Wholesaling Vacant Houses Vs Tenant Occupied
What’s better wholesaling vacant houses or tenant occupies ones?
There continues to be a lot of debate about whether wholesaling vacant homes or occupied ones is better. So what’s the deal, which is better and what are the real pros and cons of each approach?
Experienced investors are well aware of the dangers of keeping owner occupants in homes after closing or doing lease-backs, but many are still split on whether vacant or rented is better.
Some of this may demand on overall branding and strategy, but the difference between occupied and vacant investment properties can have a significant impact on everything from acquisition to expenses and risk and marketing for resale.
When it comes to acquisitions vacant homes which have been abandoned can be in worse shape and often mean dealing with banks for REOs or hunting down out of area owners. This can sometimes make marketing and negotiating more difficult but is often offset by bigger discounts. Tenants can bring certain challenges, but sometimes they ensure that properties haven’t been vandalized or become run down.
While many wholesalers are now turning properties in hours, those that end up holding houses for days or weeks can find it great to have a renter in place who will prevent theft and keep up maintenance, and potentially provide some cash flow to offset holding costs.
Rented homes can also be much more appealing to end buyers, who are often buy and hold investors, providing that rents are at least market rate or can be raised soon. This offers huge value to cash flow investors and saves them the time, hassle and expense of advertising, screening and placing new tenants. It gives them the confidence that they’ll be cash flow and returns from day 1.
Of course this suggests that some investors may want to focus on wholesaling tenant occupied properties instead of vacant ones. This can be done be targeting rental homes by contacting landlords from ads or lists, or even through renters of distressed properties. If renters are a part of regular marketing wholesalers can also put tenants in place before resale to up value and increase appeal.
Those interested in diversifying their incomes and engaging in a wider variety of real estate investment strategies can also branch into property management and provide turnkey rental properties to other investors, earning ongoing incomes from these properties without any of the debt or liability.
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