Real Estate Wholesaling Makes A 6 Figure Income

Real estate wholesaling properties is not easy.

When my clients Don Lewis & Rick Lewis told me that they were giving up focusing on being general contractors for others to develop their real estate wholesaling business, I wasn’t sure if it was a good move. 

A real estate wholesaler focuses on finding off market deals. These are that aren’t listed publicly on MLS or by realtors. 

Real estate wholesalers compete against real estate agents. They offer  a different option to homeowners to sell their properties, without the hassle of having many buyers walking through.

These real estate wholesalers secure a contract with the seller. Sometimes, they purchase these properties themselves.  And sometimes, they make the deal and sell it to other people who may be interested in these properties for a higher price without owning the property altogether.

In other words, real estate wholesalers make money on the spread between selling and buying.  

Is real estate wholesaling taxable?

The money a real estate wholesaler makes is a taxable supply in the eyes of the Excise Tax Act. Therefore, it is subject to HST in Ontario.  

The wholesaling fees that real estate wholesalers earn is considered 100% taxable business income. 

If they keep these properties, renovating them and selling them shortly after as a quick flip, the profit that they make is also 100% taxable. (I shared a few tax tips for house-flippers here, last week).

These are some challenging real estate investment strategies.And it is best to know all what you may face in terms of income taxes before you dive into the game.

Therefore, it is advised to speak to your accountant beforehand as each individual’s situation is unique.  

I was lucky enough to be part of Don & Rick’s journey.  I’ll let Don directly share how they used these two difficult investment strategies into steady 6 figure income in 2 years. 

This sums up today’s blog post about real estate wholesaling.

Until next time, happy Canadian Real Estate Investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant

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