The Strategy: Acquire a property low and sell it high—quickly. Your profit is the spread between your purchase price and your selling price, minus expenses (including taxes!).

How to Fund It:

Your Cash: The simplest way. All profit is yours.

Your IRA: Use a self-directed IRA to make the purchase. The profit goes back into your retirement account, tax-advantaged.

Private Lender: Borrow from an individual using a Promissory Note. You control the deal; they earn a fixed return.

Hard Money: Short-term, asset-based loans from professional lenders. Perfect for speed.

Joint Venture (JV) Partner: A partner provides the cash for a share of the profits.

Pro Tip: Speed is critical. The longer you hold, the more carrying costs eat into your profit.

The Strategy: You don’t buy the property. You secure a property under contract and then assign that contract to an end-buyer for a fee. Your capital is your knowledge and your ability to find a great deal.

The Contracts You Can Use:

Option Contract

Purchase and Sale Agreement (with an assignment clause)

Lease with Option to Purchase

Land Contract (in certain states)

Wrap-AITD (All-Inclusive Trust Deed)

Pro Tip: Wholesaling is a marketing and sales business. Your profit is your flipping fee, and your only risk is your earnest money deposit.

The Strategy: Also known as “fix and flip.” You buy a distressed property, use hard money or private funds to renovate it, and then sell it on the open market to a retail buyer at a premium price.

How to Fund It: This is almost always done with Hard Money, Private Lender Money, or a JV Partner’s Cash due to the short-term, high-risk nature of construction.

Pro Tip: Your profit is made on the purchase, not the sale. Buy right, budget your rehab accurately, and the profit will take care of itself.

The Strategy: The classic long-term investment. You acquire a property, rent it out, and let the tenant’s payments build your equity while the property (hopefully) appreciates.

How to Fund It:

Your Cash / IRA Cash: Use your own funds for maximum cash flow.

Bank Financing: Traditional 20-25% down payment loans.

Private Lender / JV Partner: They provide the down payment or full purchase price in exchange for a share of the monthly cash flow and eventual equity.

Pro Tip: The magic is in the cash flow. Ensure the rent covers all expenses (PITI + maintenance + vacancy reserve) and puts money in your pocket each month.

Why This is a Strategy: If you are flipping or retailing properties, your most likely buyer will use an FHA loan. These loans have maximum limits that vary by county. If your sale price is above the FHA limit, you drastically shrink your pool of potential buyers.

Action Step: Know your market’s FHA loan limit. Price your flips at or below this threshold to ensure maximum demand and a faster sale.

Resource: See the Official 2024 FHA Loan Limits Here

The Strategy: Acquire properties “subject to” the existing mortgage. You take over the payments, but the loan remains in the seller’s name. This is a powerful tool for deals where the seller has little to no equity but the property has strong cash flow.

The Key: The PITI (Principal, Interest, Taxes, Insurance) payment MUST be less than the market rent. Positive cash flow is non-negotiable. This strategy solves problems for motivated sellers with unwanted properties.

The Strategy: Defer paying capital gains taxes by using the proceeds from the sale of an investment property to purchase a “like-kind” property. This allows your wealth to compound exponentially without being eroded by taxes each time you sell.

Think of it like a 401(k) for real estate: You don’t pay tax on the growth until you finally cash out, allowing a much larger pool of capital to work for you over your lifetime.

The Strategy: A powerful IRS rule that allows you to exclude $250,000 (or $500,000 if married filing jointly) of capital gains from the sale of your primary residence. To qualify, you must have owned and lived in the home for at least 2 of the last 5 years.

Resource: Cornell Law School: 26 U.S. Code § 121 | IRS Topic No. 701

The Strategy: With meticulous planning, you can combine the tax-free exclusion of a 121 with the tax-deferral power of a 1031. This is advanced tax strategy at its finest.

Common Scenarios:

Convert a Rental to Your Primary Residence: Live in it for 2+ years, then sell and claim the 121 exclusion.

The Reverse: Convert your primary residence into a rental property, then later sell it and use a 1031 exchange to defer the gains above the 121 exclusion amount.

Warning: This requires expert advice from a CPA or tax attorney specializing in real estate.

The Strategy: Don’t overlook your retirement accounts! A Roth 401(k) allows you to contribute after-tax dollars, with all future growth and withdrawals being 100% tax-free. This is a phenomenal hedge against future tax increases.

Why it’s powerful: Unlike a Roth IRA, a Roth 401(k) has no income limits and allows for much higher annual contributions ($23,000 + $7,500 catch-up for 2024). You can use these funds in a self-directed account to invest in real estate, and all profits flow back into your account tax-free.

The Strategy: Target vacant and abandoned properties. These are major headaches for owners (costs, liability, vandalism) and eyesores for neighbors. Your offer to solve their problem is incredibly valuable.

The Angle: You’re not just buying a house; you’re providing a solution. This positions you as a savior, giving you leverage to negotiate favorable terms, often with creative financing like Subject-To or Owner Financing.

The Strategy: You buy a property using an installment contract. You make a down payment to the seller and make regular payments directly to them. Title transfers upon final payment or refinance.

The Benefit: This allows you to control and cash-flow a property without needing bank approval. It’s perfect for buyers who can’t get traditional financing and sellers who want monthly income and are willing to act as the bank.

The Strategy: An All-Inclusive Trust Deed (AITD) or “wrap” mortgage is a form of seller financing. The seller creates a new loan for you that “wraps” around their existing mortgage. You make payments to the seller, and they continue making their original payment.

Key Insight: This works well in deed of trust states (e.g., CA, TX, WA, CO, etc.). It allows a seller to offer financing even if their existing loan is not assumable. The seller earns a spread on the interest rate.

The Strategy: Understand the vast landscape of alternative financing to structure deals that banks won’t touch.

Seller Financing: The holy grail. The seller carries the loan.

Installment Sale: The seller allows you to pay them over time, deferring their capital gains tax. Learn More About Installment Sales

Lease Options: You control a property with a lease and an option to buy it later at a predetermined price.

The Strategy: Small apartment buildings (2-4 units) are often owned by individuals who are terrified of a large tax bill from a outright sale.

Your Offer: Propose an installment sale. You make a down payment and make payments to the seller over 5, 10, or 20 years. This spreads their tax liability over time and provides them with steady retirement income. You get control of a cash-flowing asset with little money down.

Resource: Installment Sales: A Win-Win