Wholesaling & Rehabbing Houses

Both wholesaling and rehabbing houses are often referred to as flipping houses. But these are actually two very different real estate investment strategies. So what’s the difference, and which is right for you?

Flipping Houses

Flipping houses has been a way of life these days for for people like you and I for quite some time. But thanks to a whole menu of reality TV shows it’s hit the mainstream and more and more people want to learn how to build wealth in real estate. It can be fun, scary, risky and incredibly profitable especially if you don’t have a mentor to show you how to do it.

You can flip houses part time on the weekends, full time eventually once you’ve cloned my system replaced or exceeded your current income that’s sustainable and profitable every month. Flipping houses works from coast to coast, from dirt cheap properties to multi-million dollar mansions. It works all the time too. Many have enjoyed house flipping in years where there have been millions of foreclosures and distressed deals. Others like the ease of doing it when property prices are rising rapidly and there are more buyers and mortgage lenders money in the market. But even in tough times RealtyTrac reports flippers can make on average of $60k to $100k per deal depending on the market they are investing in.

So what are the two main types of house flipping methods? What are their pros and cons? How do you choose where to start?

Rehabbing Houses

As it suggests this real estate strategy involves fixing up and renovating houses, multi-family dwellings and apartments. Buy, fix or renovate, and resell or rent for a profit. If you’ve watched enough episodes of these shows on reality TV like Brave, HGTV, DIY and TV One you’ve already seen that while it’s exciting, it also has its risks. It’s important to invest in building your knowledge base before you get started. You need to know how to accurately evaluate properties, size up remodeling jobs, give accurate and realistic marketing and resale timelines, be able to manage contractors, and stick to a budget.

If you get this down there are many rewards for rehabbers, including:

• The sizable profits from flipping houses
• The fun and therapy of flexing your DIY (Do it Yourself) and interior design skills
• Helping to provide safe, healthy, quality housing to the general public
• Helping to revitalize and strengthen communities
• Aiding in creating jobs and supporting the local economy

Wholesaling Houses

Many also refer to wholesaling houses as flipping houses too, but this is really a very different method. The biggest difference is that wholesaling doesn’t involve fixing or remodeling houses. It is about purchasing properties at a discount, and reselling them for a profit, quickly. This is often done within 30 days. In, out, and it gets you paid fast. Often these properties are sold to rehabbers who will fix them up and then either resell them again, or rent them out for a monthly positive cash flow and equity position. Wholesaling generally requires little to no cash, produces large lump sums of cash fast, and comes with less risk than the other niches.

Pre-habbing

This is a third, and hybrid option. This is a scaled down version of remodeling, and effectively means clearing the slate for the next investor. This can range from clearing houses of junk, to gutting them, to tearing them down to make way for re-builds. It makes it easier for the next buyer to envision what they can do with it, and can add a lot of visual appeal. It can be as cheap or extensive as you see fit, but can add value and profit to your wholesale deals, without having to add too much burden. I recommend lining up short term funding for these deals if you don’t have the capital to close on them yourself.

Which Flipping Strategy is Right for You?

All three of the above house house flipping strategies can work, and can be very profitable. The key is to start with what fits your current business model, can afford to do, and then build on that as you see the profits coming in.

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”