5 Reasons Wholesaling Houses Rules for 2014
As the U.S. housing markets continues to rapidly morph many investors have been questioning which real estate investment strategy is best going forward. So as the improvements keep stacking up, which is the best strategy for you?
Recent housing data and real estate statistics show actual foreclosures declining, and house prices and demand increasing, building on the trends of the rebound which have been making their way around the United States. A few have pointed to these figures as reason to adjust their investment strategies and doubt how long of a run they have left.
However, for those choosing wholesaling houses as their preferred investment strategy the outlook is great, and here are five reasons it should continue to rock throughout 2014 and beyond…
1. Rapid Home Price Increases
The recent dramatic rise in home prices around the U.S. combined with more competition over fewer publicly marketed foreclosure homes has had some worried that the easy days of wholesaling houses is over. The veterans of course know that nothing could be further from the truth. Wholesaling thrives in an appreciating environment, and is often far easier.
2. Plenty of Distressed Property Inventory
While the pool of publicly marketed REOs and foreclosure homes may have shrunk slightly in some areas recently there are still tens of billions of homes in foreclosure coming down the pipe. In Baltimore alone Bloomberg reports foreclosures tripling in July 2013. NY, FL, CT, NJ and OH have also recently seen significant spikes in foreclosure rates.
3. End Investors Willing to Pay Premium Prices
The appetite and need for cash flowing rentals and the yields they provide have all types of funds and amateur investors rushing into the market happy to pay even above market value for homes today providing an easy exit for wholesalers and healthy profit margins.
4. Low Risk & Capital
While there are masses of new cheap foreclosures and severely distressed properties coming onto the market many are in truly terrible condition. This brings risk and requires a lot of capital for those focused on rehabbing or keeping them as rentals. One recent report put the average repair cost of a foreclosure in Baltimore at a whopping $60,000. Wholesalers get to skip all this and pass the expense and risk onto someone else.
5. Rising Costs
Increasing costs associated with buy and hold investing including; labor, materials, interest rates and borrowing costs, property taxes, etc. can eat into cash flow for rentals, yet have little effect on wholesaling houses.
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