Hey BP family, I’m a nob to investing. I’ve read Cash Flow Quadrant 3 months ago and was inspired. Attended a couple courses. Spoke to a couple investors doing what I would like to do. I’ve had the opportunity to buy a few properties. Then ANALYSIS PARALYSIS set in. What’s a good deal? What’s a bad deal? Everyone says “oh this is just one of those things you jump into”... So my question BP is should I start with whole selling to get my capital up? Once I’ve created some income, then should I start looking for foreclosures, passive income and more sophisticated strategies?

Do you mean wholesaling? I wouldn’t do that if I were you but it’s also because most wholesalers don’t know what they’re doing.

You can use “advanced” strategies if you want but that sounds like a good way to give yourself a headache

How much capital do you have now? Sounds like you have enough to buy a rental?

Use the BP calculators and they will tell you the numbers. If the numbers work, do not allow fear to stop you from moving forward. You simply must get beyond that. 

Wholesaling is no easier than buying a rental. In fact, I'd say it's more difficult, but that's just my opinion.

@Vince Mack I'm going to say yes, start with wholesaling.  Why?  For several reasons.  It sounds like you are willing to spend a few thousand dollars on education.  You can use that on advertising.  You don't know what a good deal is.  Trying wholesaling will give you exposure to more deals.  Work with another wholesaler if you haven't got a buyers list.  Tell them that they can market the deal to their buyers and you will split the profit with them.  And ask them what their buyers are looking for.

Basically, it would be a good education.  Even if you fail you'll find that it isn't easy to find a deal and that may help you adjust your thinking about what a deal really is.  Another possibility is becoming a realtor.  Work with investors (you'll work your butt off) and just go look at every investment type property that hits the market.  Again, a great education.

@Vince Mack

Wholesaling is promoted as low risk / low cost way to make money in real estate but it’s tougher than the gurus make it sound. The successful wholesalers are really expert marketers and most are spending a lot of money monthly on their business . They also have to be good negotiators and persuasive enough to get a property owner under contract at a below market rate .

I think a lot of it depends on the area too . Most markets seem hot now even the ones that had been written off during the housing crash . Wholesaling seems easier in lower priced markets from what I have seen .

On the plus side if you actually have a deal it’ll be easier to assign it since there is a lot of investor activity now and it seems everyone wants to be in real estate . A lot different from when prices were declining and the media would talk about how awful real estate is as an investment.

Best of luck

@Vince Mack I'm going to agree with those here that have discouraged the wholesaling route. Not because you can't make money, you definitely can, but because (as @Nicole A. and @Joseph M. have said) wholesaling is A LOT more work than people think. If you're having trouble getting past the analysis paralysis stage of rental investing, you're going to have the same issue pulling the trigger on properties to get under contract. This is a psychological issue, not an REI one - you'll have this same hang up regardless of what route you go, everyone does in the beginning.

As was mentioned before, it sounds like you already have enough capital to start investing in rentals. So if your goal is to create some passive income from REI, I would say do the work to get over the paralysis and execute your original plan. Depending on how much capital you have currently, and whether you qualify for financing, you may be able to get a nice little portfolio of cash flow properties going.

If you decide that rental investing isn't the route for you, there are other passive investment options to consider. Again, wholesaling can be very lucrative but don't jump into that out of fear of pulling the trigger on a rental, because the fear will follow you. And definitely don't make the mistake of thinking that wholesaling is easy - it's a hugely saturated market pretty much everywhere and competition can be incredibly steep. If you're looking for passive REI income, wholesaling isn't the place to look.

Now, if you decide you want to get your hands dirty and have the time/interest/energy to put in that kind of grind, then maybe your goals have shifted and wholesaling would be a good fit. But based on your post it sounds like passive income is your end-goal and you're just trying to find the easiest route to get to it. And the easiest route, if you've got capital already, is to just start with rentals.

I think your next step should be to run some more numbers until you trust your gut a bit more. Get over the psychological hurdle and do what you set out to do in the first place.

