When wholesaling residential homes, you’ll either be wholesaling the property to a landlord who will rent the property out, or to an investor who plans to fix the property up and flip the house at a retail price. This means you’ll be dealing with mainly two categories of properties.
When wholesaling to landlords you can either focus on lower valued properties in your city which can be wholesaled to landlords such as Section 8 program landlords, or you can focus more on a middle-class home which can be sold to landlords who want nicer homes in their portfolio for various reasons.
Lower Income Areas
Low income affordable housing properties are usually found in the area of town that is older. The area will probably have a reputation as not being the best place to live; in fact, you probably wouldn’t want to live there yourself but don’t let this stop you from making money on these properties.
You can even call around to find out what areas are being targeted by government subsidized loans. When driving around, look for areas that have newly built government houses. These are both indicators of low income areas that are on the rebound. Most investors would love to buy an old junker house next to a brand new house.
Avoid The Total War Zones
You won’t want to do business in what are called “war zones” that are the worst of the worst. The worst are the areas where every other house is boarded up, drugs are available on the street corner, and so on. If you deal in properties that are in these war zones and you repair a property, you may come back the next day to find a lot of your fixtures or appliances have been stolen. In addition, the tenants who rent in these areas tend to tear properties up and it is next to impossible to find a retail buyer who can qualify for a purchase loan. For this reason, you’ll have a hard time finding another investor or landlord to flip the deal to.
However, some war zone areas are great for wholesaling properties to landlords who already own rentals in those areas. One great way to identify these landlords is to get a list of available Section 8 rentals from your local HUD assistance office. Then identify what lower income areas some of the properties are available in. The landlords who already own properties in low income areas which may have a reputation for being a war zone are many times looking to buy more properties in those areas.
Wholesaling To Retail Investors
If you plan to wholesale deals to investors who plan to fix the property up and retail it, you’ll want to target the areas that are somewhat older, yet the area is still desirable to homebuyers.
The key to these neighborhoods is that they are old enough for people to have built up some equity in their home. Older homes may need more repair work too, which means it is easier to get a discounted price and a better profit margin.
Identifying Wholesale Hot Beds
To identify what areas are best to find deals to wholesale in, you’ll want to look at where the properties are that other investors are wholesaling. You can do this by talking to other investors at your local investor’s association, checking craigslist and of course checking with other investors in your area here on RealEstateInvesting.com just for starters.
The main indicator of where you should look for deals is your buyers list. Nothing is better than knowing you can get a deal resold before you even buy it. In the end, you can wholesale any house in any area, if you can buy it at the right price and can find a buyer who will pay you more than what you’re buying the deal for.