If you are a local real estate investor based in Colorado, then you have likely researched flipping vs. wholesaling, and are interested in learning the major key differences between the two. We are going to take a deep dive into this topic so you can learn exactly what wholesaling is, what flipping is, and how you can use these strategies to increase your income and multiply your success in this industry.
What Is Real Estate Wholesaling?
Wholesaling is the act of putting a property under contract that is at a discount price, and would be a great fix and flip opportunity for another investor, and then selling the contractual interest in that property to them, so they will essentially step into your shoes, buy the deal, and perform the rehab and resell it. You would then gain whatever the amount of your assignment fee is that you’re charging, which typically ranges from $3,000 – $10,000, or even more in some markets. Wholesaling is a great way to get into real estate investing without much money to put down to earn profits on your own flips, and it’s also a good way to gain some experience as a beginner, so that a few years down the line you will be in a much better position. When you wholesale a house, you’re never actually taking title of the property, so please keep that in mind.
Main Benefits Of Wholesaling
- Easier to gain entry and get started
- Able to start wholesaling with no money
- Relatively easy to learn compared to flipping
- Don’t have to worry about rehabbing and working with contractors, pulling permits, reselling the home, etc.
- High profits on some bigger deals by performing a double close.
What Is Flipping?
Oh come on! Everyone knows what flipping is…but if you don’t we’ll explain it anyway. Flipping is of course when you “flip” the house, or fix it up and then resell it for a profit a couple of months later. Basically the idea is that you buy a house that needs a lot of work for a discounted price, usually 70% of the after repair value minus repairs, and then you perform all of the repairs and then resell it on the open market for a large profit. Some of these flippers are making anywhere from $30,000 – $50,000 profit per deal in this industry, so please keep that in mind when you are trying to decide whether to flip or wholesale. There’s obviously a lot more money in flipping, but there’s also more risk to go along with that extra reward.
Main Benefits Of Flipping
- Higher profit potential over the long haul.
- Ability to earn huge sums of money when conducted in the right manner.
- Can be an excellent income earner in strong markets with steady growth.
- Satisfying experience, knowing you are contributing to the good of the neighborhood.
Which One Should You Do?
Well, that’s something that only you can answer. If you don’t have much money but you are interested in getting involved in real estate investing, then I would definitely say that wholesaling is the more attractive option. If you have some capital to invest, are comfortable working with contractors, and marketing and reselling homes FSBO then I would say that flipping is probably the better option. The smart thing to do would be to sit down and assess your skills to see if you can come up with a solid action plan that will hone in on specifically the things that you are good at, highlighting your assets, while minimizing your weaknesses, and focusing solely on your strengths. The only way to find out for sure is to take the leap and begin investing in real estate to see what you like to do, and where your particular skill sets will be applied. If you have any questions don’t hesitate to reach out to us and we will put you in touch with the right people.