I'm a wholesaler (for now) and loving everything I'm learning, all the ups and downs, just falling in love with the process. There's lots of money to be made, relationships to be built, and lessons to be learned in all areas of real estate. However I would love to hear everyones opinion or views on wholesale investing vs. buy and flip and private money lending to fund projects. Please, any insight is appreciated.
I have never done wholesaling but my obeservation is that several people start in RE by doing or wanting to be wholesales.
It requires very little capital. So there are no barriers to entry.
Fix and flips require capital. In some cases, a lot of capital and the risks are higher. If you get your assumptions on cost of rehabs and ARV wrong, you can end up losing a lot of money.
But the returns are higher.
In hot markets, like it is the case in most places accross the nation, it is very difficult for wholesalers to find deals that make sense for investors and they end up spinning their wheels for long period of time without making any money.
It is my impression it is difficult to make a good living from wholesaling.
A common path for a lot of people is to start doing (or thinking of doing) wholesaling, then do fix and flips then move on to doing Buy and Hold when it makes sense.
@Kevin Perk I've been thinking about this a lot recently. I mainly wholesale but have recently done a few flips with the deals I found. I decided that this year, I'm going to only wholesale and wholetail...no more flips. I found that when I flip a property, it takes up a lot of time and energy away from my wholesaling business. A flip can take around 3 months whereas if I had just wholesaled it, I would have made a nice profit (not as much) in a very short period of time and then moved on to the next deal.
That being said, I'd suggest you do 1 or 2 flips at some point as it helped me immensely to understand what flippers (my customers) have to deal with.
A lot of people think that you "graduate" from wholesaling into flipping and then to something else. I just see it as, make the most amount of money you can in the most efficient manner. If the deal makes more sense as a wholesale, do it. If it's better to do some basic repairs and put it on the market (wholetail), do that.
@Pratik P. wow I couldn’t agree more!! Like you said, graduating? There’s folks making hundreds of thousands and millions off wholesaling! Can you explain to me what wholeTAILING is?
@Pratik P. Also since youre in Sacramento and that’s been where I invest, we should partner up. WOuld love to spend a day with an investor as they do a walk thru amen analyze a deal.
IMO, wholesaling and flipping are very similar. Well in the sense how I do it. These real estate closings often take awhile regardless if your wholesaling it,fix and flipping or buy and hold. I never seen a real estate deal actually close less than 15 Days. And that’s including a all cash deal on a cheap rental property for someone. The more common is about 25-30 Days. Things just always come up.
It’s kind of funny scrolling down BP and seeing about 70% of the topics pertaining to LLCs and wholesaling. I thought a sticky note thread was already placed somewhere.
Anyway, it’s possible to make a lot of money wholesaling(flips too) but the current market conditions right now don’t call for it. I look at it like this no one should get into any industry or field based on money because you will be disappointed when things don’t go your way or things happen to you not in your control. The focus should definitely be on learning the process of wholesaling and general real estate knowledge. Then focus on actually helping landlords and flippers get deals. The result will be the money coming to you as a reward for actually helping people look for deals they may have not come across.
There are a TON of wholesalers not making anything right now because of the extremely low inventory all over the United States. And because of the lack of genera Real estate knowledge they have. I look through some wholesalers "deals" and I crunch numbers myself I wonder to myself how is this a deal????? What makes it a deal? Because usually the ROI is too low for any sensible flipper to want. The comps are usually too high and the rehab numbers are all the way off, as in nowhere near the real rehab cost. Not to mention CCRs are too low for someone to add to their portfolio of rentals.
So my honest advice for any wholesalers is that they should learn the business/investor side of real estate. I mean really know it and also understand that wholesaling is a business. A very hard business that requires a lot of time and effort for looking for deals and a ton of marketing. A TON
Let’s talk about why I say flipping and wholesaling is very similar. Well as I stated before not many wholesalers actually close/sell anything because of the “deals” they present(don’t feel bad because most realtors don’t make anything as well). The only difference between flipping and wholesaling is your involved in the rehab process managing it and ensuring it goes okay(pick your rehab crew extremely careful, there are so many bad general contractors out there) but how I wholesale properties in chicago and Indiana I’m involved in the process anyway......to ensure the properties are rehabbed to my buyers/investors liking. So the deal closes before the rehab process begins with wholesaling as opposed to the deal won’t close until the property is rehabbed and sold on the market if I flipped it myself. So that’s why wholesaling is very similar to flipping it’s almost no difference the way how I do it. By the way I don’t see why most people say their flips take 3 months or more unless they are counting the period they start the rehab and it’s sold.....but then again that goes back to having your knowledge and knowing your markets and areas you should be flipping in the hot areas of your market....nothing is guaranteed but that’s the most sensible strategy.
Speaking of closings, So from the time of the start of the closing process it could take 30-45 Days. Even on deals where you want a “quick close” for a variety of reasons(your contract expires or the seller wants to hurry and close) it still takes a long time. There are so many hands in a transaction that, everything can go right to the very end and on the last day it won’t close. Dealing with real estate attorneys and certain title companies and even some realtors can be extremely annoying. Even your own buyer or the seller can delay things as well. So hang in there and keep learning everyday. Real estate is a business and it’s a reason why most people in the world only Buy one house in their life.
@Kevin Powell Wholetailing is where you actually buy it, clean it up, maybe do some basic repairs and then list it under market value. Being that the MLS is your biggest buyers list (in theory), you might make a lot more money that way instead of just wholesaling it to a buyer you know. This may work well in an area where there is a demand for rentals.
We Close Deals soon is title is back in 3 to 5 days in Atlanta.