The Strategy That Might Make You Reconsider Wholesaling Lower-Income Properties

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I’ve noticed a few BP members swear that you cannot make money in lower income neighborhoods. Or that you should stay away from these kinds of houses. I personally think that lower income areas have multiple advantages. They are easier to get owner financing for, easier to justify a low cash offer on, and a great way to get good returns if you are willing to put up with some extra headaches. I normally encourage new wholesalers to start marketing in lower income neighborhoods because you will find very motivated sellers. That’s how I got started, but you can pretty much find motivated homeowners in any neighborhood. Now I will address lower income neighborhoods in major cities with strong economies. If you are located in a depressed economy, then some of this won’t apply to you.

Related: 5 Simple Commandments All Real Estate Wholesalers Should Live By

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Buying a House in a “War Zone”

I am located in a major city with a booming economy. Right now on the MLS, there is a shortage of houses for $30k and below. In other words, on houses that I used to be making $2k-5k, I can now make $10k-15k. There was recently a house that I wanted to pick up for $17k. The owner would not budge from $20k. I decided to take the risk because the numbers were not bad. However, the house is in a “war zone.” It’s usually a particular type of landlord who likes these properties. I like them because of the high returns, and I outsource the stress to a property management company. However, most landlords run from these types of properties. I even see a lot of newbies walk away from these — yet these kinds of properties are a large part of my business. Walking away from this type, you are literally leaving money on the table for a decent wholesale fee.

Alright, back to the story. I contracted this property for $20k. I offered it at a local real estate club meeting for $25k to anyone who would bite that day. I had about two people interested, but nobody would commit. I decided to list the property on the MLS. In my state of NC, there is an option on the MLS that states, “Seller does not own yet.” This option is not available in all states. Please check your local MLS laws. I then did a flat fee listing with an agent.

The price for a flat fee listing will vary state to state. Now, with a flat fee listing, please keep in mind you will still have to pay the buyer’s agent commission. In my state, the buyer’s agent commission is 3%. But if your MLS buyer is willing to pay more than your traditional investors, that 3% is well worth it. I listed the house at $31k. The second day, I got a call from an agent wanting to pay $31,500. I accepted, and we signed contracts and sent everything to the attorney.

Related: Why I’d Rather Be a Wholesaler Over a Fix & Flipper or Buy & Holder Any Day

Now, please keep in mind if you do a flat fee listing as a wholesaler, you will still have to require a cash buyer. That means you cannot accept financing. But your flat fee agent should be able to mark that section on the MLS “cash only.” Besides, most of our houses don’t qualify for a loan. One of the only hangups is explaining what’s going on to the buyer’s agent. I’ve done assignments and double closes before. Be sure to explain to the agent, “The only way this deal will fly is if we use my attorney.” And if the agent pushes back, offer to pay for the closing costs as a incentive if they use your attorney. The reason is that their attorney might not do assignments or double closes.


This is another tool to put in your toolbox. I only recommended using this on vacant houses. I don’t recommend doing this on owner-occupied houses, houses with tenants and vacant houses where the family members live in the area. You do not want the real estate agent to start talking in front of these people. Take my word for it; it’s never a good thing. When it works, using this strategy is a great way to maximize your profits and to sell lower income houses that your traditional buyers might pass on.

Wholesalers: Do you ever target properties in lower-income neighborhoods? Why or why not?

Let me know with a comment!

About Author

Nasar Elarabi

Nasar El-arabi has been involved in real estate for 12 years. During those 12 years, Nasar has wholesaled houses, rehabbed properties, build new properties, created a buy-and-hold portfolio, and flipped land. Nasar identified early in life he wanted to have his own business. Fortunately, because of parents who instilled an entrepreneurial spirit in him, he was able to build a seven-figure business after being terminated from his job in September of 2012. Nasar has gone on to become a successful real estate investor in Charlotte, NC. Nasar has over 100 videos on YouTube and runs a blog at


  1. Ryan Smith

    Great article! I wholesale in lower income areas also, and I have been having success. It is good to know who the landlords are in the area that are buying those type of investments and building solid relationships with them by bringing them great deals consistently. I just connected with a cash buyer who buys 3-5 a month in lower income areas. So it definitely is a niche that can be successful.

  2. Curt Smith

    Nasar, true low income hoods are places to make money, certainly for the wholesaler. For the landlord it CAN be another matter. It takes a seasoned expert landlord to make money in hoods where there’s mostly “professional tenants” high turn over and high damage or theft. The later is the point of it being hard to make money in rough hoods, not re the wholesaler.

    A good rule for landlording, you make your landlording life easy and profit easy when you buy. Buy in a good area! If you buy a cheap house in a rough area, you may have lost the landlording job from the start. Our buying criteria are:
    – Buy the cheapest house in the best school system. Great schools 7 or higher = you’ll never hear from the tenants and they stay for 5 yrs. Great schools 5-7 = a few calls per year, they stay less than 5 yrs. Great schools 3-5 = They stay a year maybe two, they can’t fix anything and may leave the place a mess. Great schools 0-2,,, well these are the disaster areas. I’ll agree that there are a few landlords in my REIA that specialize in these areas! It’s a special skill, not for the “passive investor”. LOL!!!!
    – over fix and advertise for top shelf renters.
    – screen for clean credit reports, dual income where rent could be paid from either income alone. (this is optimistic, but dual income is a good rule).
    – Young children. The parents want their kids in the local school.

  3. James Gallagher

    I really appreciate the subject and content of this article. Low income/high rent margin property while sometimes a rollercoaster does pay the bills. Article shows me I can still learn a lot regarding use of assignments for purchases and especially selling techniques. Did you get into mls for a 3% commission that was paid to your listing or sellers agent?

  4. Dale Sorensen

    I am a new investor looking for some advice. I recently saw an ad on Craigslist for 17 cheap houses for sale. I knew right where they were having driven the area before. They are all low income rentals and appear to be in really bad shape. These houses make up the entire street. They currently rent for $295 – $350 per month. I talked to several residents there who said the landlord does very little in the way of needed repairs. If the houses were in better shape the tenants said they would pay more. Part of what I want to do as an investor is to make a positive impact on the community. I have a vision of a whole street of 17 refurbished houses that is a decent neighborhood instead of an eye sore. Anyone have any experience with something like this or am I crazy?

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