New to investing in Atlanta! Rehabs vs Wholesale deals?
Hi everyone,
I am new to real estate investing. I am trying to decide whether I should get into wholesale deals or if I should rehab for profit. If I go the fix and flip route then I will have to use hard money. With the wholesale deals, I plan to target motivated sellers and do my own birddogging to locate properties to make offers on and wholesale to other investors. I am still in the learning process, but I want to pick one area of investing and master it before moving on to another area of investing.
My situation is that I do not have a lot of liquid cash available and my credit is not great right now (working on it), which is why I would have to consider hard money for any fix and flips. I know that wholesaling would be good because there are techniques that I can use that do not require good credit or a lot of cash. I do have some money saved for marketing, earnest money, etc...
Any advice from investors in Atlanta would be great! Thanks in advance!
My situation is that I do not have a lot of liquid cash available
Then stay away from rehabbing. Even with 100% financing which you are highly unlikely to get you still need cash for closing costs and to fund renovations. Renovation loans are done with draw schedules. You get reimbursed in stages for the repairs you do. You do not get the money up front to do the repairs.
In order to wholesale you will need the ability to find great deals. That is a skill that will help you in whatever strategy you choose to do in the future.
Thank you Ned!
Hello Brooke, I just left Atlanta last week to come up to the snowy (and Cold) North East.
I would recommend that you start off with Wholesaling. You should set a goal to wholesale 3 properties a month, once you do that for 4 or 5 months, then you should have enough money saved to move onto Renovating.
Marketing is the KEY to wholesaling, anyone can find a property on Realtor.com, the key to wholesaling is to find that property that isn't on the market and get it under contract.
I usually target vacant homes and distressed properties when Marketing. Good Luck with your new adventures!
I usually target vacant homes and distressed properties when Marketing. Good Luck with your new adventures!
Thanks John...that is my plan. I will start with wholesaling and then move into renovating. :-)
Brooke McDuffie, I wouldn't be so quick to write off rehabbing as an option. In some ways, it requires the same skill set as wholesaling - the ability to find motivated sellers, estimate repair costs, and determine ARV. There are of course additional skills rehabbers need, such as finding trustworthy contractors, knowing how long homes in certain areas take to sell, etc., but much of the skill set overlaps.
The large benefit of starting off in wholesaling is you can learn about the business without risking your capital. If you miscalculate the repair costs or ARV while wholesaling, the worst you can do is lose your EMD and waste a little bit of time for you and the seller, while in rehabbing, there is the possiblity of losing a lot of money.
I would begin by networking as much as possible and connecting with other investors in the area. Going to a REI club will get you connected with rehabbers/landlords who would benefit from a knowledgeable wholesaler (if you choose to go down that route) or potentially someone interested in parterning on a rehab if you can bring enough to the table yourself (ie, finding a great deal, being able to manage the project, etc.).
Anyways, just a few things to think about.