Whole-Tailing vs. Wholesaling: Which One Should You Do?

Signing a contract for a wholesale deal
Photo by Romain Dancre

To get the most profits from the real estate business, you need to decide what kind of transaction and type of property best fits your resources and goals. After all, the most successful real estate investors don’t limit themselves to just one strategy. 

Now, wholesaling is a great way to get your feet wet in the real estate market. But, after dipping your toes in with wholesaling, you might also be curious to try other adjacent methods to the investment strategy—whole-tailing being one of them.

While wholesaling involves buying a contract from a house owner and finding an interested third party to purchase the home, whole-tailing is a hybrid of wholesaling and house-flipping. In a nutshell, a whole-tailer will purchase a distressed property, make quick and easy renovations to improve the value, then put it up on the market themselves. 

While a house flipper makes the finishing touches to an entire property, a whole-tailer only addresses the issues that are the most obvious, have a high impact on the price, and are easy to address. Then, they try to sell the property to a buyer willing to fix up the rest of the house themselves. 

Whole-tailing isn’t all that different from wholesaling. 

So, which type of real estate investment strategy should you focus on? 

Here, we’ll discuss the advantages and disadvantages of the two strategies for you to decide which type of method is more appropriate for your means. 

What is Wholesaling, exactly? 

Let’s start by refreshing our minds with how real estate wholesaling works. Wholesaling is a short-term real estate transaction where the investor looks to make a profit with very little capital investment. Here’s how that typically goes: 

  1. The first step of a wholesale deal is to find a good deal on a property with a motivated seller. You’ll then execute a purchase and sell agreement with the seller, who is usually the homeowner.
  2. During the execution of the contract, both parties will agree on an earnest money clause. This clause allows you to deposit a sum that serves as your collateral for finding a buyer. If you can’t find a buyer within the allotted time, you will lose your earnest money. 
  3. The next step is for you to find a willing buyer for the property. Once you’ve found a willing buyer, the both of you will enter an assignment where the buyer will take over your role in the purchase and sell contract. 
  4. Lastly, the buyer will pay the agreed-upon value for the property and your assignment fee—also known as your wholesale fee or wholesale profit.

Here’s an example to illustrate what a wholesale deal looks like. 

You find a homeowner willing to sell his property for $55 thousand, so you enter into a purchase and sell agreement with him. You then find a buyer willing to purchase the house for slightly higher at $65 thousand. Once you find a willing buyer, you’ll enter a signed agreement with them and they’ll assume your position on the purchase. 

Finally, you’ll close the deal with the buyer and homeowner, where the buyer will pay $55 thousand to the seller and $10 thousand to you for your assignment fee.

Advantages of Wholesaling 

Now that we know what the process of wholesaling entails, let’s discuss some of the advantages that wholesaling provides. This will help you see the most important benefits that you’ll get with this method: 

  • It’s the most pain-free way to get into real estate investment. You can learn the basics of the real estate market without much risk. 
  • You’ll earn profits in a short amount of time. The wholesale process is relatively quick in comparison to other real estate transactions such as house-flipping or whole-tailing, taking between a week to a month before you can pocket your profits.
  • You’ll have high rewards with low risks. You don’t need a large amount of capital. In fact, you sometimes don’t spend anything when conducting a wholesale transaction. That said, most experts agree that you can see profits of around 5-10% of a property’s value.   

Disadvantages of Wholesaling

Wholesaling comes with a lot of advantages, but that doesn’t mean it’s a guaranteed prospect. Let’s take a look at some of the disadvantages inherent to wholesaling.

  • Wholesaling tends to have a negative stigma. Because wholesaling is the gateway to becoming a part of the real estate business, it often attracts inexperienced people looking for quick and easy profits. Inexperienced wholesalers can commit mistakes such as overestimating a property’s ARV or underestimating the estimated repair costs (ERC).  
  • Wholesalers face trouble if they can’t find a buyer. If you can’t find a buyer within the allotted time you and the seller agreed on, you will lose your earnest money deposit. 

What is Whole-tailing, Then?

As mentioned before, whole-tailing is an in-between of wholesaling and house flipping. 

In a whole-tail deal, you’ll still buy a distressed property from a motivated seller. Unlike wholesaling though, you won’t be finding another buyer to purchase the property. Instead, like a flip, you will be renovating the property then will try to sell it yourself. Unlike flipping a house though, whole-tailing involves making minimal repairs to get the house sold as soon as possible. 

