"Wholetailing" Strategy?
My plan has been to find junkers (severe fixers at extreme discounts) to wholesale. However, I've been mostly coming across houses in fairly nice condition, which are maybe 10k to 25k under the market.
I know this is not enough for wholesaling, but should I try to put these under contract and then sell them EITHER to say retail buyers or various professioinal sorts of people looking for rental properties?
Say like if I buy a house worth $200k for $180,000 (not good enough for a wholesale deal) with the seller paying all of my closing costs, and then I aggressively market it to home seekers or landlords looking for a bargain? Say if I could make $5 or $10k after all costs on the deal?
I think someone called that "wholetailing" if I'm not mistaken, so I'm wondering if I could pick up a lot more properties which I would otherwise pass on, and make some modest profits, with planning on that sort of an exit strategy. Please advise.
If you're contemplating working on deals that are this thin, you might consider looking into using options. That way you could limit the down side to your deals if nothing good happens.
Jeff
Wholesaling implies also no risk and almost no money out of pocket. By purchasing the property and having a thin margin for profit, you are taking on a huge risk. I do not think that you realize the holding costs of a 180k property - insurance, taxes, utilities, etc.
Ron LeGrand has a course on Lease Option that sounds like it would work for you on houses that have this kind of margin. He gets it under option contract with almost no risk to himself and no money out of his pocket. He then finds a lease option tenant/buyer.
Brenda
I noticed from your posting that you are from Las Vegas. During this summer Las Vegas has been going thru price correction, the amount of properties have tripled in the last few months. So the reason that you are seeing properties selling for $180k, that are worth 200k, is because a few month ago the property was easily sold for 200k, right now because of inventory, it will sit at 180k.
Quote:
On 2004-09-13 18:02, reinatalie wrote:
I noticed from your posting that you are from Las Vegas. During this summer Las Vegas has been going thru price correction, the amount of properties have tripled in the last few months. So the reason that you are seeing properties selling for $180k, that are worth 200k, is because a few month ago the property was easily sold for 200k, right now because of inventory, it will sit at 180k.
Which has the intrinsical meaning that they are probably not worth their current priced value either.
So yoy guys are saying that a propery in nice condition selling at 25,000-30,000 below market is a thin margin, even for a landlord who plans to hold the property? I can understand it would be for a rehabber, but I thought for landlords that would be a good deal to consider..pls correct me if I am wrong...
No, what we are saying is that there is no margin. There might have been a margin if it was few months ago.
By the way, I am only reffering to Las Vegas market.[ Edited by reinatalie on Date 09/13/2004 ]
Hi Rambler:
Yes you are correct! The term "Wholetailing" is when I sell a property to a 'retail' buyer somewhere between a 'wholesale' and 'retail' price.
This is a very favorable strategy to employ. The 'retail' buyer gets a house that is priced under market, yet not enough room in it for a real-estate investor to purchase it for investment...
Best Regards,
Jeff Adam
[addsig]
Leaving a little $$ on the table for the buyer as Jeffrey does ensures a quick sale and small holding costs
I think it is okay to buy in an appreciating market. In a down or flat market, I would passed, not enough margin.
Sam
Thanks to everyone for these excellent replies. I do see that some conservative caution is in order here, because of the recent slowdown in my market.