Best of luck!

Clayton

@Vince Mack the biggest advice I can give new REI is they need to determine alot of things:

1. DETERMINE WHAT YOU WANT LONG TERM! (A flipping company, rental portfolio, apartment building etc....)

2. DETERMINE IF YOU CAN START THERE! (you may not be able to start with apartment building)

3. DETERMINE STRATEGY TO GET YOU THERE! (Wholesaling -> Flipping -> Apartment building)

4. FIND SOMEONE WHO IS ALREADY A ROCKSTAR WHERE YOU WANT TO START AND WORK FOR THEM/ BEFRIEND THEM.

5. LEARN THE ROPES FROM YOUR FRIEND TILL YOU REACH THAT LEVEL OF SUCCESS

6. REPEAT 4 and 5 TILL YOU GET WHERE YOU WANT TO BE!

I wish you the best my friend and keep reaching out there is a wealth of resources here to help you.

Wholesaling is a great strategy. The more money you have the less work it can be and vise versa. The hardest part is finding the deal. Lower Cost you can drive for dollars, door knock, and drive for dollars. Once you get one deal you can afford to start buying my targeted list and cold call or send direct mail. Enroll yourself in YouTube University & Biggerpockets podcast. Brandon Turner has a good book on No to low money investing.

Wholesaling is a way to make money with little outlay of cash and relatively low risk, but it is effing hard.  It sounds super sexy, and can be a way to generate capital, but you'll quickly learn it's way harder than it sounds.  To be successful at the technique you have to be pretty shrewed and willing to push the Caveat Emptor factor on your buyers, or you have to be very, very, very good at finding REAL legit good deals (this is not super common). 

There's a reason wholesalers get a bad reputation - and it's not because they are making a profit without having skin in the game or don't have a license - it's usually because they move crappy deals, or they hang their clients out to dry when the deal goes bad, or they sell to people who really shouldn't be getting involved in the deal because they are not capable of handling the deal.

Also - there's not one single definition of what "wholesaling" is.  I work with wholesalers on a regular basis, and while most of them are ultimately getting a deal under contract and then selling the contract, there are some that do it different or more "creatively".  While wholesaling itself is a completely legal and valid practice, when you start getting creative, you can easily start making some moves that can land you in hot water (if you get caught). 

What is the alternative? Is it wholesale versus flip? Wholesale versus buy and hold? Wholesale versus getting a real estate license?

You could always house hack to get your financial base off on the right foot. Buy a multi family with low money down, rent out the other doors so your mortgage and other expenses are paid for, essentially you’re living for free and saving a lot of money. Read some of Brandon Turners Books- Low Money, Rental Property Investing, he talks a bit about wholesaling on there. Wholesaling is difficult but with the right drive and not letting your foot off the pedal it can be done. It took me 2,000 letters to get 20 calls to get 1 deal. That is a .0005 conversion rate. Be prepared to spend $1,000 or more to get your first deal, but it can be done.

You will make money if you make offers. Stop being concerned with the stratagy, just make offers. Always have a short contingency in your offers. The buyer or money will come when you actually have a deal under contract. So my advice is to make offers. What's is gonna take for you to make more offers? When you wake up in morning start figuring out how to make more offers. It doesn't matter if they are accepted. Make offers. When one is accepted, make more offers. If you assign a contract and earn an assignment fee, you should have already made more offers. When you had to bring in a partner to close one with his or her cash, in the mean time, make 100 offers. That one was full of termites and you had to walk away, termites are eating and you're making more offers. I can make a written offer in 2 minutes. After I make the offer, my focus is on making another offer. My head is on a swivel. Any body know someone that would like to move some real estate? I have "we buy houses" on my car, cards, signs, adds, hats, pens, and website. Just make offers. Focused time making offers on the calendar. Building a team or researching online does not help you make more offers. What amount of time and money can you spend every month that will directly lead you to making more offers? I gotta go make some offers.