5 Ways to Identify a Hot Market for Apartment Wholesaling

Posted on Sep 13 2015 - 5:00am by Lance Edwards
Lance Edwards. President, First Cornerstone Group, LLC.

Lance Edwards, President, First Cornerstone Group, LLC.

There is a saying that I use a lot in my small apartment boot camps, and that is “A rising tide floats all boats.” In the real estate business, we can stack the deck in our favor by finding markets that are in demand. Rather than push a product on our buyer they don’t want, we need to have a product people are already looking for.

You can do that by selecting a market that is favorable for the small apartment business. I don’t care what business you are going into, you want to market something that already has existing demand. Your location can take all the work out of it.

We’re going to start your business where your product is in demand, and that product is small apartments. But, in order to do that, we’ve got to find a place to look for deals, and I’ll be presenting five factors below that help you determine whether a market is hot or not.

1. Population must be or exceed 50,000 people
You need to go to areas with a population. You need to have at least 50,000 people in the area, otherwise, there are not going to be enough supply or demand for apartment deals, not enough people to market to, and the list goes forth. You must have at least some population to work with, or it’s going to be really hard to sustain your business.

2. Area must have a good number of Class B and C properties
When you are looking for a location to set up your small apartment business, make sure it has Class A, B and C properties available for you to do your deals. You probably won’t work with too many Class A properties, and while you can work with Class D properties, I strongly advise against getting involved with these dead properties. Remember, “D” is for “Dead.” Instead, look for a good number of Class B and C properties you can work with over time.

3. Lots of management companies are necessary
The other thing I want you to have are management companies in the neighborhood, and I’m not talking about you doing it yourself. Whether you are looking to flip or invest, you need to have management companies. Even if you are flipping the properties, your buyer is going to ask who the management company is—and the answer, again, is NOT “you.” Managing tenants and toilets is not the highest use of your time!

4. Access to many single-family landlords
You will need to find a market with lots of single-family home landlords who you can make deals to, because these are your typical buyers of small apartments. If you are going to try to flip duplexes, triplexes, four-plexes and above, I want you to have a larger group of buyers to market your deals. Look for towns with housing authorities, which means they have Section 8 vouchers, which also means there will be a place single-family landlords can get a list to advertise their properties. Get that list!

5. Access to real estate clubs and IRA holders
An ideal market will also offer you access to real estate clubs and regular networking groups with self-directed IRA holders. Look for apartment associations, which will give you access to other apartment owners. You can usually get access to an owners list through the association. If you absolutely cannot find an IRA networking group, you want to be in the real estate club. They will be there instead.

A final thought for the starting small apartment wholesaler: stay close to home. While my students will attest you can flip or wholesale anywhere, staying within a one-hour drive of your home will help you with the mindset portion.

Your first real estate deal is the most critical, and finding a community or region close to home will allow you to see the property and stack the deck in your favor by allowing you to lay eyes on it. You don’t have to see it, since you’ll be making deals sight unseen and based on the financials, but again, for your first deal, you will want to be in close proximity because I do want you to be able to lay eyes on your deal.

Learn how to get your first apartment deal done with no cash or credit of your own. Get a free copy of my No. 1 best-selling book, How to Make Big Money in Small Apartments, at http://dealsanddollarsclub.com/freebook.