Property is not just about buying and selling. There are several strategies at play here, and the choice of what to do with a property depends on multiple factors. However, two popular methods in the industry are deal packaging and flipping. They may seem similar, but they have significant differences in terms of risk, capital, timelines, and results. In this blog, I will dissect both strategies, explore their pros and cons, and help you determine which one suits your investment goals.
Understanding Deal Packaging
Deal packaging is a term used to describe the process of finding and securing below-market value properties, then selling the rights to purchase them to a buyer for a fee. In other words, it is acting as a middle man between the seller and the buyer. The ultimate goal is to offer potential buyers a great deal that they could not have found themselves.
Pros of deal packaging include:
- It requires little to no money to start.
- You can make a profit without owning the property.
- You can potentially make money in 30 days or less.
Cons of deal packaging include:
- It is not a scalable model, and you need to spend time looking for new deals.
- You are not in control of the deal, and there is a risk of losing your fee if the buyer pulls out.
Understanding Flipping
Deal packaging is a term used to describe the process of finding and securing below-market value properties, then selling the rights to purchase them to a buyer for a fee. In other words, it is acting as a middle man between the seller and the buyer. The ultimate goal is to offer potential buyers a great deal that they could not have found themselves.
Pros of deal packaging include:
- It requires little to no money to start.
- You can make a profit without owning the property.
- You can potentially make money in 30 days or less.
Cons of deal packaging include:
- It is not a scalable model, and you need to spend time looking for new deals.
- You are not in control of the deal, and there is a risk of losing your fee if the buyer pulls out.
Assessing Your Investment Goals
When deciding between deal packaging and flipping, it comes down to what you want to achieve in real estate. Consider the following questions:
- How much time and money do you have to invest in a property?
- What kind of risk are you comfortable with?
- Do you prefer short-term or long-term gains?
- What are your long-term financial goals?
If you have little capital, want to start small, and prefer quick returns, deal packaging may be the right choice. If you have a higher risk tolerance, more capital, and a long-term vision, you may want to try flipping.
Finding a Mentor
Regardless of the strategy, property is a complex and competitive industry. It helps to have someone who has been through it all and can guide you through the process. Find a mentor or a partner who has experience in deal packaging or flipping and learn from their successes and failures. It can save you time, money, and headaches.
Both deal packaging and flipping have their strengths and weaknesses. There is no one-size-fits-all solution in property, and the choice depends on several factors. It is important to consider your financial goals, risk tolerance, and available resources before deciding which strategy to pursue. Remember to do your research, find a mentor, and stay focused on your vision. With perseverance and the right strategy, you can succeed in the property market.
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