Wholesaling, wholetailing, holding, and flipping are the four main methods that real estate investors use to build wealth.
And the savviest real estate investors — including Ryan Dossey — don’t limit themselves to just one of those methods; they use each when it fits the criteria of the deal they’ve dug up.
(Ryan Dossey’s personal motto is, “Keep the best, wholesale the rest.”)
After all, you can’t really control the leads that you generate and the opportunities that fall before you… but you can try to make the most of every opportunity. Utilizing all four methods gives your business more flexibility and allows you to secure different types of deals at a profit.
But when should you hold, wholesale, wholetail, and flip?
Here are our criteria!
(You can tell us YOURS in the comments below)
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Buy & Hold
First up is buy-and-hold. This is when you purchase a property, do some light rehab if necessary, and then find tenants to get the home cash-flowing as quickly as possible.
We love the buy-and-hold method for building long-term wealth and increasing net worth. The Brrrr method, in particular, is great for purchasing lots of real estate with very little upfront money — check out our beginners guide to the Brrrr method over here.
As for buy-and-hold criteria, we recommend focusing on good quality properties that don’t require much rehab. They should also be in a market and neighborhood where there’s adequate demand for rentals (preferably from the type of middle-class people who will make for good tenants).
Wholesaling
If you need some capital, wholesaling is a great method that requires very little upfront cash and merits a nice-sized paycheck in a little bit of time.
Wholesaling is when you get a property under contract and then flip that contract to another cash buyer for a fee — usually between $5,000 and $20,000 — without making any repairs yourself.
We recommend wholesaling a property if you don’t want to pay for the cost of repairs, if you need some quick cash for your business, or if the home is not in an ideal area for renting or selling.
Wholetailing
Wholetailing is a little bit like flipping a home, except the property requires very little rehab in order to be listed on the MLS.
When wholetailing, you purchase the property (not just the contract like when wholesaling), make some minor repairs, and list it on the MLS to sell to traditional buyers.
When you have the opportunity to wholetail a home, that means you’ve found a property that’s in good condition and you’ve got it for a good deal, so you can either wholetail or hold. We recommend wholetailing if you want to make some quick profit but holding if you want to build your long-term portfolio and net worth.
Flip
House flipping is probably the most glorified method of real estate investing. But it’s also one of the riskiest methods.
With wholesaling and wholetailing, you’re offloading the property quickly enough that the risk of a sudden market change is minimal. And with buy-and-holding, market changes don’t matter quite as much because you’re in it for the long-term.
But house-flipping requires a lot of time (sometimes up to a year) to fix up a property. During that time, the market can shift in unexpected (and unprofitable) ways.
That doesn’t mean you should avoid flipping homes, but it probably shouldn’t be your only investment strategy.
In fact, if you’re going to flip, you might also want to keep buy-and-holding in your back pocket if the market takes a turn when you’re ready to sell — that means not dumping all of your money into a single flip.
But enough from us!
What are your criteria for using the above four investment strategies? Let us know in the comments!