Wholesaling Property
Does Have Its Disadvantages...

But the advantages of wholesaling property probably outweigh the disadvantages. I'll let you be the judge of that.

I experienced a lot of confusion and conflicting advice when I first decided to learn about flipping houses. The problem was that I had no clue that there were so many real estate niche options:

• wholesaling
• lease options
• subject to (assuming mortgages)
• rehab real estate ("fix and flip" in popular usage)

I'll be forever grateful to the young real estate investor who wasn't that far removed from his "newbie" days who told me to focus exclusively on wholesaling.

In hindsight, of course I had to start with wholesaling!
With no money, bad credit, and no particular project management expertise, starting off with any of the other real estate niche options would have been a disastrously bad idea.

The real estate investor community is full of very giving people and so I think I just have to chalk it up to the fact that all these experienced people had forgotten how difficult to manage some of these other niche strategies could be.

Fortunately for you, you have me as your advisor. Even if you have some cash right now, and good credit, wholesaling real estate is still my most strongly recommended niche for the beginner investing in, or flipping real estate.

Below, I explore the advantages and disadvantages of wholesaling so that you can make up your own mind.

Advantages of Wholesaling Real Estate

I'm not so sure that's not a dangerous idea for the beginner house flipper. By the way, if you're interested in learning how to manage and profit from fix and flips, I recommend the wholesaling and rehabbing courses from Steve Cook, a real estate coach with high ethical standards who's doing deals in the real world.

I have grouped the advantages of wholesaling property into four classifications:

• Lifestyle advantages
• Real estate investment education advantages
• Ease of entry advantages
• Risk moderation advantages

  
  

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  Lifestyle Advantages

  
  
  • Economic independence
  • Possibility of substantial income
  • Flexible schedule
  • Short-term financial windfalls
  
  

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  Real Estate Investment Education Advantage

  
  
  • Learn to identify opportunity neighborhoods and zones
  • Relatively simple business model
  • Prepares you to rehab real estate profitably
  • Learn investment property buying criteria
  
  

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  Ease of Entry for Beginners

  
  
  • Bad credit is not a barrier
  • Unlike rehabbing or rentals, no need for substantial cash reserves
  • No project management expertise needed
  • No property management expertise required
  • Little to no financial overhead
  
  

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  Risk Moderation Advantages

  
  
  • No money or low money down
  • Quick-turn time frames reduce price risk
  • Financial and legal liabilities can be limited by contracts
  
  
  

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  Disadvantages of Wholesaling Real Estate

  The primary disadvantage with wholesaling property is precisely this:

  You are not an investor; and as such, you have no passive income. You have to keep working to keep getting. It is a job more than investment. Although it can be a pretty lucrative job, you don't get paid when you take time off.

  Other disadvantages of wholesaling also have to do with the challenges of being self-employed:

  • Income fluctuates with level of motivation
  • You have to take care of your own benefits
  • Income does not receive the favorable treatment of investment income.

  If you can handle these disadvantages, you are well on your way to becoming a real estate flipper.
  
  

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