OfflineThere are many ways to make money in real estate investment. Many people think that it’s only about owning and renting out properties. That’s probably the most popular and it’s very profitable from a cash flow and ultimate appreciation profit at the sale. For this reason, there are a whole lot of real estate investors out there who want more rental properties.
An opportunity arises here because the vast majority of these rental property investors are not aggressive in locating deals. They also are not normally into renovation of properties before they place them into rental service. They pretty much want to buy a property at a value price knowing they can immediately place a tenant into it with a nice positive rental cash flow.
The investor who wants to make money in real estate in more short-term strategies like wholesaling will need two things for success. First, they need the knowledge and ability to ferret out deals. They’ll need to be able to locate good deals they can flip to the rental property investors. Of course, unless they know who these investors are, they can’t build a great business.
The investor who wants to profit from wholesaling will need to develop an active list of investor buyers. They could be those long term rental property investors or they could be fix-and-flip investors who want to find as-is deals and do the renovations for profit. These are the prospects the wholesaler wants on their buyer list.
By meeting other investors at investment club meetings, handing out business cards, and advertising in print and online media, the wholesaler builds out a list of investor buyers. This list isn’t just contact information. It should be a comprehensive database of investors, their contact information, and particularly the geographic areas in which they want to invest and the types and price ranges of properties they want to buy. A great buyer list will yield great profit.DClark
Randy's information above is incredibly valuable, it seems like so many wholesalers are focused on finding properties for rehab buyers, and the landlord buyer is often forgotten.
Legacy Income to pass along to heirs.
The landlord has recognized a principle of wealth that is not a part of the rehab buyer's strategy--Passive Income.
Using a buy and hold strategy creates the following benefits:
1) Rental Income--Cash Flow
2) Ability to take advantage of long-term appreciation
3) Ability to take advantage of tax deductions for depreciation
4) Mortgage paydown by tenants
5) Ability to utilize lower capital gains tax upon sale
6) Ability to use 1031 Tax Deferred Exchange when exchanging one income property for another
7) Passive Income--Ability to get paid without doing additional work.
None of these is available to the short-term rehab buyer, who then resells the property in less than a year.
Landlords employing a buy and hold strategy are interested in as much of the above 8 benefits as possible.
Unless they are in liquidation mode, every landlord wants to increase the amount of the above benefits that they are receiving.
If you speak with a landlord, and they are not liquidating, and are not interested in acquisition, the immediate question we should have for them is: "Why Not?" There must be a reason, and maybe we can help with a solution to the obstacle. Common reasons for not acquiring more properties would be:
1) Lack of Cash
2) Lack of Credit
3) Lack of Time
4) Lack of Energy
5) Lack of Skill
If you can build a little rapport with the landlord, you may be able to assist them in: A) Finding good loan terms; B) Arranging seller finance deals; C) Finding and negotiating good deals on additional properties. As was mentioned above, many landlords are more passive, and if you are willing to step in and help them, you can assist them in building their portfolio.
Remember that in real estate investing, every seller and every buyer have a problem that needs to be solved, and you will make immeasureable amounts of money by becoming a professional problem solver.
Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall
The articles on finding cash buyers who are landlords looking for rental income property have great advice. As the market heats up and more and more investors are making offers on the available property, it gets harder to find property for the price reductions necessary to attract the fix and flip investors. Investors looking to fix and flip have to make an immediate profit and have closing and holding cost to consider meaning that they have to buy a at very low price for the numbers to work. The buy and hold investor looks to the income stream as the main part of his investment strategy and looks for the property to increase in value over time making it possible for him to pay a little more for the property. He also gets a tax advantage that is beneficial and makes paying a little more for the property a reasonable investment scenario. So by targeting income seeking buyers you have a better chance of getting a property into contract because you can pay a little more than the wholesalers who are targeting fix and flip investors.