Can You Wholesale Other Properties Besides Single Family Residences?

HI DWALL & THE DG FAMILY: this is really a interesting point you brought up,as you said the principles are universal,so i say why not apply it.this caught my
attention now and open for review. I believe what keep us back is that most of
us do not have the knowledge about these creative investing.this is a nugget

Excellent points here regarding expanding your investment horizons and thinking a little different in advancing your career! Thanks!

Loren

The important thing I heard you say is ..... What's in high demand ...
In my area mobile homes ARE in high demand and how do I know this ?
As people begin to KNOW you are an investor they ask you for what they are looking for!! If they continually ask for something specific then find it and give it to them:))....:::::::::::::::::::: fascinated by the multiple arenas that real estate provides ... Great post Dallin !!!!
Jay

First, many thanks to each of you for your comments, and additional suggestions. Jbtoggs, not sure if you work alot with mobile homes, but everyone I know who focuses on that niche highly recommends the book "Deals on Wheels" by Lonnie Scruggs. I believe he wrote a follow-up called "Makin' Money with Mobile Homes" as well, but it is the first book that is essentially the gold standard for mobile home investors.
Now, in the first of a series of follow-up posts, I'd like to explore lessons for wholesalers market shifts--most specifically the current shift in the U.S. from Buyer's to Seller's market.
As the market has shifted in several areas of the U.S., there are many rehab buyers who are struggling more and more to find the deals and the profits that they need to make their current business model work. Part of the problem comes from the twofold way that they create their profits:
1) Add value to the property by making needed improvements that either increase the value or accelerate the sales rate;
2) Purchase the property at a deep enough discount that they can re-insert it into the marketplace in about 90 days at a retail price.
The inherent problem with this in an appreciating, competitive marketplace is that they are competing with more and more buyers who are willing to pay higher prices, and then re-inserting the property into the marketplace before enough time has passed to allow for reasonable appreciation. The model is harder to sustain in fast-moving markets, and the need to employ wholesalers increases--but wholesalers must also deal with those same constraints. End results--you have to turn over more rocks to find properties that can be purchased at deep discounts.
The lessons for wholesalers should be:
Your marketing to find properties should be diversified--you need to be reviewing at least 12 or more sources of properties on pretty much a daily basis. Remember, you are now running a business that can make you $10k per month or a lot more than that--it's worth it, and necessary to treat it like a business and do what you must do to find enough properties to keep you busy and profitable. Buyers NEED you more than ever, but you must rise to the occasion and be good at finding them properties better than they can for themselves.
The true professional Wholesaler will employ multiple agents, each with a specific assignment regarding an area or niche of properties; will review multiple free classified sites (I posted a list of those sites on another thread a few days ago); will build their own team of bird dogs driving neighborhoods and reporting back on properties; will dedicate time to driving neighborhoods looking for fsbo and for rent signs plus other indications of vacant properties; will research court records locally for probate and bankruptcy properties; will call on rental properties; will post ghost ads to find properties; will plant 25 or more bandit signs every week; will give out cards and flyers at every opportunity and offer generous referral fees to friends and associates; will contact property managers to see if any of their clients have properties to sell; will negotiate arrangements with real estate agents to make sure they get paid on any deals negotiated on expired listings; will research any properties that have excessively long DOM; will find other wholesalers and arrange to co-wholesale on deals with them.
In future posts, we will explore some of the other focuses in my post above, but the idea of having diversified marketing to find properties is an essential. Keep in mind that the average successful business uses at least 25 methods of introductory marketing to help potential clients to find them. A real estate investing business should be thinking the same way.

