“IT DEPENDS” - the real answer to most questions in Real Estate
“IT DEPENDS”
The answer we don’t like to hear, but is the real answer in most cases.
I can’t tell you how many times I’ve used this answer when asked a question about real estate. We like things to be black and white, cut and dry, but usually they aren’t.
There are so many different ways to skin the cat in real estate. And the problem is they all work. But it seems like people are always searching for that magic bullet that just isn't there.
This is the reason that I really LIKE and DISLIKE the Bigger Pockets Podcast. It's super interesting to hear people’s stories in all different stages of their investment career executing all different strategies, but I think it does a disservice to some people.
You hear about a kid doing millions in assignment fees wholesaling. Cool, that sounds pretty good. Love wholesaling. Next week you hear about a syndicator buying with other people’s money. Cool, that sounds pretty good. I’m going to do syndication. Next week it's Seller Finance Guy. Cool, that sounds way better than going to the bank, that’s my thing.
Which one of these is the best strategy? ...IT DEPENDS. Is wholesaling the best strategy? It was for me when I got started, because it was the only one I could figure out with my current available time, money, and risk tolerance.
Knowing what I know now, could I go buy an off-market multifamily building using none of my own money (like I wanted to do before I got started)? Yep… but there’s absolutely 0 chance in hell I could’ve done that as my first deal without starting in wholesaling (learning how to market to find off-market deals, talk to sellers, etc), getting into flipping (learning how to raise private capital, learning about rehab, operating deals, etc.) and holding some rentals along the way.
You can always change the strategy later as you get better, but I see it so often at the local meetup I run in Reno NV… people don’t give themselves enough time to do a SINGLE strategy before switching up and going after something else… ultimately resulting in 0 deals done across ANY strategy.
You can see the same phenomenon when talking to people about deals even in the same strategy. People are always asking “is this a good deal?” … IT DEPENDS.
I know a ton of flippers that buy a few $0 cashflow West Coast SFR's per year. Are they idiots? To the guy that only buys South East SFR's mainly for cashflow, yeah probably. But they do it for the accelerated depreciation to eliminate their tax bill from the flipping company. Different strategy within the same strategy. Are they good deals? … IT DEPENDS.
I saw this just YESTERDAY on a wholesale deal I posted for $340k. An OG buyer offered $285k. Another buyer laughed at me when he asked about rehab and I told him if we were going to take it down, we’d spend about $20k (meaning he thinks it would be much more), and I had another buyer use the “Win It Now” feature on investor lift and take it for $350k without even walking it.
Is it a good deal at $350k? … IT DEPENDS.
If you’re stuck getting going or scratching your head as you’re seeing deal after deal sell for way more than you think it's worth, hopefully that helps.