Will Your Wholesale Real Estate Business Survive a Recession in 2022?

It’s no secret a recession is here. The effects on real estate has a delay in the market and a lot of wholesale real estate businesses are in full panic mode. Wholesale Real Estate businesses have tightened up their ship. Becoming more selectve on costs and try to be more aggressive when closing. Meanwhile, sellers aren’t so receptive to it. They still feel the current real estate market is still thriving, which doesn’t show much urgency. Making it harder to negotiate as buyers are also being more selective on what to take in. Personally, I don’t think that the sky is falling for wholesalers. Although there are some precautions to take NOW to weather the storm; while everyone else is fulling their hair out.

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– Converting your leads should be top priority: Leads cost money, so does marketing to get those leads. Optimizing the sales skills or “closing” process to convert leads into closed deals is the key point you should focus on during a recession. Make sure your lead conversion rate is up as much as possible. We offer sales training to help that, if you’re interested.

– Know all your KPIs in all aspect of your business.

While in a Wholesale Real Estate market downturn period, it’s important to know your ratios. To know what areas are the bottlenecks in your business and help focus where to improve on processes. We’ll offer a tools to help you measure your business performance and how to provide metrics to the boss, investors or partners. DM me on Instagram and ask for them. @steve.trang

– Be selective on costs: As cash flow potentially slows down. Being conscious on unnecessary business costs are key areas to focus on during a recession. Areas like lead generation, CRMs lead generation platform can cost a lot so make sure to save there. But depending on the size of your business its should definitely by a open discussion with your team on where you can cut some fat. And focus on keeping reserves so there isn’t any business disruptions.

– Don’t spend more than you’re making per deal:

This may not apply to everyone but, if you keep burning through your profits just to do a deal that won’t make you any money in the future. For example a high-end home at a high price that doesn’t have equity in it then it’s time to put a stop to it now! It’s better to stay out of these type of deals. For the time being or consider selling off your inventory for those types of properties to avoid further losses.

– Make more sales to increase cash flow:

We as wholesaling agents should try to look at ways to increase our revenue throughout the market to be able to withstand down times without going broke. So, in addition to looking for new deals and getting more marketing exposure, we also need to turn the ones we have into a sale quickly to save our sanity and protect our business from losing its health during the recession.

– Recycling back on old leads: Never under-estimate the power of touching on old leads that didn’t convert in recent months. Situations change as times go on. It doesn’t hurt to touch on those and try and maximize on leads you thought were dead. At least it’ll give you the opportunity you needed to reestablish trust with a former leads. Hopefully turn them into a sale down the road.

– Networking events:

Networking is a great way to increase exposure for your business. Build your brand and promote deals at the same time. Often times business owners and entrepreneurs overlook networking because they aren’t able to make immediate connections that result in immediate sales. Adding to your pipeline is always effective. This should be done on a regular basis regardless if you’re trying to sell something or not, especially during a recession where there’s possibilities of getting deals that some people might need help with to partner with.

Remember, it’s not the end of the world and it’s not doomsday yet!! You can still make money in this business even in a recession if you take the right measures. It’s not time to be running wild with your money and acting like a crazy person in a candy store because there’s a party going on over there! Trust me on that… I did my fair share of acting crazy in good times but there are no re-runs in life!

I do like to point out that while you put focus on tightening your business and squeezing out every little opportunity and getting better inside your own organization will help you position for the market when it turns in our favor. Even figuring out your own personnel seeing what their strengths are how to position them for most success within your own organization. As you’ll be ready for the flood gates to more sales and scale properly. Even during the worst of times, there are always people who will do well if they know what they’re doing so the key is to constantly stay educated and adapt to the right changes with the market cycle. History repeats itself, and the market will thrive right after the recession take its turn upward. Some say it won’t be till middle or till the end of 2023.

There are many people out there that are “playing” the wholesale real estate market right now based on predictions that are not logical whatsoever and just a bunch of hot air. There is a difference between reality and optimism… do you know the difference? If you let your emotions drive your decision you will be in trouble when the recession hits. However, if you stay grounded and follow common sense rules and keep your head in the game you will be fine as the crisis passes by.

Another thing to remember is that good deals are out there if you know how and where to look for them. The only thing you have to lose is time if you don’t already have that knowledge or desire to search for those types of deals out there…. Go get them before it’s too late!

Wholesalers are real estate investors that specialize in locating and marketing distressed real estate property to other investors and/or rehabbers. Which generate an income for the investor(s) whether it’s by selling the property outright. Or by arranging debt financing in the deal while typically being shielded from the day-to-day management of such a project.

Wholesale Real Estate generally invests in a subject property through his or her own funds or leverages third party money. Depending on the transaction structure involved, some wholesalers charge the investor a fee for locating and structuring the deal, while others earn an override on the wholesale fee they receive as compensation for investing in a deal themselves. Conversely, other wholesalers may work with private investors that provide seed capital for the acquisition to then be shared with investors as part of a syndication arrangement.

If you would like to know what the Real Estate Market Update is as of 2nd half of the year. From the top Mortgage Lender and Top Market Real Estate Researcher. Check this out:

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ABOUT STEVE TRANG

Steve Trang is the founder of Real Estate Disruptors. Started his podcast in the middle of 2018 to inspire wholesalers and real estate agents to double their incomes by adding a 2nd leg to their business. The podcast has grown to tens of thousands of followers, with new community members sharing their success stories every week.

Steve also created the OfferFast Homes app. The app aims to help wholesalers jump-start their careers faster by putting all buyers in one place. The hope is to minimize the challenge of building a buyer list when getting started in wholesaling.

Steve’s legacy will be to create 100 Millionaires. One of his favorite quotes is from the great Zig Ziglar: “You can have everything in life you want if you will just help enough other people get what they want.” He heard this quote when he first got into real estate, and it has stuck with him throughout his entire career. It’s essentially one of the core values Steve lives by.

Since starting Stunning Homes Realty in 2013, the brokerage has had over 130 agents. SHR has an almost 1% market share in the Greater Phoenix Area. And sells one out of every 137 homes in the Phoenix Metro (https://www.stunninghomesrealty.com). Wholesale Real Estate.