Wholesaling Vs. House Flipping: What’s the Difference
While you may have heard about house flipping, wholesaling might be a new concept. So, the first thing to understand is the difference between wholesaling and house flipping. It’s important to realize that both of these options offer you the opportunity to make short-term property investments. However, they require a different set of real estate skills.
What Is Wholesaling Vs. House Flipping?
When you flip properties, you renovate them to bring the value up. This gives you a higher sale price, thus a higher profit. It takes skill and care to make improvements to meet the expectations of the market. On the other hand, wholesaling involves selling to other real estate investors. In wholesaling, you’ll seek a buyer who intends to flip the property. This is a good option if you don’t want to spend tons of money, time, and energy on upgrading the residential or commercial property.
Benefits of Wholesaling
Although the profit margins are typically smaller with wholesaling, you don’t have to have a lot of upfront cash. Ideally, you’ll structure the deal so that you agree to find a buyer for a set price. Then, you find someone willing to pay the seller’s price plus a healthy margin for your trouble.
Benefits of House Flipping
If you have enough capital to focus on one or two investments, you can look for properties that need some work or look for short sales and foreclosures with a below-market asking price. Although you can make a much wider margin in house flipping, it’s not the only consideration when deciding between wholesaling versus house flipping.
House flipping is labor-intensive and requires upfront cash to upgrade home features, such as kitchen and baths, that make a home seeker willing to pay a higher price.