Happy Friday!
Do you know what real estate wholesaling is? If not, here’s a quick explainer.
There’s a dozen ways you can structure these deals that I won’t get into. Many a hotel seminars have been taught about get rich quick easy simple wholesaling profits, but nothing is as simple as it seems, right? Don’t go to those seminars.
And I really don’t like residential wholesalers, because many of them are outright crooks that I wouldn’t trust with a used 1993 550cc Kawasaki motorcycle. You almost have to be shady with all parties involved to be really successful at residential wholesaling.
But commercial is an entirely different ball game.
My buddy Connor just profited $352k on a wholesale self storage deal. He could have made more by buying it himself, but risk adjusted, he made the right call. He didn’t need to invest a dime of capital or undertake any of the post-close risk that comes with buying any piece of real estate.
His weekly newsletter is great BTW. And I’m not being paid to plug it. It’s a lot like mine, except shorter.
That’s an awesome story in and of itself, but I want to take it up a notch.
There is a MASSIVE opportunity for someone to wholesale industrial properties to BTC miners. You’re getting an inside look from the insider himself, because I AM a BTC miner. I know this market inside and out.
Businesses exist thanks to uneven distribution of information and resources.
Think of it this way:
The 9 year old knew that thirsty moms would be driving down this road, and has access to resources (lemonade). commerce enters the room
I made millions because iPhone repair shops didn’t know who to buy cheap iPhone parts from in China. I did. So I sold them to them.
CPAs make millions because they know finance and business owners don’t.
Uneven distribution of information and resources.
I paid above market for this property behind my house. I literally paid too much! Why?
Asymmetric information works both ways. Because I had more plans and ideas for the property than the average investor, I paid more for it. The seller wanted way too much and so it sat on the market for years, until I paid what he was asking.
Ok, back to Bitcoin mining. Here’s what this process will look like in 3 steps:
Step 1: Find a property
To have a profitable BTC mining facility you need a few things:
If you don’t have all 3 of these things you will have to pay a ton and wait a ton to get what you need. Transformers are EXPENSIVE and take many months to arrive.
If local power is expensive, just forget it altogether.
If the climate is hot, you’re still okay if you install enough fans to move hot air out, but ideally the climate should be cooler. Texas is the mecca of mining, after all.
So if I were cold calling owners or searching on Crexi or Loopnet I would need this type of property:
You want to find a property owner or broker that doesn’t know what they have. This is more common than you’d think. Cheap heavy power is the key.
You want a facility with at least 1MW of power, but the more, the better.
You can also cold call landowners that own property next to substations in OK, WA, OR, PA, NV, WY, OH and TX. There are a TON of miners that buy or lease land like that. Those states are mining friendly.
Where to find a map of all the substations? Right here.
Next step? Get it under contract. EVEN IF IT IS FOR LEASE ONLY. But preferably it’s for sale.
You’ll want to use a contract that’s assignable, like this one. Lock it up under contract for as long as the seller will allow. 3-6 months. The more time you buy the higher likelihood if finding the most profitable buyer.
Use rows 116+ of this sheet to get a feel for pricing per MW on these types of facilities.
I buried the lead right here:
If I were to sublease the space I’m in right now as a normal industrial space, it would only rent for $12/foot, or $50k/year that goes straight to the landlord. We don’t even own our space.
But since it has cheap, locked, heavy power and all the mining infrastructure is already here, I can sell the right to the lease and onsite infrastructure for $1m, and then the buyer still has to pay the landlord $4,500/month!
And that doesn’t include any BTC miners! Just the shelving, infrastructure, transformers, switchgear, HVAC, etc. Stuff that cost a few hundred grand to install over the last few years.
But you can find places with most of that stuff already onsite! And the BTC miner only needs to install shelving and switchgear to make it ready to go.
Step 2: Find a BTC Mining Individual or Company
This part is actually much easier than you’d think. Once you have it under contract you can do whatever the crap you want with it.
That means you can even list it on the same website where you found it! Why not?
BTC miners such as myself are constantly trolling the below websites for mining facilities with cheap power.
Notice how janky some of those websites look? Those are the best ones! I speak with Bob and Milt on a regular basis, and they are BTC mining facility brokers. If you can’t find a buyer, they can for a small fee.
Step 3: Assign the Contract and Profit
Tell the interested parties that you are wholesaling the deal right upfront. This is where wholesalers start to act shady. Don’t be shady, be transparent. It’s more profitable in the long run anyway. Go ahead and tell them what the contract price is anyway. They are going to find out eventually anyway.
If they balk at how much your markup is, just tell them that’s fine. If they are jealous of how much money you’re making then you’ll find another buyer that isn’t.
If their side of the deal pencils then it should matter what your contract price is.
For example, it could play out this way.
More Opportunities
Don’t want to do this in mining? That’s fine. Right now is the perfect time for mining because the mining reward is about to be cut in half in 3 months, which means the price of BTC is about to go parabolic, which means mining will actually get much more profitable.
Funny how that works right? Mining becoming half as profitable overnight leads to it being even more profitable.
I’m in the biz and I hear things. There is not even close to being enough mining space in America right now. There are shipping containers of brand new miners just sitting around with nowhere to plug in. You can help fill that demand.
But if you don’t want to go so niche, you can wholesale:
Using all of these same principles.
You’ll usually have to put up earnest money, so that’s your risk.
Conclusion
Wholesaling is a great biz, just don’t be slimy about it. I’d suggest you skip residential and go straight to commercial. Residential is too efficient of a market and very saturated. Commercial is still wide open for the taking.
What am I Working on Right Now?
Things are clicking. Not a lot of complaints about how biz is going right now.
Top Tweets of the Past Week
As always, thanks for reading! Love you all.
Chris Koerner
chrisjkoerner.com