Are you new to the real estate industry? Do you have little or no investment capital? Then we’d advise you to opt for wholesaling houses over fix and flip properties. Although fix and flip houses offer high ROIs, the process requires a great deal of experience and patience.
How is Wholesaling Houses Better Than Fix and Flip Houses?
Here are some of the many ways that makes real estate wholesaling a better option:
No Capital is Needed
Unlike fix and flip houses, wholesaling real estate requires no money to get started. The wholesaler contracts the property with a seller and then finds a cash buyer. The contract is then assigned to the buyer. The cash is paid to the seller and the price difference is the profit earned by the wholesaler.
In this entire process, no capital is involved. The wholesaler doesn’t buy the property at any point of the transaction. And more importantly, the property is sold as is. However, the process of fix and flipping homes is just like the name suggests. The investor buys a home that needs repairs, fixes it up and then sells it at a higher price. The process requires investment in property buying and repair work. This can be costly for those with limited budget or no cash.
Another benefit of wholesaling houses over fix and flip houses is that the process is quite fast. All you have to do is contract with a motivated seller and then find a cash buyer and close the deal.
On the other hand, the process of fix and flipping homes can be quite time-consuming. The process typically involves:
- Finding the right deal
- Finding the right financing and contractor
- Deciding what to repair
- Maintaining a property
- Valuation of the property
- Making sure that all repairs are done
- Selling the house at a profitable price
All these things are important. Failure to do things the right way can turn a profitable deal into a big loss.
Practically No Risk
When it comes to real estate wholesaling, there is no risk involved. This is because you don’t invest in property buying. But fix and flipping homes is a risky ordeal, especially if the rehabs cost more than anticipated. This usually happens if the market shifts downward and buyers are not interested in buying the property you’re selling.
Real estate wholesaling spares you the tax problems, which are quite common in fix and flipping homes. Once you have completed renovations, the city may increase the taxes on your property. This can further affect you if you have a difficulty finding a buyer and have to pay the taxes yourself.
Therefore, wholesaling houses is definitely a safer, stress-free and less risky option as compared to fix and flip homes.