Why All New Investors Should Wholesale Before They Fix & Flip
Most 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.
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.
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.
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.
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.
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.
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.
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