Those minimal repairs are done to address the most visible and unattractive problems that negatively impact the value. Once you’ve made the repairs to make the property mortgage eligible, you can start searching for the perfect buyer. 

Your dream buyers are usually homeowners willing to fix it up themselves. However, you can also sell it to a new house flipper as well for them to finish the project. 

Now, right off the bat, it’s clear whole-tailing requires more time and effort to generate good profits. You need to do a thorough examination of the property to determine which issues need to be addressed. Remember: You aren’t fixing everything, just the most important things. 

This is not a skill that many people have—which is why wholesaling is more common.

All that aside, if you have the expertise, whole-tailing a property can be a more profitable option than wholesaling. Instead of just earning an assignment fee, you’ll be earning the entire amount of the property. If you’re confident that you can:

  1. Afford to buy the distressed property
  2. Perform quick repairs on the house
  3. Put it up for sale and entice potential buyers

Then, whole-tailing can potentially be a lucrative venture for you.

Depending on the state of the property and the amount of money you’re willing to invest in a property, whole-tailing might be a more profitable option. 

Advantages of Whole-Tailing

Whole-tailing is considered a riskier investment than wholesaling. You’re risking more than earnest money when dealing with a whole-tail. But, that doesn’t mean that whole-tailing is a worse option than wholesaling. In fact, it comes with some benefits like:

  • Wider buyer pool than wholesaling. When conducting a whole-tail, both regular buyers and investors are both be interested in your property. This is in contrast to wholesales, where investors are your primary market. 
  • Higher potential profits over wholesale. When whole-tailing, you have higher profit margins than a wholesaler. In a wholesale, you’re looking at around 5-10% of a property’s value in profit. If you can whole-tail a property, you can see far more than that. For example, a property is up for sale for $50,000. If you wholesale the property, you’re looking at a profit of around $2500-$5000. But in a whole-tail you can potentially make more than that. Here’s a simple breakdown:
    • Property bought at $50,000
    • Repair costs of wiring and plumbing: $8000
    • ARV: $80,000
    • Estimated holding costs: $1000
    • Estimated resale fee: $4800
    • Total costs: $63,800
    • Gross profit for a whole-tail: $16,200       

Disadvantages of Whole-Tailing

Now, let’s take a look at some of the disadvantages of whole-tailing. You might earn more from whole-tailing than wholesaling, but it isn’t all sunshine and rainbows:

  • Riskier than wholesaling. In a whole-tail transaction, if you’re unsuccessful in selling the property, you’re looking to lose all the money you invested in the project. 
  • Whole-tailing requires more capital than wholesale. You also need to consider the purchase price and the repair costs when conducting a whole-tail investment, compared to a wholesale deal where you can make profits without any capital. 
  • Holding costs. You will have to deal with property holding costs if you plan to make it a whole-tail investment. When whole-tailing a property you’ll need to deal with the expenses that come with having a property. This means dealing with any utility fees or homeowner association fees. 

Wholesale or Whole-tail? Both Sound the Same But Are Very Different

If you are new to the real estate business, wholesaling can be a good introduction. It is a low-risk, high-reward deal that can get your toes wet in the real estate market. You can learn the ins and outs of the business in a relatively low-risk situation. 

But if you have the adequate know-how to conduct a whole-tail transaction, it might be the better option for you. You can earn greater profits in a whole-tail deal, making it a more attractive choice if you have the knowledge and the means.

At the end of the day, the best option depends on how well-versed you are in real estate—and how much money you’re willing to invest to earn a profit. Be clear on that before you get started, and you’ll have the highest chance of succeeding in your real estate investment venture.

If you have any questions or suggestions, feel free to leave them in the comments section below! 

DIY Landlords

Investing in Real Estate from a Property Manager’s Perspective

Executive Summary

Many real estate investors self-manage their properties and I did too learning from my experience as I went. However, professional property managers have a lot of experience to help both new and seasoned real estate investors make the best investment and property management decisions. I asked my property manager, Jill Powell, of 1st Choice Real Estate, PLLC to share some of her insights into what investors should be considering.

Property Management Considerations Before Purchasing

Interestingly, all of the suggestions from my property manager come before purchasing the property. Thus, education and preparation are key to success in real estate investing. However, from my own experience, there are things that you just cannot anticipate and only experience teaches you.