Before explaining how to find landlord cash buyers, let's quickly hit on WHY to find landlord cash buyers. As mentioned above, the shift to an appreciating market requires us to diversify our strategies to find more opportunities to convert to deals.
One of the key directions I've found to accomplish this is to focus on a different group of cash buyers. Not all people who have the cash available to purchase a property are rehabbers, looking to resell a property they have worked on in 90 days. Some are landlords, who make their money from positive cash flow, property appreciation, tax benefits, depreciation, mortgage paydown by tenants, and potential 1031 tax deferred exchange or sale of the property in the long-term future.
Most importantly, these cash buyers do NOT need as much of a discounted price in order for the property to be a satisfactory purchase.
A) They want a positive cash flow on the property
B) They want a high CAP rate and maybe a high Cash on Cash Return
C) They want a property they can refinance if desired to pull most or all of their cash back out.
D) They want to feel that they got a good price on the property.
While a rehab buyer generally wants at least moderate repairs on the property, and will generally require a purchase price that is less than 65% of the After Repair Value (ARV) of the property, (sometimes a LOT less), in many situations, a property that can be purchased at 80 to 85% of ARV can produce a satisfactory deal for a cash buyer. As long as it looks good on a Cash Flow Analysis, CAP Calculation, and/or CoC Calculation, you will have interest from Landlord Cash Buyers. So how do we find them?
1) Call on Rental Properties--You can move right into a discussion about whether they are interested, as landlords, in acquiring properties right away, or you can first talk with them about the rental property they have listed. You may find either a property deal or a cash buyer from these calls.
2) Contact Property Management Companies--They are often told in advance by their clients when they intend to either buy or sell a property. See if they have landlords who are in either mode, again, you could pick up either a property or a cash buyer, or maybe both from these calls. Form a relationship with these property managers, they are in a position to know about opportunities in the future, offer them referral fees if a referral turns into a transaction.
3) Contact Apartment/Landlord/Property Owners' Associations. While there are many independent associations, a large number are affiliated with the National Apartment Association, website: www.naahq.org. Go to this website, click on your state to find affiliate associations close to you. Attend a meeting if possible to meet members, if not possible to attend in person, call the contact person, and ask if they know of any members who are looking to acquire additional properties, or if there is a way you can connect with any of the key members of their group to see if you can assist them in acquiring high CAP rental properties, make sure they know you are not an agent.
4) Search Properties Wanted classifieds for people looking for apartment or cash flow properties.
5) Post Ghost ads--Post in Properties for Sale category, sample ad text: Salt Lake City, Fourplex, potential high cash flow, owner motivated, cash buyers only, call for details, xxx-yyy-zzzz. When responding to call, indicate that you work with a number of properties, not just one, so you need to gather information to match them with properties that meet their specifications.
6) Post Bandit Signs--similar text to Ghost Ads.
7) Knock doors of small multi-unit properties or single family residences that you know are rentals. Find out how to contact the landlord. Many landlords self-manage their SFR and small multi-unit properties, so frequently they can give you the phone number of the owner, it's the emergency contact number they have posted on their refrigerator.
I would suggest that everyone expand your cash buyer database to include some landlord buyers. It definitely expands your potential to produce viable deals, and builds your relationships of people with money who want to spend it with you. Now THAT's LEVERAGE!

I may as well provide a brief discussion on mobile homes as a wholesaling target. They present an interesting challenge that can work well for some investors.
Unless the mobile home has been properly and permanently installed on a foundation, it is not classified as real estate, and used mobile homes older than about 5 years that are not real estate are extremely difficult to find financing for. So older mobile homes are essentially a cash or seller finance type of business.
This leads to opportunities for cash buyers or those who are interested in seller finance either as an acquisition vehicle or a method of offering the property for sale.
Many cash buyers of mobile homes like to buy the older homes, paying an average of $2k to $5k total, and then putting $1k to $2k into the property for rehab. Total investment into the property is typically around $6k to $8k, they then offer the property to a tenant/buyer on a lease option arrangement, with around 12 to 20% up front, and a reasonable monthly payment that includes a percentage applied to purchase. If the buyer performs, they can own the property within 5 to 10 years, if they do not, the tenant/buyer is evicted, and the process begins again with a new tenant/buyer.
Owners of these properties typically have their entire investment repaid within about 2 years, anything beyond that is profit (except property taxes and insurance), the tenant/buyer is responsible for utilities, space rent, repairs and maintenance.
Some mobile home investors use the same types of arrangements, but with higher priced mobile homes.
As a wholesaler, your objective is to find these mobile home cash buyers. Many of them also own mobile home parks, so that would be a good starting point. You can also run ghost ads or post bandit signs at the intersections that lead into mobile home parks to find both cash buyers and motivated sellers.
If mobile homes are prominent in your area, this may be a niche that is not as saturated by other investors and could provide opportunities for substantial profits. Remember that if you are dealing in lower priced properties as a wholesaler, you need to adjust your expectations for assignment fees, and focus on volume rather than on big scores with each property.

While Condos and Town Homes are prevalent around the country, they can be a valuable niche to focus on in areas where home prices are high, in college towns, or where there are high concentrations of empty nesters or professional individuals and couples who do not have children.
When focusing on these properties as wholesaling opportunities, your due diligence should include the following:
1) First and foremost, make sure that you have cash buyers who are interested in these properties, and be clear on what they will and will not accept for purchase;
2) Determine in advance any restrictions imposed by the HOA for the propery, including:
A) 55 and over
B) No Pets
C) No Children
D) No Renters
3) Research desirable services in the vicinity for marketing purposes
A) Colleges/Universities/Trade Schools
B) Hospitals
C) Churches
D) Shopping
4) Research the HOA fees on the property
5) Look for desirable sizes and amenities, such as 2/2, 3/1, 3/2, and larger, covered parking or garages, etc.
The less restrictive the community is, the more desirable services in proximity, and the more reasonable the HOA fees, the more attractive the unit will be to your cash buyers, and to the end buyers who purchase the property from them.

