Wholesaling or flipping for a newbie?

Question

Hello my bp community,

I have gathered enough information and my next step is to educate thoroughly into my first niche.

I’m little confused about which one to dive into, wholesaling or flipping single family house. Please help with any advice for my first deal. Thank you!!

Josh Caldwell · Answer

Why choose, do both.  Wholesaling is simply the act of getting paid for deals that you don't want to keep   In your quest to find a good flip, you will 100% find deals that arent right for you. Just because they arent right for you, doesnt mean that someone else isnt super excited to have that same deal. This is all part of your marketing funnel.  Doing both will open up a new world of profit for you..

Pooja Jangid · Answer

@Josh Caldwell that a nice way to look at it. I’ll keep an eye for a good deal and can later decide to wholesale it or flip it. Thanks you!!

David M. · Answer

@Pooja Jangid

No problem.  Also, don't forget that flipping and wholesaling isn't necessarily rei.  Neither is taxed as an investment.  Instead, your profits are considered active ordinary income since its the sale of inventory, not investment property.  So, it will be taxed at your marginal rate and subject to "all" taxes such as self-employment tax.  Just another aspect to realize and take into account according to your tax/financial situation.

Pooja Jangid · Answer

@David M. Thank you for a detailed explanation. The path to my niche is getting more clear.

David M. · Answer

@Pooja Jangid

I'd say somewhere between neither and "well, you've got to start somewhere..."  People keep thinking these are the are easier REI niches. In reality, they can be harder.  It sound like you have sufficient cash??  People try to get started into wholesaling since they think it doesn't require any cash.  Then, wonder how to show they can purchase the property to get it under contract.  Or, they are about to close and haven't found someone to assign the purchase rights.

Flipping is just as hard because you have to make sure you get the property remodeled, deal with any unforseen issues, and finally sell it.

As mentioned, both are related skills.  Both flipping and wholesaling require to be able to correctly judge the remodeling costs and the value of the property.  In my opinion, the latter leverages heavily on a sales-type background.  As alluded to in the prior post, both have the same or similar lead generation approach, so potentially having both approaches in place gives you that flexibility.  However, I would caution in spreading yourself too thin, i.e. you can't start out being a specialist in everything.

Hope that helps.  Good luck.

Wholesaling or flipping for a newbie?

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