If you’re new to real estate investing, a lot of people will tell you that wholesaling houses is a great way to get to know the industry and make some money without diving right into rehabbing and flipping properties. This approach has its advantages and disadvantages. It works really well for some people but not so much for others. I prefer doing my homework and then jumping right into fix-and-flip investments. I think there’s really no better way in the world to start flipping houses than, well, to start flipping houses.
That said, while you might not want to start your career in house flipping as a wholesaler, you might want to find a great wholesaler in your area and get to know them. Why? Knowing one or more wholesalers you can consistently work with could cut out a lot of work and help you get a lot more leads with less time and effort.
What Does a Wholesaler Do?
To really understand why you should get friendly with a wholesaler, you first need to have a better understanding of what they do. Basically, wholesalers find great leads on flip properties. Then they make an offer, do a bit of negotiating, and get the contract on those leads. Once they have a contract, they start shopping around for a real estate investor to buy it from them. In the end, they make a profit of about $3000-5000, and you get a great deal on a flip house without having to do a bunch of footwork to find it.
A Wholesaler Will Bring Potential Flips to You
Consider how difficult it is to keep your lead funnel full of really promising properties in good neighborhoods where you’ll be able to sell them at market values. It’s definitely not impossible, but it is a lot of work, especially when you’re doing it all yourself. If you get to know a wholesaler and they know what kind of properties you’re looking for on a regular basis, they’ll start looking for those properties for you. If you consistently buy the properties that they find for you, they’ll look even more for you, and you’ll be the first investor they come to when they have a new deal.
You’ll Still Get a Great Deal
Now, you might be thinking, “But how am I just going to add $3000-5000 onto the price of a flip house? Won’t that eat into my rehab budget?” Actually, no. Real estate wholesalers are always studying the markets where they make deals. They know that they need to get a deal that’s good enough that they can add their fee on top without souring it for their buyers (you and other investors).
In other words, a good wholesaler is a master negotiator, and they’ll work hard to not only find great properties that will make profitable flip houses but also to secure prices that will work for you. Could you find these properties on your own and get a slightly lower price than a wholesaler? Theoretically, yes, but you’d have to spend a ton of time on research and negotiations. Why not let your wholesaler do all that for you so that you can work on finding other leads, overseeing more rehabs, and generally selling more flips faster?
You don’t necessarily want to get all of your properties through a wholesaler, but having someone in your corner who can find properties at great prices for you is definitely a plus. Make friends with a real estate wholesaler today and see how many more house flips you can get over the next few weeks and months.