In this post, I will address a few points in regard to small, medium and large multi-unit residential properties.
For those of you who are unaware, the dividing line between small and medium multi-unit residential properties is set at 4 because 2 to 4 unit properties qualify for the same owner-occupied or non-owner occupied loans as single family residences. The terms are different, usually the interest rates are lower and the down payment requirement is less for these properties. Five units or more is classified as a commercial purchase, even if the usage of the property is residential.
I had a friend as an investor who called duplexes, triplexes, and quadplexes "Training Wheels Properties" because they are attractive to a lot of first time investors who want to buy a property, manage it themselves, and become a landlord. With no previous experience to go on, they tend to make their mistakes on these properties, and either end up becoming experienced and ready for other properties, or else they give up and sell off the property and try to forget they ever owned it. So these small multi's are often sold with the same emotions or desperation as single family homes.
As a wholesaler, we want to find these motivated and flexible sellers, but our cash buyers could either be the rehab and sell buyer or a more experienced landlord who will buy the property, fix it up if necessary, and then refinance the property to pull their cash out for the next deal.
If you are entering the world of wholesaling multi-unit properties, the common paperwork and calculations of the realm are cash flow analyses (Gross Income minus expenses), CAP Rates (Annual Net Operating Income divided by Purchase Price) and Cash on Cash Return (Annual Net Income divided by Cash Investment).
You will also have the opportunity of analyzing the historical income and expense records on a property (IRS Schedule E or equivalent) and rent roles. So the due diligence on these properties is a little different than it is on a property that is being rehabbed for resale.
I have provided a list above of 7 different ways to find landlord buyers for rental properties, and encourage you to use these methods to build your cash buyers list. If you are dealing with medium and large multi-unit properties, you also need to learn about the 1031 Tax Deferred Exchange and realize that this may also be a resource for both buyers and sellers. I will post more on the 1031 Exchange and using this as a means of finding sellers and buyers.
Finally, in regard to working with multi-unit properties, realize that time to close on these deals can be longer than for single family residences, so don't cut yourself short on your time frames. And always remember, that as a wholesaler, you are shopping on behalf of your cash buyers--get specifics from them and only research and make offers on properties that match their specifications--otherwise, you will spend your time trying to fit square pegs into round holes, and we all know that does not work very well.

I am pausing in this string of posts to explain that my intent in posting here is to give a little direction and invite questions. These posts are not a definitive guide book--I'll come back and write that later. But those who post on this blog are happy to answer questions, and that includes me. I don't always know what will attract people's attention or what questions may arise, so your response will help to make sure that we provide enough information for you to follow through with any of these niches of real estate wholesaling. They are all viable, and can be applied in every state. Some, like resort properties, may not apply to your local area, but most can be used in towns and cities of various sizes in virtually every locale. We look forward to your input.

This is one area of investing where it is wise to understand the marketplace you are dealing with quite well. If you understand the seasonality of the resort, and the demand of vacationers and part-timers who buy properties in the area, it helps with making realistic offers. If you have a cash buyer who you are working with, who focuses on the area, and you are not that familiar, try to arrange a meeting with them, and have them share with you any quirks that you need to be aware of in bidding on properties on their behalf. You need to know what amenities are expected, plus proximities, and how those affect values. To cite a specific example, I worked recently with a person who is bidding on a property with a recent home on it that should have an ARV in the $325k price range. Across the street is a VACANT lot that is listed for $425k. The lot is about the same size as the property across the street. The difference is that the vacant lot backs up to a golf course, while the other property is in the much less desirable position of being across the street. That's a lot of difference in value for being across the street, but in this particular area, being ON the golf course really does mean being ON the course. Another example is the condo with an ocean view that is the same size and amenities as one on the opposite side of the building that does not have an ocean view. The difference in value between these two condos is $800k. That's just a small example of the peculiarities that are associated with resort properties, and the sellers of these two properties would just love to find a sucker who will buy the lesser value property at the higher value price.

