Ideal Real Estate Properties for Wholesale Investing

You can get several hundred dollars a month in cash flow from that method; however, you also get giant headaches because of the kind of tenants who occupy your properties. So, why suffer all that trouble when you can wholesale these properties and make a good profit?

Believe it or not, there are investors who do buy and hold properties in lower income areas. These individuals are your target audience. In typical low income areas, you'll find that 80% of the properties are tenant-occupied and only 20% are owner-occupied. That means you have a lot of tenants who don't take care of their properties. This leads to a lot of vacant or ugly lots and houses, and they're ideal for wholesaling.

So, how do you know if an area is low income, moderate income, or middle income or up?
And what kind of strategy should you pursue in each of these areas? Let's look each of these areas in turn to answer those questions.

LOW INCOME NEIGHBORHOODS -Generally speaking, you can recognize these areas by their "anchors"-businesses that are a mainstay of the community. In low income areas, these tend to be non-branded pawnshops, bail bonds, "buy here-pay here" used car lots, non-branded "mom and pop" stores, etc. Depending on where you live in the country, property values can range from under $90,000 in value to around $300,000 (as of this writing-values change, of course). As mentioned above, a low income neighborhood is an ideal area for the strategy of wholesaling.



MODERATE INCOME NEIGHBORHOODS- Although these neighborhoods tend to have the same anchors as low income areas, they'll also have nationally branded stores in the mix-Shell, Stop 'n Go, 7-Eleven, etc.-as well as churches and schools. The properties are about 50% owner-occupied and 50% tenant-occupied. This fact alone tells you that it's a more stable area than a low income neighborhood. That, in turn, means there's more competition among investors because they know many people want to live in the area. Plus, the buyers will tend to be of better quality with more income. Because of all these factors, you can pursue three strategies, depending on your objectives-wholesaling, lease options, owner financing, or retailing. Depending on where you live, property prices can range between $90,000 to $125,000



MIDDLE INCOME AND UP NEIGHBORHOODS- In these neighborhoods, the properties are 80% owner-occupied and only 20% tenant-occupied. These areas are anchored by shopping malls, movie theaters, restaurants, Starbucks, etc. As you might expect, such neighborhoods are not ideal for wholesaling or rentals since they're so stable. However, they can be good areas for retail or lease option strategies. Depending on where you live, properties will range from $120,000 and up.



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