Archives for February 7, 2015

Wholesaling is by far the most popular real estate strategy for new investors (with sandwich lease option being a close second) because it seems like one of the least complicated routes to make some money in the start when you don’t have money for down  payments, renovation costs, or like many that take their first real estate course – often do not even own their own home.  I would disagree in many ways that the wholesaling world is the best thing to foray into right out of the gate.  There is no doubt that on paper it would be one of the simplest ways to get some cash in your pocket – find a great deal, get it under contract, and then sell that contract to another more experienced investor for a profit.  There are some inherent issues there however – you would need to have some experience with other investors and analyzing deals to make SURE it’s a good deal before you run out there and get that home under contract.  Having a contract is great, but if you make great claims to the owner of that property that you will be closing on it in two week or less and you never remove conditions (which is fine in concept) letting the deal drop this could annoy them – which again in theory is fine but if you do this to a hundred people in the first 3 months of doing real estate you may be building a reputation and image that you don’t want for your company long term.  The image and brand that you have in business is one of your most important assets and its very difficult to repair once damaged.  Some mistakes are going to happen in your first year in real estate and that’s OK, but it is very important to have a strategy to make sure you have a winner of a deal before you tie it up with a contract and have a buyers list  of whom you know exactly what they are looking for before sending them deals that will waste their time and yours.  Is this an excellent strategy? Yes – is it an easy one to execute in the beginning? I think not – network like crazy with experienced investors in your local market, pick a few that have similar profiles then find deals that suit them.  One of the most important things I feel you should remember in the wholesale game: don’t try to be all things to all people – focus your due diligence on 1 type of deal then go from there!

To your success!

Tim

There are many strategies that can be used to make money in real estate, some days it seems like there are more than you can count if you have an eye for creativity when looking at a deal.  In the Calgary area with everyone panicking about the oil prices and fearing that the Alberta economy is going to crash – changes the landscape for some exit strategies but not all.  One of the strategies that I like the most is renovations which works in any market: up, down, declining, rising, sideways you name it – if your plan is to buy/fix/sell then you can do that in any market conditions because you are adding value through repairs/updates.  Of course, this only works if you due your due diligence properly and know your numbers to a T while keeping your costs under control. With all the panic in Calgary there could be some more motivated sellers on the market in the coming months which would open up the door to things like lease options being a bit more feasible than they have been with prices soaring and competing offers being the norm over the last 12 months.  There is always a strategy that will work well in your local market but depending on the fundamentals in that area some may be better than others.  For example I would say that buy and hold in the residential space (non commercial/multi tenant) would be a poor bang for your buck in Calgary right now due to the price surge we have seen and low inventory, Edmonton or some of the US markets would get you a lot more properties for your dollars.  I also think that Edmonton will be a strong lease option market now and in the future, I know of a few investors that execute on that strategy alone to run their whole real estate business.  Wholesaling of deals will work in any market to be sure, but the types of GOOD deals that you will be able to find will depend on the same fundamentals such as job growth, new transit expansions, factories being built or large government projects in areas such as Ontario/Quebec.  What is your favorite strategy? Please feel free to contact our team and let us know what your challenges are in your niche in real estate today – we are here to help!

Tim