How does a downturn affect wholesaling?

[Mike Schorah]

I’ve heard that 20% of a wholesaling business is rentals and 80% of a wholesaling business is flips. If flips dry up but rentals are still going… Using this 80/20 rule, which of the following is more likely to happen?

• 80% of wholesalers go out of business leaving the top 20% cream of the crop?

OR

• Wholesalers need to put 5x as many properties under contract to find 1 deal that works with a buyer? (If this is the case, then will the number of phone calls made stay the same? Ex: 7,500 cold calls to get a deal in a tight market would evolve to 1,500 cold calls to get a deal in a wide market (7,500 / 5 …but of course a buyer only buys 1 out of the 5))