Why do wholesalers exist?

[Matt Rodak]

Hello Everyone,

New here and am trying to understand the motives of a wholesaler. Trust me when I say I understand the value and appeal of the wholesaler but I can't wrap my head around it completely.

Wholesaling seems like a TON of work and a lot of heartache. I've read stories of people going through heaven and hell to get the contract and pocket maybe upwards of $10K (which is a big profit in this space as I understand it) fully knowing that the investor they sold it to is going to make at least that and probably a multiple of (not that their job is any easier).

For all of that work, and assuming it really is the great deal you are marketing to your investor network, I'm wondering why not see the deal all the way through the flip and maximize your upside and the effort you put in?

Reasons I can come up with on my own...what am I missing and why do you wholesale versus full-out flip?

1. Financing - wholesalers don't have the capital themselves or the access to capital. But isn't there adequate capital out there if the deal is good? Won't hard money fund the deal if the margins are right, and you can of course prove it?

2. Risk tolerance - some people may not have the risk tolerance to take on the liability of the full flip and hold? This one makes the most sense to me.

3. Credit - no matter how good the deal is, the wholesalers credit may not be where it needs to be yet. (No judgement, I've climbed out of it from student loans)

4. Capital Bandwidth - you come across a good deal but your personal funds are tied up in other deals and so are your connections to capital. But isn't there always ways to fund the right deal?

5. Time Bandwidth - Also could be a time bandwidth issue...only so many hours in a day and don't want to stretch yourself too thin. So why not hire people?

6. Skill set - flipping is a different skill set than finding the deal and not one you want to or feel capable of venturing into.

This space is really interesting to me. I look forward to your thoughts/feedback that will hopefully help me understand this crucial function in the flipping ecosystem.