Why wholesaling is USUALLY better than Flipping

Hey everyone!

One of the most common questions/concerns I get from SCALE Community applicants is:

“Are you guys just wholesalers? Because I don’t really like to wholesale”

The answer to this is NO, we flip, buy and hold, do JVs and Creative BUT I would be lying if I said Wholesaling wasnt a HUGE part of our business.

The reasoning is because honestly I think Wholesaling is a BETTER option than flipping MOST of the time, but people don’t consider it because it has a bad reputation.

The primary reasoning for my opinion on this is simple:

Velocity of Money

While there is no doubt more money to be made by flipping properties, the problem is, if you have an established pipeline, the Financial and Mental capacity required to flip a property probably has a higher NET ROI Potential if you simply focused on wholesaling more deals.

Wholesaling ultimately has more DEAL OPPORTUNITY (I made that up) than most flips because you get the proceeds in your bank account so much quicker.

As an example:

• You get a contract you can wholesale a property for $20k or flip for $50k profits

• To wholesale will take 4 weeks, flip will take 16 weeks + management

• Your average cost per deal is $4k. So your NET for the wholesale is $16k profit

• Instead of flipping, you take your $16k profits from the wholesale and invest into marketing to get 4 more deals at $20k profit. Now the value of first wholesale deal is actually $100k ($80k NET) in 4 months vs $50k for the flip.

Now of course Flipping CAN make sense, but I think you should save it for when:

• The market is HOT and stuff will sell fast (2021)

• You have LOW lead flow AND excess capital

  • If you have no capital fix your systems and get more deals first

• When a deal is EXTRA JUICY

  • EX: $100k flip vs $20k wholesale

  • Calculate your true “deal opportunity”

• You need some sexy social media content

But outside of that, if you are an active and operating Real Estate business, MOST of the time youre better of wholesaling.

This is a controversial one!

Lets hear your thoughts!

Hit me up on Instagram.

-Mike