There are 3 popular methods for investing in real estate. Buy and hold, house flipping, and wholesale real estate. If you’re here, you’re probably wondering which one is the best to invest your money in. There is a clear winner, in our opinion, whether you have $30k, $50k, $100k, $300k, or $1m. With that being said, I want to emphasize it is my opinion based on a personal portfolio of cash flow properties. Please invest in whichever method is best for you!

What is Wholesale Real Estate?

Wholesaling is when you know someone who wants to sell and you get it under contract to purchase and then you assign that contract to someone.

Opening Thoughts

I’m not a massive fan of wholesaling. It has its time and place, but there are a lot of negatives to it. So, if you’re looking to be convinced that’s the best way to make money in real estate, I’m not your guy.

Essentially you’re telling someone you are the buyer when you aren’t. Or, even if you are being extremely transparent in your method, there’s a good chance it’s not the best option for the seller and they simply don’t know that. To be fair, there are times and some people who have entire businesses built on transparent, ethical wholesaling. 

I’ve just seen it done with questionable ethics more times than not. On top of that, it’s hard. You have to find someone who wants to sell their house largely discounted to you, when you aren’t even the buyer. Lots of people aren’t serious, houses are oftentimes in bad condition, and many other “obstacles” inevitably come up along the way when wholesaling.

Pros

• Takes less money to get started (on a small scale)
• Can make a nice chunk of money per deal if executed well
• Can be quick money… if you have a deal

Cons

• Difficult to execute once, let alone consistently
• It is hard to find the deals (people who wholesale consistently usually spend a lot of money on marketing)
• Blurs the line on ethics if not helping people explore their options or being transparent
• Usually an uneducated or desperate seller
• Houses are usually very rough (otherwise they would just put it on the market to sell it)

Summary of Real Estate Wholesale

Personally, I’m not a huge fan of wholesaling. It has its time and place, but there are a lot of negatives to it. So if you’re looking to be convinced that’s the best way to make money in real estate, I’m not your guy.

Essentially you’re either telling someone you are the buyer (when you aren’t) or even if you are being extremely transparent in your method…there’s a good chance it’s not the best option for the seller…and they simply don’t know that. To be fair…there are times and some people who have entire businesses built on transparent, ethical, wholesaling. 

I’ve just seen it done with questionable ethics more times than not.
On top of that…it’s hard. You have to find someone who wants to sell their house, largely discounted to you, when you aren’t even the buyer. Lots of people aren’t serious, houses are oftentimes in bad condition, and many other “obstacles” inevitably come up along the way when wholesaling.

-Insight from Joe Hammel