15 Things to Consider Before Making that Next Purchase (in no particular order)

  1. New property investors should not buy older homes that have been turned into multi-units with all utilities included. These properties are often efficiencies or one bedroom units with transient tenants. You will have sky high turnover and sky high utility bills. Plus, you can’t hold anyone responsible for leaving the junk sofa on the curb that you now have to pay to have disposed.
  1. If you buy in a college town, have the parents co-sign.
  1. Always run prospective tenants’ credit and have a good way to score the rest of the application findings. Make sure the application is complete and all steps followed—no cutting corners or exceptions.
  1. If you don’t have a lot of spare time or don’t enjoy tenant calls at 3 a.m., when their heat goes out in Michigan in the winter, think about hiring a property manager. After self managing at first, I now buy my properties with the intent of having a professional property manager help me run my rental business.
  1. Use a cashflow or deal analysis spreadsheet prior to writing your offer. My property manager has seen many out of area investors pay for inspections only to walk on the deal once they find out what the local taxes will be after buying, local cost of the rental licensing and the true cost of rehabbing the property. It pays to have a professional on your side. I always have my property manager weigh in and be involved prior to making any offers. They are a valuable part of my team.
  1. Use a local Realtor who specializes in rental properties. They can tell you not only what is happening with property values and market rents in the area but also things like is there a moratorium prohibiting rentals in that subdivision, a limit on the number of unrelated persons in a property or a limit on the number of pets a tenant/owner can have in a property in that area. 
  1. Get the details from your lender before making the offer so you have the exact downpayment number as this will affect your rate of return.
  1. Start slow and learn from each property.
  1. Investing in real estate is not a way to earn “passive income.” It is a very time consuming business unless you use a property manager.
  1. Be cautious purchasing rental properties with tenants in place. Ask for a tenant ledger. Ask for current photos or, better yet, inspect all units personally. Look up rental/tenant violations for the property historically. Drive by the property at multiple times of the day to see how the tenants maintain the property.
  1. Research rental rates for the area. Just because the listing says they can get a certain rent doesn’t mean they actually are—verify it against market rents.
  1. Know the local laws regarding “discrimination based on income source” for things like section 8 vouchers.
  1. Decide if student housing is right for you. You will have high turnover, higher costs to get the property ready to re-rent and potential issues locally if the tenants like to party.
  1. Have a good CPA. They can help save you a lot of money and understand the tax implications of the investment.
  1.  Make sure you understand the local rental laws where you purchase property.


A professional property manager is a valuable part of any real estate investor’s team. Even if you self-manage your properties, you can learn from their experience to make the best investment and property management decisions before you buy your next property.

About the Author


Top 5 Real Estate Flippers to Learn From (Part 3)

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To quote the founding father of the United States of America, Benjamin Franklin, “An investment in knowledge pays the best interest.” 

When people learn more about the things they venture into, they can do it better. However, it’s also important to consider who you learn from. The better the source, the better your improvement. You want to learn from teachers with plenty of experience and successes in their careers. 

But who are the “good teachers” of house flipping?

In this article, we’ll be talking about some successful flippers, their stories, and their valuable insights. With the right mix of information and inspiration, you too can follow in their footsteps. Read through the list below and find out who you should be following to step up your flipping game.

Mike Cantu

Based in Southern California, Mike Cantu runs a buy and sell operations, deals in wholesaling, and manages his own portfolio of rentals. As a successful figure in the industry, he aims to teach others through books he’s written: Don’t Get Voted Off Real Estate Island and Rental Management and Properties. Apart from books, Mike Cantu teaches through talks in Southern California’s investment clubs.

Being an established figure in the industry, Mike Cantu has reached a point in his career where he wants to help others find success. Although he’s made it now, he took over 30 years to reach where he’s at today. He has two bits of advice for people trying to find success in the business: First, always be eager and dedicated to learning. And second, believe that it’s possible.

According to Mike Cantu, by constantly showing up to learn and believing in yourself, you can find success in real estate. If you’re interested to learn more about Mike Cantu or his courses, find out more here: 

Nick Manfredi

A household name in the real estate community of Southern California, Nick Manfredi is the CEO of the Manfredi Group. He’s also an expert when it comes to buying and flipping, as well as a speaker teaching others about real estate. 

