Why I Recommend Wholesaling For Beginners

New investors are drawn to wholesaling. Wholesaling is the one area of real estate where most new investors gravitate to. You can start wholesaling without having and cash or credit and it appeals to people who need to make more money and it also appeals to people who don't have money. 

So it appears to be very easy. The concept of wholesaling is very straightforward. You make an offer to buy a property, get an executed contract, and then assign the contract to another investor. That investor is the one who is going to close on the house, fix and flip it or turn it into a rental or Airbnb. 

But wholesaling is not for everyone and it's not the only place to start out as a new real estate investor. For example, when my student Andy came into my real estate training program, he was adamant that he wanted to learn how to wholesale. When I asked him why he wanted to learn how to wholesale his answer was so that he could "quit his job and flip houses for a living".

But he had a good corporate job with a Fortune 500 Company, he had a good salary, and he had health benefits, stock options and a 401k. He also had good credit. And he was young (only 27). I suggested that he consider buying and holding rental properties and learning how to implement the Buy, Repair, Rent, Refinance Method. It took around 6 months for me to persuade him that this is the strategy he should pursue (instead of wholesaling). And it has worked out very well for him. Now, 7 years later he has North of 2 million in equity and is making $80,000 a month in income from Airbnb (he has 10 Airbnb's). 

He was able to quit his corporate job, and he makes his income full time from real estate. But he doesn't make his income from wholesaling. So there are multiple ways to make income from real estate, and they are not all from wholesaling which is a perception that I see a lot of beginners gravitating towards.

Another thing I often see is when I give new students a choice of which area of real estate they want to focus on. I give them a choice and ask them to pick one of these: 

1. Wholesaling
2. Buying rentals
3. Fixing and flipping
4. Buying Airbnb's

Everyone answers that question the same way. They say "I want to learn all of them". And when pressed further they say that they want to learn how to wholesale to make money, and then after they are making money, they want to learn how to fix and flip houses and then ultimately buy rentals. But if your ultimate goal is to own rental properties, why not focus on that goal and buy rentals? 

Wholesaling and learning how to be a deal finder is a great way to start for new real estate investors. But in order to wholesale and get a house under contract, you have to understand the product (houses). You need to now how much you would be willing to pay to buy a specific house. And the way you do that is by knowing what the house is worth fixed up (we call that ARV). You also need to know how much it will cost to repair the house, and the maximum amount you would be willing to pay. We call that "Maximum Offer Price". 

If you knew for a fact that I would buy a house for $100,000, and you offered a seller $90,000, then you would know that you could make $10,000 flipping that house to me. So the key variable is what would an investor like me pay to buy that house? The beauty of wholesaling is that if you can learn how to get houses under contract at a discount, you can flip those houses to other investors without risking any of your own cash or credit. That is very appealing. There is no risk for you. There are other benefits to wholesaling too. For example, as a wholesaler, your lifestyle is very flexible. You don't have to work if you don't want to. Andd you can take a vacation whenever you want to.

As a wholesaler all you have to do is make offers on properties, get them under contract, and then flip those contracts (assign them) to other inves