Why All New Investors Should Wholesale Before They Fix & Flip

Why All New Investors Should Wholesale Before They Fix & Flip

wholesale before flipMost investors want to jump right into doing fix & flips.

You can make more money with them, plus you get the opportunity to remodel a home (which looks fun on HGTV).

But despite heftier paydays, I teach my new investors to focus only on wholesale

Before I tell you why, let’s make sure we’re on the same page.

What’s the difference between Wholesale and Fix & Flip?

A fix & flip means you take on the whole process – finding the deal, putting under contract, securing funding, managing the rehab, and the eventual sale.

A wholesale deal means you find the deal and put it under contract, but then you find another investor willing to take on the rehab, and you get paid a finder’s fee. Usually you’ll profit between $5k and $15k.

Why Wholesaling?

  1. Quick Win/Confidence Boost

Real estate investing is hard, and one of the main reasons new investors quit is they come up to a barrier they don’t think they can hurdle. The whole process seems overwhelming – so dipping your toe in with a simpler wholesale deal can give you the confidence you need.

  1. Fast Turnaround Time

Many new investors are itching to start this new adventure! Often getting that first paycheck in just a few weeks is more appealing than embarking on a 5-6 month fix & flip – and it’s easier to stay motivated during a shorter turnaround time.

  1. Seed Money

While we can help provide 100% financing on fix & flips, we still recommend you have some money in the bank in the case of unexpected costs. A quick wholesale deal can provide financial cushion.

  1. No Loans

Here’s where it gets REALLY fun – you don’t have to worry about getting a massive loan! That’s the scariest part of a fix & flip because you’re all of a sudden on the hook for a lot of money. With a wholesale deal, you don’t have to worry about making any payments or worrying about deadlines.

  1. No Rehab to Manage

Another common reason fix & flips go south is from mishandling the rehab! Managing deadlines, repair bids, a General Contractor, and more can be a massive headache for someone without experience.

  1. No Concerns About Market Changes

Over the course of a 6-month fix & flip, it’s possible that the market can fluctuate enough to cause you problems when it’s time to sell the property. In a quick wholesale deal, that risk if minimized as you’re trying to unload it so quickly.

  1. You Can Still Build a Long-Term Business With Wholesaling

I typically teach that you should wholesale a few deals, and then move onto fix & flips. That’s where you can earn $30k – $60k PER deal. That’s life changing money even if you only do a few per year.

However, I know many real estate investors that put together a system and a team, and profit millions per year by only doing wholesale deals!

Related Blog Posts and Articles

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How To Use The HUD Checklist

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