What Is Wholetail Investing In Real Estate?
Wholetail is an investment strategy that is a mix between Wholesale and Retail. An investor purchases a property at a discounted price, as if they were wholesaling the property; but rather than wholesaling it, they complete minimal upgrades themselves and attempt to sell it on the MLS to an owner-occupied buyer (like a retail transaction).
As a real estate investor, these deals can be quite profitable because you’re looking for a property that requires very little work upfront, so you can turn properties over with less rehab costs and potentially faster.
Timing wise, a wholetail deal can take anywhere from 30 days to 90+ days, with the largest amount of time going towards marketing the house after listing it on the MLS and closing time for the end buyer.
Many people consider wholetailing to be a safer, in-between strategy than either wholesale or a complete fix-and-flip. It gives you the potential to make a larger profit than you might with wholesale, but also doesn’t carry the same inherent risk that a full fix-and-flip would. However, wholetail opportunities are rare and cannot be counted on as a consistent source of profit in your overall business plan.
Here’s a quick breakdown of its pros and cons:
Wholetail Pros:
- Faster and Less Work: Compared to flipping, wholetailing gets you in and out quicker. You don’t deal with renovations or repairs, minimizing time and effort.
- Potentially Higher Profits: By eliminating the middleman (another investor), you can potentially capture a larger profit margin on the deal.
- Lower Capital Barrier: Unlike traditional flipping, you might not need to use your own funds to buy the property. As a wholesaler, you have a contract with the seller and find an end buyer before closing.
Wholetail Cons:
- Finding the Right Deal: Unearthing motivated sellers with properties in near-market condition can be challenging. It requires patience and a strategic lead generation approach.
- Upfront Investment: While you might not buy the property, there can be upfront costs for marketing, title searches, and earnest money.
- Reliance on Others: You’ll need a network of real estate agents to list the property on the MLS and attract potential buyers. This adds another layer of complexity and potential fees.
