your profit margin. If you start
with a % profit margin, you could get in trouble really really fast.
Because you can’t afford for very much to go wrong on the deal. Well, think about
it. If it sells for 95 instead of 100 and if your rehab goes to 30
instead of 25. -And you just took another 10,000 out of this. -And that’s
that’s easy to do, right on a deal. So, you got to be careful with your formula. A
lot of people think, “Oh, well. You know, it’ll all work out.”
Well, follow the formula. -Yeah and I want to share with you a golden nugget
here. And then I want to let you know, we got a special bonus for you.
For those these that are like, “Awesome dude. You guys have shown me how much money.”
You can really make wholesaling real estate. If you want to skip the whole
flipping part of the process and actually click to $10,000 finder’s fee,
stay tuned just at the very end. I just want to share this one point with you. So,
check it out guys. Jerry has just shared with you his formula for and also great
stories on money he’s made. And how he’s making it. Now here’s the best part guys.
If you’re sitting here you’re watching us like, “Guys, this is a little steep for
me. I don’t want to get in that heavy that fast.” The good news is that there’s
an excellent way for you to participate and play skip all of this part. But
collect a big fat juicy $10,000 reward. Jerry, thank you so much for breaking
down this, man. This is great information. I hope you guys are loving
this… I hope you’re getting this video big thumbs up. If you’ve written this
down, you get a great value here. One of the things that Jerry does I think that
is quite extraordinary is that he’s always out there looking for deals and
so he’s teaching this to help educate you. But Jerry, you also have a free
software that you can download for free. Like no cost and actually go into the
market and start finding some fantastic deals right now. Would you like to have
access to that? Jerry’s going to dish it up right now for you. -Awesome. Well, thank you
for being here and like Kris said, I do have a free deal finding software.
What’s awesome about it is it serves up a list in any zip code. You put the zip
code in and it gives you a list of underpriced properties for sale right in
your markets? You’ve got the best deals to go after. -And now this is in the United
States. So guys, we don’t have this for India or Germany. But for those of you
that are actually hunting for deals inside the United States, every zip code
is covered. And you have a free software that will actually hand off really, really good deals. -Yeah. You just download the free subscription to it. There’s a login,
you login. Put your zip code in, boom! Gives you a list, awesome. -So guys, if you
want to get that information, all you have to do is Jerry’s putting on a free
webinar, it’s a web training to show you how do you find these deals. And then
better than that, he’ll actually show you that after you find a good one in your
market, you can bring it to Jerry or someone else. But Jerry will actually pay
you $10,000 which i think is pretty phenomenal. So, all you got to
do is click the link in the description below. Check that out and get hunting
down your first $10,000 finders fee.

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