Commercial properties, including hotels/motels, strip malls, warehouses, office buildings, restaurants, and other retail facilities are purchased by two types of buyers.
1) Owner/Occupants, who wish to locate their business in the building, and will occupy either the entire facility, or lease portions of the building to business tenants.
2) Commercial Investors, who purchase properties and lease them to business tenants.
If you plan to focus on any type of commercial property, research the marketplace for the types of properties that you are interested in as your specialty. I have an associate who does one deal per year wholesaling a commercial property. He typically estimates that his involvement in research, contracting a property, and facilitating the purchase to a commercial buyer will take around 6 months, but could take up to 8 months. The enticement is that he will not work a deal unless his net profit will exceed an absolute minimum of $250k, and he often makes twice that much or more.
He says that he doesn't want to work that hard, so once he has completed the deal and deposited the check, he heads down to the store, stocks and outfits his yacht, and then sails to some exotic place or places, and has been around the world a few times. He spends 4 to 6 months doing that, and then goes back to work.
Among the potential buyers for commercial properties are those who are doing 1031 Tax Deferred Exchanges. There are actually groups around the country that support and facilitate finding properties for these individuals. The typical 1031 exchange investor is not particularly area-bound, meaning that they are very often open to a suitable property that is clear across the country.
Connecting with commercial buyers and learning their needs is no different than working with residential cash buyer investors. The big difference is the amount of money that is involved, and the amount of profit for an investor that is common in these kinds of deals. Purchasers of properties that cost millions or even hundreds of millions don't usually quibble over an extra half million to get the deal done. As the old saying goes, "It's just a couple of extra zeros, otherwise it's exactly the same."

Let's face it, there are vacant land properties with faded signs that were probably available for purchase when our parents were young, and will be available when our grandchildren are old. Those are NOT properties to become involved with, unless it somehow serves your own vanity to own one of these properties. I almost bought one because it was CHEAP, but then I realized I was being sucked into something that would really not reward me during my lifetime, and would gradually require me to support my local government with property tax money on a yearly basis.
So we are definitely looking to focus on a different type of property than that. My first real estate mentor had a simple approach, he always said: "Buy on the hillside, buy on the waterside, and buy in the path of progress." Those are the kinds of vacant lots that we are interested in.
Unless your buyers are developers, we suggest that you wholesale properties that are within city limits, have road frontage, and are developed into realistic sized building lots with water, sewer, and electric already brought into the area. These are desirable lots, and finding an investor buyer who will purchase and hold that property for 2 to 5 years for appreciation is realistic. These types of lots exist in a variety of areas, and if the current owner's plans didn't go exactly the way they expected, some real values are possible.
While this may not be the only direction to look for wholesaling vacant land, it is certainly the most guaranteed to attract buyers, and has a reasonable hold time for speculators looking to make a decent return on a relatively small investment.

It may be surprising to some to know that time-shares are considered purchases of real estate. What will probably come as no surprise is that there are a lot of people, who, after purchasing a time-share, decide that they no longer wish to own it. There is a sizeable secondary market for reselling time shares. And there is a significant mark-up for companies in this market between the buy price and the sell price.
Consequently, many people who own unwanted time shares post them for resale privately. They are usually burdened by the cost, not using the benefit, and just want to get out of the obligation and feel that they received a little compensation.
There is an opportunity for wholesalers to profit from these time-shares by finding cash buyers for time shares, and then negotiating low prices on private purchases from owners who are anxious to sell. I am also aware of an investor using a time share as a bonus purchase for an investor who is purchasing a property from them to provide additional incentive. Getting a wholesale price on a time share along with a fix and resell property means that they can either keep the time share to use with their family or resell it along with the property, (or include it as a purchase incentive).
Obviously there are yearly fees associated with owning a time share, just as there are property taxes and HOA fees associated with owning many properties. The relatively lower price associated with time shares, especially when purchased at discounted prices makes them adaptable to many add-on type uses in real estate investing, just like the postage stamp lots mentioned above.

Fantastic info!!! Thank you for sharing!

First, thank you Jay for your comment, it is a pleasure to post some information that will hopefully be used by some of the members of this community to make huge profits.
I am currently working on another string of posts called "Clever Creative Real Estate Strategies" that shares some other ways to make properties profitable. You may find that information valuable, each of the strategies is backed by a recap of a story of someone using that strategy to make money.
I guess being involved in coaching and training on Creative Real Estate for over 16 years has exposed me to enough diversity in investing to have some interesting stories to share, and to me, if they help open your mind to new possibilities and greater success, that is a great reward. I am told that I have personally added some new variations on strategies with my own investing that are completely new. And you can too!
Real Estate Investing is problem solving, and every person selling or buying or renting or leasing a property has a problem. The more problems you can solve, the more money you can make and the more people you can make happier in their lives.
I would also suggest my posts on two-fisted investing that explains how you can resolve many issues for motivated and flexible sellers by using either wholesaling or seller financing.
Also, I look forward to your suggestions or questions. I post frequently on this site, and would love to either embellish something that has already been written or discuss any additional questions you might have.