Flipping - One of the Most Risky Strategies?

[Adam Bartomeo]

Out of the three main ways to invest ( wholesaling, flipping, and buy-and-hold)  it seems obvious to me that flipping is by far the most risky strategy.  This not only comes from personal experience but from commonsense.

 Wholesaling  -  you normally don't have any money invested. The only risk that you really have is in marketing and time. 

Buy and hold -  normally, if you make a bad investment or if you overspend on fixing up the property you can normally just wait in the property will appreciate and/or  over time you will build equity through the paying down of debt service.

Flipping -  there are a multitude of things that can go sideways. Paid too much for the property,  went over on your rehab budget, didn't upgrade the property enough, upgraded the property too much, market fluctuations, and a multitude of others.

 My advice, avoid flipping unless you have so much room in the property that you can not fail.

[J Scott]

Wholesaling, flipping and landlording are three completely different businesses, with different business models, financial models, products, tax implications, time requirements, skillset requirements, etc.  From a business standpoint, the three business models have very little in common and it seems weird to say that any one is any better or worse than the other two.  You could easily throw tax lien investing, lending, owning a shoe store, owning a restaurant or starting an online retail business into the mix as well.  Those business models are equally diverse.

People don't pick a business to start simply based on risk.  There are many other -- more important -- factors that need to be considered.  For example:

- Interest

- Amount of time to invest

- Amount of capital to invest

- Credit worthiness

- Location/market needs

- Cash flow needs

- Long-term goals

- Years to retirement

- Skillset

- Education

- Network/contacts

- Etc.

Why aren't you factoring these things into your analysis?  If someone works 80 hours a week, has a growing family, has $1M in the bank, a high-salary job, no debt, stellar credit, doesn't need cash flow and their goal is to generate 8% returns on their cash for the next 20 years, would you make the same business recommendation to that as you would to someone who has no cash, no credit, no job and poor communication skills?  

I doubt it.  

There are lots of factors that go into deciding what entrepreneurial venture might be right for someone, and to narrow it down to just three possibilities (flipping, wholesaling, landlording) and then saying that one of them probably isn't right based on a single factor, just doesn't make sense to me.