BiggerPockets

The knowledge required to profitably run a rental/wholesale/rehab business isn't really that exhaustive. Much of the knowledge for one carries over to another.

Wholesaling is all about finding and analyzing deals and building a buyers list. Rehabbing is all about finding and analyzing deals AND getting the work done efficiently. Rentals are about finding and analyzing deals, getting the work done efficiently, and dealing with tenant management.

I do all three. Wholesaling easily feeds into rehabbing or renting, because you can find great deals for yourself to rehab or rent while you wholesale. Rehabbing feeds into rentals because a make ready on a rental is a piece of cake for a good rehab contractor.

I would say there are multiple components to analyze to determine which single or combination is a good fit for you. Time, money, credit, and goals are the main components to look at.

Wholesaling and rehabbing are ways to generate capital, while rentals are a good way to invest capital. Wholesaling requires very little starting capital while rehabbing usually requires fix up costs and/or closing costs and down payment. Rentals normally are going to require at least a down payment and closing costs but not always, and they may need to be fixed up, also.

Wholesaling and rehabbing are time and skill intensive, while rentals are by nature passive and can be delegated out very easily.

If your credit is in the toilet, building an extensive rental portfolio may be out of the question right now. Wholesaling requires no credit and rehabbing can require little or no credit.

Your investment goals can range from you need to make $2,000 in the next month because you are broke and unemployed or you make six figures at your job and are looking for a safe place to make 15% on your money.

The answers to all these questions are what determine which is better for you.

If you have $25,000 and you invest in a rental property that will cash flow $10,000 a year then that's great, but you have to wait 2 and a half years to be able to invest in another. During that two and a half years you could have taken that $25,000 and done a rehab to retail and then another and then another until you were doing 1 a month. Let's say you profited roughly $15,000 per rehab and over 2 and a half years you amassed $250,000. At that point you could invest that money into 10 rentals at the same return and make $100,000 a year.

But if you are a doctor or an engineer making $200,000 at your J-O-B, it might be a waste of your time to do rehabs and you would rather just invest your 401K of $250,000 through a self-directed IRA straight into rental property.

Or maybe you are a complete poindexter and you wouldn't know the first thing about swinging a hammer and you still don't have any money or credit, you could start off with wholesaling. Over 2 and a half years you could amass let's say $100,000 and start investing some in rentals, and maybe you've developed some contacts that can take care of the remodeling for you so you start doing some rehabs, too.

Point being, there are multiple ways to make it in real estate, and it depends on your time, money, credit, and goals.

Let me KISS it:

Wholesaling requires time
Rehabbing requires time and money
Rentals require money

There are exceptions and caveats but that's the basics.

I'd say Ryan touched on just about everything in a GREAT post. He got my vote.

Michael-
How did you come across that book & who is the author? p.s. That's a Rotty, correct?

Eddie, though your example is absolutely achievable, I think you missed the point.

Let's say you cash flow $5,000 a year on that $15,000 rental (which is not realistic with taxes, insurance, maintenance, and vacancy factored in). That would be a 33% percent return on your money, which for most investors is a respectable ROI. You would still have to wait 3 YEARS to buy another one with the profits you generated.

Part of my point is that rentals require large amounts of capital invested to make large returns, so its better to focus on strategies that generate capital initially and THEN invest into rentals.

If you wanted to make $4,000 a month passively from rentals and all your rentals had an ROI of 40%, then it would require you to have $120,000 invested to reach that amount of income ($4,000 x 12 months divided by 40%). So unless you have $120,000 sitting around, then you will need to find ways to generate more capital faster, hence rehabbing or wholesaling.

First to answer you Brandon, I came acrosse the book just browsing at Borders, I like there so I took it home.
Aslo yes a Rottie named Thea, she is 10 mth old, the love of my life.
Now for Eddie. While 15k might not seem like much for some people, and there are times when it's easy to save, I have put 40k plus in my last rental. And now even 5k seems like a lot.
Plus there is a learning curve. In the past 3 years I realize I have put about 80k in down payments for rentals and for what: not much at the moment. Will try to recoup my money when it's time and do it better after for better returns but still won't be enough to make a living off of it.
So while I love rentals and won't give up on it, I might try something that requires a little less cash at the moment.
Plus you told me about Birmingham and yes the houses are way cheaper over there compared to what I paid for mine, but it seems that most houses under 50k are bought cash by investors. How often could I buy a 50k house cash, not oftern enough.

I have been a buy and hold landlord.
Last month, I brought my 19yr old son to our REI meeting.

Larry Goins was the speaker. My son got excited about the possibility of wholesaling so I am trying to learn some new skills in that area to teach him.
Not soliciting here. However, Larry is offering his online bootcamp for $1. I am actually going through the informaiton. You view them online so you need to sit at your computer for a while but a lot of information for one dollar.

I don't think that he does anything out of the ordinary other than automate his process. Of course, I have not done any wholesaling.

I am struggling with how do you wholesale when properties (in our area) are available on the MLS (reo's) for under 10K. I think I understand in normal times that a wholesaler brings value by finding motivated sellers not listed on the MLS.

Anyway, I enjoyed Larry's presentation. He seemed genuine to me.

Still trying to learn the concept so I can teach my son those skills. It has been fun to watch him get excited and eat up the CD's that we have from his Larry's course. (not the online course I was talking about.)

You do not necessarily need any downpayment to buy rental properties. What you do need is a willingness to work hard to find deals that don't require a downpayment.

The key is to find DESPERATE SELLERS! These sellers will do WHATEVER IT TAKES TO END THE PAIN! Failed landlords are a good place to start. You can often buy these properties via owner financing, lease option, land contract, or other strategies that don't require money down.