19 Erin writes: What is the difference between wholesaling and flipping?
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Welcome to the real investing show with Tim Herriage each day, we’ll provide real investing for everyday investors. Tim is a nationally recognized real estate investing expert podcast, host and public speaker. He built his businesses from the ground up and is here to help you do the same. Here is your host Tim Herriage.
Welcome back to real investing. I’m Tim Herriage your host. I am so appreciative that you’ve stopped back by. Remember if you’re enjoying this daily release of this podcast, please just give me a quick rating. We loves five stars. Give us a quick review and share it with your friends. Um, and if you’re listening and you have questions, make sure you’re, you know, go ahead and submit a question. Uh, I’ve got a lot of questions I like to sit down and kind of flow and record as many as possible. So hop on over to, Ihavelunchmoney.com and submit a question. So today Erin writes, what is the difference between wholesaling and flipping? Um, in my opinion time, uh, some people say you don’t need a bunch of money to wholesale and you do for flipping. It’s not entirely true. I mean, there’s companies like RCN that will give you a hundred percent of the cost.
Um, as long as you’re buying at the right loan of value, it’s very easy to find joint venture partners, um, in the flipping business to where they’ll cover all the cost. So I think the biggest difference is time. Um, when you look at wholesaling, oh, and risk, so probably risk, uh, with wholesale and you never own a property, right? So you’re only at risk. Your only risk is your main risk is the terms of the contract, which you sign. So if you have an option period, um, you have a seller’s disclosure timeline, there’s all sorts of things that can get you out of the deal. Uh, and you can manage your risk a lot easier with wholesaling, but flipping like what you own the house, right? Vandalism storms, uh, overages the market conditions, war <laugh>, uh, pandemics. These type of things can really impact your profit and loss.
And there’s really nothing you can do about it because you own the property, right? It’s not, it’s not something you can give back, you know? Uh, you’re actually, um, you’re stuck, right? Like, I mean, we’re not stuck, but you own the house. I mean, so you can’t, you, you you’re more impact. So, so just to me, that’s the main difference you do in general, make more money flipping than wholesaling, but you can also lose more money flipping than wholeselling. So it’s risk in time. Uh, compressed timelines recently, my company, we bought a property in row at Texas that, you know, we made 20 grand in a week, uh, probably could have made 40 grand if we had fixed it and flipped it. But with interest rates the way they are and it’s summer and we’re busy and we’ve got these other multimillion dollar project going, it just made more sense to go ahead and wholesale a property than to take another project on at this point in time.
So for me, I’m a big fan of Bluebell ice cream and, you know, they say we eat all we can. We sell the rest. And that’s kind of the way I look at whole selling in my business. I’m going to keep all the rentals I can. I’m going to flip all the properties I can. I’m going to take on the major projects I can. But when I come across a good deal, I’m not just going to pass on it because I’m too busy. I’m gonna go ahead and put it under contract, wholesale it and make money. And then also, I think you need to master both. Anyway, because here recently we had a mobile home on almost an acre in a town called Quinland and I don’t buy mobile homes and I don’t buy vacant land unless it’s a ranch. So nor you know, I, if I didn’t have a whole selling mastered, I would had, I would’ve had to say, ah, nevermind, I don’t want it.
Um, but instead we, they said they would take $30,000, seemed like a fair price. We bought it for 30. We sold it for 70. We made $40,000 in two weeks. So, you know, I, I think you need to master both. And I think you really just need to understand your own personal risk appetite, uh, your capital situation. And I’ll tell you this though, don’t flip because no one else will buy it. Right. Don’t don’t flip the bad ones. Flip the ones that make you the most money that when you look at the, a, the home, you’re like, yeah, I wanna flip that house. Um, a lot of flippers and wholesalers make big mistakes by they’ll put 1, 2, 3 main street under contract, and then try to wholesale it. No one will buy it. They get, you know, like in cards, pot committed. They, they think, ah, it’s a good deal. I’m gonna go ahead and flip it. I’ll show them all wrong. And oftentimes the market was right, right. Like always listen to the market and in everything you’re doing, if, if people aren’t making you the offer that you won’t, you are probably asking too much just in general. So Erin, I hope that helps. Thank you for riding in. Thank you for taking the time to ride in and, uh, that’s all for today, folks. So you’ve been listening to the real investing with Tim Herriage. I’ll see you tomorrow.
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