How Long Do You Hold Properties? Inventory?
I'm looking at many ostensible wholesalers' web sites, and postings on some investor BBs, and noticing that a lot of people are talking about or showing properties that they bought for wholesaling and are now trying to sell.
I am totally new at this, so maybe I'm naive. However, what I was getting the impression of (from the LeGrand and some other materials I've been reading) is that
1. The exit strategy is to turn these wholesale houses over quickly to a rehabber, generally finding the buyer before my closing, and doing either an assignment of contract or a simultaneous buy/sell closing. And...
2. That this is not hard to do because finding buyers to flip to isn't hard, there are plenty of them out there. So you can generally get the property tied up with the seller, advertise, find your buyer, and get it closed in a fairly short amount of time, and without building an inventory of wholesale houses.
But I am seeing wholesalers with inventories. Is this common, a minority of transactions, or a majority? What's your experience or what you have witnessed with your fellow investors?
Thanks for your thoughts and instruction!
1) Yes this is one exit strategy. There are others.
2) This is hard to do. Thats why you get money for doing it. Everything in Real Estate is hard to do unless you compare it to having an actual job. Nothing is harder than showing up for work every day and letting somebody else keep the fruits of your labor.
By far the best way to build wealth over time with property investment is to buy and hold. This will maximize equity appreciation and delay capital gains tax.
The best way to reduce risk while participating in property investment is to research the areas that meet your investment criteria and objectives purchase property getting the most favorable rates and terms possible - and then hold onto the property forever. Property investment is already a lower risk and holding for the long term further reduces risk.
While some property investor's jump in and out of property
There is a penalty to pay in terms of your investment of time. If you buy and hold you will spend less time managing your portfolio and more time enjoying the benefits of it. Also consider that each time you purchase and sell a house there are fees involved - escrow, title, loan origination fees, agent commissions, etc. - that will chip away at your equity. Holding your property allows the equity to grow without these additional expenses.
How long you decide to hold your property is up to you; there are many compelling reasons to buy with an eye towards holding for the long term. If your heirs practice the same philosophy, the properties you purchase today may give benefits to you and family generations to come.
The best advice I can give you is and a method I have used for years is when the investment no longer provides financial benefits "I sell".
I primary have my accounts direct this method based upon tax and income outcome.
BIgger wholesalers--including the ones who'd have websites and advertise--sometimes buy several a day on the courthouse steps in the hopes of reselling at a profit to you or another investor quickly. Some sell the day they list them, and investors rush to be the first in line. Inevitably they get some dogs that don't resell quickly for one reason or another.
I am still new to this, even though I've been trying to learn for years.
I believe in buying and holding because of the benefits listed above BUT I actually want to wholesale FIRST to generate cash because I want out of my job. Rather than spending the money I have on a couple properties to hold. (I don't want to wait years for the money, I need it now - so i'd liek to do Both)
But back to the topic...
Personally, I would try to have my investors as a buyers list to try and sell these properties as soon as possible.
I have LeGrands course and found it really helpful. But I blame myself for still not taking action. I'm still at my job and haven't attended any investor meetings. lol.
Active wholesellers pick up all types of properties, some with bad floor plans or poor showing on drive-by these don't always move quickly.
Someone, maybe you, will see the hidden possibilities and eventually pick it up. I look for properties that are listed for long periods and get a better deal on them.
:-D
[addsig]