Why are wholesalers leaving wholesaling to landlord and flip?

Question

Is flipping and buying rentals really more profitable in a downturn?

Jerryll Noorden · Answer

Several things.

1). That is not true. Wholesalers (in general) are not leaving wholesaling to flip and hold.

First, a lot of REI don't yet have the capital or experience to flip or hold, but was always in the plans to transision to flip and hold

2). There are A TON of flipers and B&H investors  that went from flipping and holding to wholesaling.

3). In general, everyone here above that said that flipping is declining and profits are declining, are not wrong (notice I didn't say "they are correct" either right?).

For years have I been trying to convince BP users they are doing lead generation wrong. Yes, that is why these gentlemen say that flipping profits are dwindeling... this is because they simply don't really do lead generation right.

Flipping profits are NOT dwindling, as long as you get a deal with a ton of meat left on the bone right? It doesn't matter what the market does.. honestly, there will ALWAYS be motivated sellers that can NOT list with an agent, that can NOT wait for the money, they NEED a cash offer and we continue to get houses for less than 10% of the ARV. So anyone that says that flipping is not what it used to be, simply need to re-evaluate their lead generation systems.

Now, to answer your question:

The lead/deal decides the strategy.

If the house is in a student town,  we'd do a Buy and Hold for a rental.

If the house is close to desirable attractions, we do AirBnB.

If the house is a upper class house we (used to) do flips. (we no longer sell our properties... but for very different reasons other than flipping profits).

If the house is just too far, we have too many flips going on at the same time, or we just don't want to deal with this deal.. we wholesale it.

It really depends on the deal, not on "our niche".

Get it?

Bob Stevens · Answer

HELLO, I used to flip about 20 per month in the Cleveland markets, however over the last 1 ,2 years inventory has dried up. Sure I can still get about 4, 6 per month, but doing 20 not going to happen unless you want to always buy in " war zones "  Simply no inventory. I do not do any marketing for props, never have. Deals come to me daily from various sources. Can always use more cash buyers,

Keep on killing it, all the best to you

James Wise · Answer

It's always profitable to flip houses and own rentals. Up, Down, Left, Right....Always.

Jerryll Noorden · Answer

Consider this. Instead of telling the guy that IS doing it, that it is not possible... instead you should be asking HOW I am doing it. What I TRULY don't understand is this.. why are SO many of you so allergic to being wrong? There is nothing wrong with being wrong. Being wrong is an opportunity to learn and improve. Grow and be better. Ask me to teach you, show you, and I HAPPILY will. But instead you are so defensive, argumentative. WHY? This is insecurity. Why do you need this so badly not to be true? Why dig so far and deep to figure out a way to maneuver your statement to remain right even when it simply is not? To tell me that "nothing is truly automated" is honestly reaching.

OK nothing is truly automated much like passive income through rentals also is not truly "passive" yes? Not because you can't do it, or don't understand how, or don't see it does it mean it can't be done right?

Here I'll share with you, hopefully you can say "Ahh I see, that's a great idea man" and we both walk away with a positive experience. You learned something new, and I helped my fellow man with more ways to become successful. What do you say?

So here goes:

My contractors have a skew sheet, they know my finishes, my project manager handles everything, my acquisitions managers get the leads signed, my website gets the leads and sent these leads directly to my acquisition managers... they get the contract signed, send it to my lawyers, my lawyers handle all the closings, and the contractors take it from there.

Tell me what the difference is between "passive" rentals and having people manage every aspect of my business? Don't you think it is a bit silly to tell me (someone that IS doing it) that it is not possible?

Man I was just trying to inspire you to think bigger. Think outside the box. You don't have to do anything I say, but it shouldn't be that hard to say "ahh I see what you mean".

Not that hard!

Jerryll Noorden · Answer

That is something everyone says but really not true.

ANYTHING can be passive income.

The trick is to automate any business, and hire employees to replace you for every job you do until you hire a CEO, and step out.

If you see it that way, how much does a rental make you/month? $100? $200? $400?

Automating your flipping business would make you $30K to 50K/month!

It is all about automation!

Bob Stevens · Answer

Really not sure if you would call it a " system" Its not rocket science, Find deals, flip the contract to an investor. Rehab it and take care of PM,  RE 101,

But thanks for the kudos :)

Jerryll Noorden · Answer

That is ridiculously impressive. I would love to see your systems in place for all this. Someone should do a podcast on you!

this would help a lot of people!

Bob Stevens · Answer

I have done about 500 in the Cleveland markets. I am not doing 20 a month now and have not done that many in a month in about 3 years. No inventory. I  also wanted to focus on building my PM co. We now have about 550 doors will have about 1k in 12, -16 months.  I have 25 guys. I flip to investors looking for rentals.

I will do a 10 unit this month, 8 unit and 3 or 4 SF,

All the best

Jerryll Noorden · Answer

Dude you flip 20 permonth?

That is INSANE!!!

How do you keep these contractors inline man!! Now I can learn a thing or 2 from YOU!

Briannan Burns · Answer

I don't think wholesaling is dying out, but I think it depends on the deal in question. A lot of those who started out in wholesaling just have more capital to leverage in other investment tactics, where they may not have had in the beginning- so when they find a deal that may be more profitable to fix & flip, or rent out, they're more capable of taking this on, themselves, rather than outsourcing an end buyer.

I also feel like Creative Finance is gaining more traction, so more wholesalers are able to use this leverage to get more deals, rather than letting leads die, because they're not able to meet a seller's price.

If wholesaling WERE to die out to landlord & flipping, I'd say it's purely due to outreach. Wholesaling takes a lot more effort to reach out to leads, phone calls, follow-ups, & the works- whereas with the other, deals sometimes just come to you, or you can find deals on-market. A lot of people, when getting into wholesaling, just don't really realize how much time & effort needs to go into building the business up.. mainly because of how it's been glamorized on social media by all these "gurus" who make it look easy. Unless you have a TEAM behind you, able to make cold calls, do lead follow-up, buyer outreach, & everything else.. wholesaling takes a LOT of commitment, but is totally worth it.

Why are wholesalers leaving wholesaling to landlord and flip?

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