I have been heavily involved in the fix and flip industry for many years. I have Baruch HaShem succeeded in bringing in lots of yidden into the industry over the past few years. Many of them have made lots of money. I am a big believer in sharing what you know so others can also make a Living. Hashem has enough to give all.
I find it rather disturbing that there was recently a conference under the banner “NJ is one of the most profitable markets for residential real estate.” So you ask why? Well, the answer is simple, for the past 12 months, this industry has been practically dead. I speak to people every day that have lost their pants in the past 12 month. I invite anyone to speak to any demo companies, kitchen companies, flooring companies etc. As companies that service the fix and flip industry, they will all tell you that business took a 80% hit.
Who was this event geared for? Newbies. But hard money lenders and wholesalers will profit.
What is a wholesaler?
This story explains it.
There was a guy that bought a can of sardines for $1. He called his friend Yaakov and says “hey!” sardines sell for $3.50 in the grocery store, I have a good deal for you. I’ll sell it to you for $2 dollars. Yaakov buys it, and calls Moshe and says I have a great deal for you. Sardines sell for $3.50 in the grocery store, I’ll sell it to you for $3 dollars. Moshe buys it and calls Yehuda and says I have a great deal for you. It’s a can of sardines. If you package it correctly, there is “tremendous upside” – I can sell it for $4. Moshe buys it and sees right away that he payed too much, so he finds a newbie, Boruch, and explains to Boruch that if you have a long-term goal, then there is money to be made at the end.
Boruch buys it for $5.
One day, boruch thinks to himself, $5 is high for sardines, it must be a really good can of sardines. Boruch decides to open it up and taste it. When boruch opens it, he finds a can of worms. All upset, he calls Moshe and asks him what did you sell me? Moshe responds, you’re silly, sardines are meant to flip, not to eat!
Luring in people to fix and flip in this market is like convincing people to become mortgage brokers in 2008.
Fixing and Flipping is a complex industry which requires careful homework.
Remember: If it’s such a great deal, the wholesaler would have kept it himself.