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The term “flipping” is thrown around a lot by the media, real estate gurus and Realtors. Heck, our site is called flippingphoenixhouses.com.

But there’s a big difference between flipping a house and fixing and flipping a house. There’s the person who flips a house for a profit without putting any real time or capital (their own or someone else’s) into the property and there’s the person that invests extensive money in actually remodeling the home and then earns a profit by selling it to a retail homebuyer.

Neither approach is wrong. Each has its advantages and disadvantages. I’ve personally done both and what I’ve learned is that each requires an entirely different set of skills.

The Wholesale Mentality

I prefer to think of the person who flips a house for a profit without putting any time or capital into the property as a wholesaler, not a flipper. Technically this person is still “flipping” the property. However, the sale is usually to an investor for a discounted or wholesale price. Thus, I find the term wholesaler to be more accurate.

The successful wholesalers I know are very good salespeople. They use direct mail, online resources and other guerilla marketing techniques to find distressed real estate deals. Once they find a lead the selling begins. They must be good negotiators and cultivate a relationship with the home seller. This requires being a good listener. Patience is paramount and follow up essential.

Distressed homebuyers are usually contacted by at least 3-5 wholesalers. In Phoenix it could be 30-50. A homeowner in foreclosure gets a mailbox full of letters and a handful of people knocking on their door. With this much competition it takes a wholesaler with exceptional closing skills to make a profitable deal.

Once a wholesaler locks up a distressed deal they must find an investor buyer. This takes additional marketing and sales skills. After all, it’s not like there’s a directory of names, phone numbers and email addresses for cash investor buyers. Lists like this must be built.

And because most wholesalers flip the house with little, if any, of their own money they must carefully orchestrate the closing to an investor buyer using an assignment of contract or double escrow.

The Fix and Flip Mentality

Fix and flippers, on the other hand, are a geared more towards being project managers. They have the capital, time and vision required to remodel a home. Fix and flip investors usually don’t care where the deals come from, as long as the numbers work. For example, I’ve purchased properties at auctions, through estate attorneys and directly from wholesalers.

While the wholesaler has excellent sales skills, the fix and flipper excels at management. Because schedules and deadlines are important they usually maintain detailed calendars to keep their projects on track. The most successful fix and flippers I know are also very in tune with what the retail homebuyer wants, from the exterior paint color to the color of the kitchen cabinets and granite countertops.

Most importantly, the fix and flipper has the patience and money required to remodel a house. They must have alternative forms of income since larger projects can take up to a year to complete and sell.

Can You Be a Wholesaler and Fix and Flip Investor?

Of course! But the resources you have often dictate which strategy you choose.

I started out as a wholesaler using direct mail and door knocking as my primary means for acquiring distressed deals because I lacked the capital and vision to fix and flip houses.

However, it didn’t take long for me to discover that I’m not much of a salesman. I didn’t like going through the process of dealing directly with the distressed seller. I couldn’t deal with their indecisiveness. Fortunately by the time I realized this I had enough cash and experience to fix and flip. I’d also built up a network of wholesalers and learned how to purchase homes at Maricopa County trustee’s sales (foreclosure auctions).

It won’t take long for you to discover your strengths and weaknesses. I know wholesalers that have been in the business for many years and love the game. As for me, I’d much rather focus on the property.

Both wholesaling and fixing and flipping are excellent ways to generate income. However, knowing which business model best suits your skill set could be the difference between average and extraordinary results.