Due to his accomplishments as an entrepreneur, he has even earned features in Fortune Magazine and Los Angeles Times. He’s well-established now, but he overcame many hurdles and challenges over the years to get there—all of which made him the experienced expert that he is today. 

His advice for those starting in the business is to do business with experienced people. By doing so, you can learn the ropes as you work alongside the professionals. That said, this is your chance to “work alongside” and learn from one of the bests—check out Nick Manfredi’s pages online:

Danny Johnson

Apart from being a top house flipper, Danny Johnson is also a best-selling author. In fact, his book Flipping Houses Exposed was the number 1 best-seller on Amazon. And for those of you interested in reading it, it’s free! He also has a blog,, where he shares his stories and teaches people about the flipping business. 

He started flipping houses in Texas and has now been doing it for over a decade. If there’s anything he wishes he could change early on in his career, it would be that he chose to flip houses he liked rather than flip the ones that investors would buy. His advice is to always consider the investor—not your personal preference. 

To learn more and learn from Danny Johnson, you can click on the following links:

Glenn and Amber Schworm

Husband and wife, Glen and Amber Schworm, started their flipping business in 2008. Fast forward to 2021, and they have bought, flipped, and sold over five hundred houses. On average, they flip about 38 properties a year! To teach and help others find success, they also host a podcast. On it, they talk about all the flipping business alongside other real estate investment tips.

Their top tip for those who want to make it big in the industry is resilience.  As they tell all their followers, “Your mindset needs to be all about getting things done no matter what obstacle is thrown in front of you.”

If you want to keep up with Glen and Amber Schworm, you can head over here:

Doug and Andrea Van Soest

The last entry on this list is another unit, husband and wife Doug and Andrea Van Soest. Their story starts when they first read the book, Rich Dad, Poor Dad by Robert Kiyosaki. After being inspired, they started pursuing their passions. In 2008, they started flipping houses in Southern California, and eventually they went on to invest in rental properties as well.

Today, they have bought and flipped over 140 properties and have over 40 rental units. When they were getting started, they only had one thing in mind: Keep going. They believed that to become successful, you have to actively chase it and make it your reality.

For more about them and their podcast features, you can refer to the links below:

Learn From The Best, Reach Your Best

Before any of these people were successful, they all had to work their way up. But it’s not work alone that got them there—it’s the right mindset, perseverance, and resilience. Once you’ve mastered those key things, it’ll get easier. 

By learning about some accomplished flippers and their insights, you’re already on the right path to finding your own success. You never know, one day we might be sharing your stories to inspire others as well.

Do you have another inspiring flipper in mind that you want to share? Let us know in the comments below!


House Flipper Tips: Steps to Avoid Over-Improving Properties & Keep Profits High

Photo by Vecislavas Popa from Pexels

As someone who flips houses, one of your objectives is to appeal to buyers so you can close a deal. To make this happen, you make improvements on the property. But, more often than not, novice flippers overdo the renovations and subsequently end up with lower profits. 

They invest a lot of time and money only to have it backfire on them when they realize that they can’t sell it at a price that offsets their investment. In other words, they quickly notice that they’ve spent way too much. on something that the market isn’t remotely interested in.

In these cases, more isn’t always better.

Nevertheless, there is a solution to this problem. Read on to find out how you can improve your properties without falling into the common trap of over-investing in a fix-and-flip project.

5 Steps for Planning a Satisfactory Flip Project

Have you ever heard of the Goldilocks principle? The principle is based on the children’s fairy tale, The Three Bears, where Goldilocks is always looking for something that’s  “just right.” 

The moral of the story is to hit that sweet spot that’s not too much or too little. You can apply the same principle in a flipping project. Make just the right amount of improvements on a property so it appeals to more buyers, without spending too many unnecessary hours on it—or far more money than you should.

Here are 5 steps you can take to do this and increase your chances of success:

1. Assess the Property

Once you have a property in mind, you have to assess if it’s worth an investment. Here is a quick list you can use to get started:

  • Determine the After Repaired Value (ARV) based on the neighborhood
  • Determine the features of properties that sell quickly in that neighborhood
  • The property should have these main features that local buyers want
  • The number of repairs should be manageable, within your skill set or knowledge
  • Your quick evaluation budget should have at least a 10% margin of error
  • The ARV less repairs, less purchase price, should meet your profit criteria

If your prospective property meets the above criteria, the property you want is probably a good option for a fix-and-flip project. And it goes without saying that a comprehensive assessment of a property will help you determine the necessary improvements you’ll have to make.

