Wholesaling vs. Flipping

[Michael S. Brooks]

I am a newbie and learning the ropes. I just finished the beginners guide and am deciding between wholesaling vs. flipping for my area of expertise. I have some experience with flipping, I recently flipped/sold a house (rehabbed down to the studs) so I was thankful to learn a bit during that process. One niche that peaked my interest during the beginners guide was wholesaling. I am continuing my education but am hoping for some quick guidance here:

What markets (city vs. suburb vs. rural) and dynamics (economics) are best for wholesaling? Massachusetts as an example.

Is there a particular sweet spot (lower end of the market vs. middle or high end) for doing high volume wholesaling?

From a marketing perspective how long is the ramp up to get your funnel flowing and which methods are most successful? Website vs. Direct Mail vs. Social Media

I am looking for income from either of these two methods 15k per month as an example.

Thank you for the guidance. 

[Dev Horn]

RE investing in general is best done in cities and suburbs where there is a strong demand for housing and it's easy to determine home values based on recent sold comparables.  In rural markets, it's hard to figure out what a house is worth, and that's a big problem for us.

Your sweet spot will be in lower 1/2 of market values, so if the median home price in your area is $250K, you want to looking well below that.  Expensive homes tie up too much or your capital, rehabs are expensive, and you put all that capital at risk on 1 deal.  Better to diversify your risk by doing multiple cheap houses rather than one expensive one.

Last, wholesaling is really just FINDING the property and getting it under contract.  You then assign to contract to a cash buyer (REHABBER) and they do the project.  So there is no difference in marketing between the two methods.

As a wholesaler, you need to buy the house cheaper than a cash buyer will pay for it, or you make no money.  A cash buyer can come in and beat your offer.  Plus, marketing for deals has gotten so expensive in many markets that wholesaling is not even viable.  If it costs you $3,000 in marketing cost to get a deal under contract, and you get a $3,000 assignment fee, you made $0.

Most new people in the business GROSSLY UNDERESTIMATE the marketing cost to consistently bring in a flow of deals.  To make $15,000 profit in a month you really need to look at "flipping" (cash purchase + rehab), not wholesaling.  You can make $15K on a flip doing 1 house a month.  But be prepared to spend $5,000 in marketing every month to get those deals.

Hope that helps.  Wish you the best!

"The wise make more opportunities than they find." ~ Francis Bacon