I’m a newbie who’s yet to do my first deal - as you know from my previous posts, I’m in the education stage, reading everything I can get my hands on.
I had a simple question concerning strategy - do you feel it is more effective to decide on your exit strategy first, and look for properties accordingly? i.e. decide you want to wholesale a property, and now you are basing your search on that.
Or, is it better to search for the best deals you can find, period, and tweak your exit strategy based on that? I would think this would give one more options, but I also know in any kind of business, especially starting out, it’s important not to have too broad of a focus. Ideally, I would like to be well versed on several strategies so that I have OPTIONS when I am searching for my first deal, instead of deciding beforehand that I am only looking to do a lease option, for example.
These concepts probably intertwine and overlap often, but I was curious if anyone had any thoughts on the subject.
If it’s GREAT…and in this market, it BETTER be…you should be able to dump it to another experienced investor for a quick profit. It’s all about leaving money on the table for the next guy. Your new, you don’t have the benefit of time OR experience. You have to move fast and build up your bank. Once that is done you can start keeping the truely great properties for yourself or rehabbing them for even larger profits.
Thanks for the response fdjake. I’ve read a ton of your posts and respect your opinion.
Wholesaling is high on my list, because while I won’t lack anything in knowledge (at least as much as a beginner can have), I WILL lack the ability to come up with huge sums of cash up front. I am currently saving about 15% of my gross income, saving all bonuses, and studying for 2-3 hours a night after work. Still, it’s tough to come up with the necessary cash even by doing this.
By the way - is anyone in the Raleigh/Durham/Cary area? I am moving there in the next few days and am planning on attend the TREIA club meeting on the 16th, but would like to start networking with any of you that may post on here.
I would decide on the strategy first, then try to find a deal. The reason is that the parameters for the deal and the way it will be treated may vary with the strategy. For example, rehabbing a property as a long term rental is quite different than rehabbing a property for a retail flip. In addition, you need to learn the strategy BEFORE you buy! Another example: if you are starting a rental property business, then you need to learn about managing tenants and the appropriate tenant landlord laws. If you’re going to do a quick flip, you won’t even have tenants!
I buy to hold for rental use. This demands that I use a different set of investment criteria to qualify a property than I might use for a rehab and flip. Because I am generally only buying to hold, I am looking at a smaller set of properties than I might for a different investment strategy.
Your question is the same as the chicken and egg, which came first, question. My response is decide on your investment strategy, then concentrate on deals that fit your strategy. As you master one strategy, you may choose to expand your repertoire with different techniques.
Have an exit strategy first. If you did find a property the holding cost can cost you. For example , what would be your exit strategy to close the deal and make profit.