What is a Fix and Flip Wholesaler?
Apr 05, 2018 / Fix and Flip
If you’re thinking about getting into the fix and flip market, it’s important to have a plan and understand how the industry works. Typically, people get into the industry by either taking the bird dog approach or the wholesaler approach. The bird dog approach is more of a slow and steady method. There’s less risk, but it takes a little longer to build up a large portfolio and to truly start making large amounts of money.
The wholesaler approach, on the other hand, can bring you more money more quickly, but it does take more work.
How Does It Differ?
A wholesaler and a bird dog fix and flipper are both similar, but wholesalers are usually businesses. If this is the method you want to take, you’ll need to create a business and start forming a team. Many who go the wholesale route have several partners. This way, the work (and stress) doesn’t all fall on you.
Starting a Wholesaler
Once you’ve created your business entity (each state has its own requirements and paperwork, so be sure to check with the appropriate state agency), you’ll start making contacts. This is different from the bird dog approach, where you simply need to partner with a contractor and assign them the contract. Bird dog flippers can usually start renovating and selling homes quickly, while wholesalers need a little more time.
The first thing to do after you create your company is to write up a professional introduction letter that presents your business as a home renovator and seller. You then send this letter to your list of contacts, including banks, credit unions, estate attorneys, foreclosure attorneys, and others who are likely to have properties they need to sell. Follow up with interested parties by arranging an in-person meeting.
Being a wholesaler does require you to have the funds on hand to purchase these properties, of course. That does mean you’re assuming more risk than you would if you were using the bird dog approach. However, the rewards are much greater—there’s no contractor to take the bulk of the money made on a sale. Instead, it’s all yours.
If you’re sure of yourself, your contacts, and your ability to fix and flip homes, the wholesaler approach can be very profitable. Another option is to start out using the bird dog method and then transition into wholesaling once you’ve built up a reserve of cash and have gained some valuable experience.