How can I start wholesale real estate

Routes to finance

"Ninety percent of all millionaires are made that way by owning real estate. More money has been made in real estate than in all parament industries combined. Today's smart young man or wage earner invests his money in real estate." Andrew Carnegie

This quote is decades old, but is still valid today. While it's all the rage on TV today, this article isn't about real estate wholesale or upside down homes.

True, there is money for these activities, sometimes a lot of money, but it is short-term gain. If you're reinvesting it in a long-term rental property then flipping it can be a great tool.

This article looks at building and growing a real estate portfolio over time that will fund a wealthy retirement lifestyle through cash flow. With multiple rentals, each generating positive cash flow, you can finance your retirement in style and avoid worrying about many of the economic factors that threaten the majority of equity and bond investors.

It's never too late to start. When you're young, you can pay a down payment to buy your first rental property and grow your real estate portfolio over the years until you retire. If you are in the five to 10 years leading up to retirement, you can convert assets into less profitable investments in rental property and increase your monthly retirement income.

If you've already reached or exceeded retirement age, you can do the same.

What Makes a Large Home Investment?

Before you get lost in the thought that each of these factors must be perfect before buying a rental property, know that they rarely are. Your goal is to try to maximize each of them as best you can, and sometimes one can be more important than others.

Here are the factors to look for in a large home rental, single family, or condominium:

  • Location: Yes you can say it three times as real estate is about location. You wouldn't want to rent a house in the middle of a supermarket parking lot, but one near a green belt or park for your kids might be just right.
  • Profitability: Location is part of that factor. However, if a home is in a great location but the competition is stiff, it might not be the best investment. If there are many rentals and the owners offer incentives, this may not be the time. When there are few rentals, not only can you live better in a property, but you can also ask for higher rents.
  • Expenditure: This is relative as property taxes are a large expense, but some areas charge high rents due to land use so taxes are also higher. If you can offset expenses against the remaining monthly cash flow then that's positive.
  • Increase in value: While cash flow is the primary consideration, adding in value over time is important. There are two ways that you can build equity in a rental property, adding value and paying off the mortgage. Intelligent leverage of your investments can be used to expand your portfolio with equity in your own real estate.

These are your main considerations, of course you will consider the age of the property, expected repairs over time, and any necessary improvements as well.

The location of the rental property and the purchase process

You are good to go and buy your first rental property. You have the down payment for your desired price range and want to make an informed purchase decision.

  1. Do you know your market area: Take the time to do a thorough analysis of your market area. Perhaps you have a specific area or area in mind, but you want to expand your research to get the knowledge you need to compare possible properties. Find out which properties are selling well in your price range. In the courthouse, inquire about areas that sell houses for cash. Investors are the normal cash buyers, so you know the areas other investors, some of whom are very experienced, are buying into.
  2. Find out how to value real estate: Learn how real estate agents conduct a comparative market analysis. The first thing the most successful investors will tell you is to buy below market value. This includes a win at the final table. It also makes it easier to generate acceptable profitable cash flow when the mortgage payments are lower.
  3. Analyze rents and competition: Find out about the local media that advertises Craigslist rentals in both print and online. Researching a neighborhood will give you the average rental amounts for the type of property you are looking to buy. How many are available, do owners offer incentives like free months? Know what to expect to rent.
  4. Cost of laying the nails: The cost is the normal cost such as normal repairs (budgeted), property taxes, insurance, etc. that apply to any property in an area. A mistake here is just as bad as investing in a sublease for a year; throw away the profit. The condition of the actual properties you are looking at is a different thing, although you may want to plan for the obvious repairs that you will be coming to an older property.
  5. Find the bargains and negotiate a deal: The next section will talk about finding the best rental property deals, but it's part of that process that is critical to long-term profit. If you pay for life in retail stores, you lose profits.

Those are the parts of the location process, but here are some specific sources for the best deals.

Rental real estate portfolio purchase offers

We all know about foreclosures and the big deals that can sometimes be found; however, the heyday of massive foreclosures with owners in place for the recent crash is over. Many of the foreclosures you will find today are in poor shape, some have been empty for a year or more. This doesn't mean you shouldn't be constantly following foreclosures through sites like RealtyTrac. com. They still happen and you can get a good one in rentable condition every now and then.

  • Owner in need: Constantly monitor media and online sources for owners in need. These are people who are in a hurry to sell their homes for financial reasons and in a situation that may result in them buying below current market value. They may have medical expenses, have been laid off at work, or are in a hurry to move. Do keyword searches on Craigslist to see owner listings with terms like "must sell," "accept all offers," and so on.
  • Pre-foreclosures: Pre-foreclosures offer investors the opportunity to find properties before the foreclosure sale. can buy with a discount on the full market value. Realtytrac. com and other websites have sections for these entries only.

  • Work with good wholesalers and fix-flip investors: Real estate wholesalers who are good at what they do can be a good source of rental housing. When they understand their role in selling to rental property investors, they know they want to buy below market value and that properties should be ready for rent. Fix and Flip investors also mostly sell to rental buyers, so they know what you want and definitely provide a property ready to rent.

Lather, Rinse, Repeat and Roll Up

Once you've found your niche and honed your skills, just do the same thing over and over and add to your rental portfolio. When paying off mortgages, you may want to work with equity, but do so very carefully and do not overwhelm. Many investors drowned in the 2007 crash because they were too leveraged and unable to maintain rents to keep making mortgage payments.

Check out the 1031 Tax Deferred Exchange to sell profitable real estate, finance larger or more real estate, and grow your real estate portfolio.