2.. Study Properties in the Area

Do you have your eyes on a property already? Perhaps you’ve already purchased a property and are wondering how to make the most out of it? 

Well, the next step is to conduct in-depth research to evaluate similar properties in the local area. We are referring to the properties that have similar features and price points to your home, so you’ll have a baseline to decide on what to improve in your flip project. 

Scouting local properties is an opportunity to learn what buyers value. For example, here are some questions to answer as you assess properties competing for buyers:

  • Which rooms do they prioritize—kitchens, bathrooms, or living spaces?
  • What characteristics will make your property stand out from the others?
  • What features will make your property more valuable?
  • Are there building codes you need to follow?

By evaluating what’s already selling fast in the market, you won’t waste time and money on unnecessary improvements and your property will get the interest of a large pool of buyers.

3. Consult with a Professional

If you’re investing in an area that’s new to you, we suggest that you seek the help of real estate agents that have sold the most properties in that area. As local experts, they’ll be far more knowledgeable about what sells, at what price, and what to avoid. 

In other words, they are your right-hand-men for insights on planning your flip project better. They’ll know what buyers are looking for and the exact things to improve to sell quickly—enabling you to make the right improvements that will make your property a hot item on the market. 

Understand though, that you shouldn’t expect them to work for free – unless you want to ruin your reputation. So, you should either pay them for their time or agree to let them list the property for sale once ready.

4. Plan Your Budget

Based upon your research and feedback from area experts, you should have a renovation scope of work and now you’ll need to get bids for the corresponding pricing. 

Be prepared for some unpleasant surprises! It happens. When it does, you may need to figure out where you can cut back in other areas.

Once you’ve finalized your budget, you’ll also need to stick to it. This is probably the biggest challenge! You can easily get caught up in “budget creep”, where you spend a few extra dollars here and a few more there, and don’t track these extras until completion. Then you get a nasty surprise that those dollars add up to thousands and ruin your projected profit.

Have a budget in mind of how much you can invest in your flipping project, including the acquisition cost and estimated repair costs (ERC). Only when you have these, can you find properties that fit within your budget and will give you the expected returns.

For example, you can use the industry-standard 70% rule in your budget planning. The 70% rule states that you shouldn’t spend no more than 70% of the after repair value (ARV) minus the costs of repairs on a property. 

Let’s say your total budget is $100,000. You should then be on the lookout for properties that come out at around $100,000 after applying the 70% rule, which means the purchase cost shouldn’t go above $75,000 and the renovations shouldn’t cost more than $25,000.

Using the 70% rule helps you estimate the price range and renovation costs you can afford. That way, you only work within your budget for guaranteed flipping returns.

5. Do Only What’s Necessary

When you’re renovating a property to get it “just right,” you need to focus on the essentials. Keep in mind that you don’t have to go out of your way and make drastic improvements. As long as you cover what’s necessary, the property will be good to go. 

These are what you to focus on when flipping a house:

  • Ensure that electrical wiring and plumbing systems are functional
  • Confirm that foundational factors such as walls, floors, and ceilings are in good condition
  • Make the house look presentable by conducting a deep cleaning and adding a fresh coat of paint

Also, take note to invest in good quality items that are reasonably priced. Splurging and overdoing these things is extra work you don’t need to do, but you do still have to show potential buyers that the house has durable, functional items inside of it.

Moreover, doing too many improvements can elevate the price of the property beyond the buyers’ budget. For example, having a glorious fountain with a group of goldfish in the backyard will only jack up the cost without adding any value for the buyer.

So, just like Goldilocks, you need to make sure the property is just right.


Going above and beyond won’t pay off in the flipping industry. Instead, focus on making the right level of improvements to increase your chances of a successful project that will give you the highest profits. As a  real estate investor, financial viability will always be top priority. 


We recommend developing the knowledge to have a rough idea of renovation costs before offering on a property. You should find some example properties and develop a budget to renovate 2-3 sizes/styles of kitchens and baths. You should know about how much it costs to replace a window, exterior and interior doors, the cost of painting per floor plan square foot, what roofing costs per “square”. If you don’t know what something will cost, you should either have a contractor you can quickly contact for pricing or pass on houses that need that type of work until you can develop estimated pricing for that issue.

Did we miss anything? Let us know in the comments below! 

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