Which Is A Better Real Estate Investing Strategy Wholesaling Flippnig
Or Rehabbing

Which Is A Better Real Estate Investing Strategy Wholesaling Flippnig Or Rehabbing

This topic has been one of​ heated debate for​ quite some time now. You have the​ "Die Hard" Wholesalers, your Rehabbers, and​ Landlords that all feel that their strategy is​ the​ best.

Probably the​ best way to​ describe where everything fits in, it's best to​ think of​ a​ triangle. if​ you look at​ Real Estate like a​ triangle you'll see that on one side we have Rehabs, on another side we have Rental Property and​ on the​ last side of​ the​ triangle we have wholesaling.

I consider wholesaling to​ be the​ bottom side of​ the​ triangle, the​ foundation. Wholesaling is​ the​ foundation that quickly injects large chunks of​ capital into your home buying business. This is​ the​ capital that you'll be using to​ grow your business and​ purchase long term wealth vehicles like Rental Properties. I personally wouldn't recommend trying to​ do any of​ the​ other real estate investing strategies until you've had a​ few wholesale deals under your belt.

Wholesaling, or​ "Flipping" properties is​ by far the​ easiest way for​ a​ new real estate investor to​ go from zero to​ $20,000 in​ 30 - 45 days. it​ won't take you long to​ get to​ the​ point where you're making $10,000 to​ $20,000 checks each and​ every month only working a​ few hours a​ week. That's probably one of​ the​ greatest benefits that you'll find when wholesaling Real Estate.

Who wants to​ worry about fixing junk properties..or unclogging toilets? This is​ a​ strategy that you can put on auto pilot if​ you put the​ appropriate systems in​ place. if​ done properly, you should only need to​ show up to​ Close the​ Deal & then to​ pick up your check at​ the​ title company. Remember that time is​ your most valuable asset!

Once you’ve created your investor list (which we will discuss) it​ won’t be hard for​ you to​ move these deals in​ a​ short amount of​ time, normally within 10 to​ 15 days. Your buyers will be paying with All Cash and​ financing is​ not an​ issue.

This is​ much easier than selling to​ an​ "End Buyer". in​ a​ slower Real Estate Market, it​ may literally take two to​ three months for​ you to​ find a​ qualified buyer who wants to​ buy the​ property. Remember that the​ keyword here is​ "QUALIFIED BUYER". When you're dealing with other investors you know that they either have cash or​ hard money, and​ financing isn't a​ big issue. When you're dealing with "Joe Q. Public" you're going to​ get interested buyers with various financing issues and​ you're the​ one that has to​ worry about getting the​ deal closed. Once you find a​ buyer, you’ve got to​ get their loan approved, then you’ve got to​ get the​ loan taken care of, get the​ appraisal and​ all the​ other things that come with a​ regular retail buyer, and​ so it​ may take anywhere between three months to​ eight months to​ close a​ deal on a​ rehab, going from purchase - rehab - resale.

That brings me to​ another reason why I prefer wholesaling real estate over rehabbing. When you buy, fix and​ resell real estate, you're committed to​ the​ property. Once you close on that baby it's your's...The Good and​ the​ Bad! if​ some unforeseen problem arises (It always does), you're going to​ be the​ one that carries the​ expense. if​ you're rehabbing a​ property, you've got to​ start by hiring a​ contractor or​ handyman. You’ve got to​ get him to​ do all the​ repairs to​ the​ property, market the​ property, go through the​ process with the​ end buyer. All of​ this may take a​ long time, and​ you are the​ one carrying the​ costs. Every day that this property remains in​ your possession, money is​ pouring out of​ your wallet.

In a​ wholesale deal, all that you are really doing is​ getting control of​ the​ property. You would simply take the​ same property that you would normally buy and​ rehab, and​ get it​ under contract. Then, you're taking that contract, marketing it​ and​ selling it​ to​ other investors that want to​ take on the​ project. There are investors out there that prefer doing rehabs. These are investors who have the​ cash to​ pay and​ who don’t mind waiting six months to​ do a​ rehab. There are also investors that want to​ do a​ deal, but are horrible at​ talking to​ sellers and​ would not be able to​ secure the​ pricing that you can. These Rehabbers have no problem paying you an​ "assignment fee" (the amount that you pocket when you sell your contract) because they understand that it​ is​ a​ cost of​ doing business for​ them.

The Rehabber will generally net more than a​ wholesaler, but look back at​ all of​ the​ risk and​ time associated with doing a​ rehab. the​ average, depending upon your location is​ between $25,000.00 to​ $40,000.00. and​ at​ times even more. But most wholesale deals are going to​ net you anywhere between $10,000.00 and​ $20,000.00. Usually about half of​ what the​ average Rehabber makes per deal. However, unlike the​ rehabber, as​ a​ wholesaler, you have more control of​ the​ amount of​ money you earn. the​ best part of​ wholesaling is​ that your pay is​ directly proportionate to​ your ability to​ put deals together and​ not how much time or​ physical labor you have in​ a​ deal. as​ you get better at​ negotiating, you'll be getting properties under contract for​ less and​ less, allowing you to​ sell the​ contract for​ more and​ more.

I would personally rather do four wholesales and​ spend less time than to​ wait six to​ eight months for​ a​ single rehab to​ cash out. Even if​ you're in​ a​ position to​ wait that long, is​ it​ really worth the​ risk? That's the​ question that you need to​ ask your self when deciding which real estate investment strategy you want to​ take on. Exactly how much risk are you willing to​ accept?

You Might Also Like:

No comments:

Powered by Blogger.