Are certain markets better than others for wholesaling?

3 Replies

I'm interested in learning more from folks who have experience wholesaling properties. 

  • Do some real estate markets lend themselves to wholesaling more than others? (FYI, I live in the Cali Bay Area. Would someone here have a tougher go at it than someone working an area like Atlanta?)
  • Does anyone out there choose to operate outside their immediate location? 
  • If so, what do you look for in a market?

I think you wanna start in your area and see how many cash sales there are? (you can ask realtor to run that report for you)  Gradually branch out (like a radius) into other markets. Cash sales are a great way to find out a good wholesaling area.  Lots of cash sales = lots of investor activity. 

-Kelly

Originally posted by @Kelly A. :

I think you wanna start in your area and see how many cash sales there are? (you can ask realtor to run that report for you)  Gradually branch out (like a radius) into other markets. Cash sales are a great way to find out a good wholesaling area.  Lots of cash sales = lots of investor activity. 

-Kelly

Yes but cash sales is not a reliable indicator that a market is good for wholesaling. Hedge funds are paying cash for properties but most of the time they don't buy these from wholesalers. They buy them directly from banks and big REO brokers.

A market could be too hot for wholesalers. A market has to be what I call in the GOLDILOCKS ZONE - not too hot and not too cold. 

A market can be too hot - for instance, if properties are selling for above list price, it's unlikely you will have enough inventory of houses to even fix-n-flip much less to have enough discount to even wholesale them. If your market is too cold - not much activity, then a wholesaler will not do a lot of deals either.

So what's a better indicator then? I believe there are 2:

1) Average Days on the market - DOM Of less than 10 days means market is probably too hot

2) Inventory - if the number of properties for sale in an area at any given time is less than 1,000, that area is probably too cold or too small of an area. For instance, since we wholesale a lot of HUD deals, when a county only has 1-2 HUD deals available, it's unlikely we will wholesale a lot of HUD deals in that county