If you’re familiar with wholesaling houses, let me make a comparison and a contrast of houses versus apartments.
First of all, on houses, whenever you wholesale any kind of asset, you have to first determine what the value of it is. On houses, the value is based on comps. You do comparisons, comparables, what do houses in that neighborhood sell for, what is the relative square footage, what is the age of the property, the condition of the appliances, the curb appeal? These are all very subjective things that we need to evaluate houses.
That process requires an inspection to price it out. You have to go to that property and check it out. If you open the classified ads in the newspaper, depending on the metro area and how many people live in the area, you will see plenty “We Buy Houses” ads. I’ve never seen any “We Buy Apartments” ads in the newspaper, nor any “We Buy Apartments” bandit signs.
Some of the difference between houses and apartments is apartment values are based upon the numbers, that is the profit and loss. We look at financial statements. We do not drive around and look at the property. In fact, we do deals out of state because we can do it without ever laying eyes on it. It is a very objective process. While evaluating houses might be more art than science, evaluating apartments is purely science when evaluating these deals.
There is no inspection required in apartments, at least in the outset, and that means our marketplace is nationwide. We don’t need to go drive to look at these properties to evaluate them. Just show me the financials. Show me the rent rolls, and I can tell you what that property is worth and what I’m willing to offer you for it. But, to put these properties under contract, we do not require an inspection.
Also in apartments, there is less competition than in houses. Most people are intimidated by the extra zeroes in these apartment deals. Too many people thing to do these bigger ticket deals, we have to have more money. That’s simply not true, especially in wholesaling. We’re only getting it under contract, and flipping it to a buyer who has the financing. We are generating bigger checks for ourselves, and therefore, it’s a better time leverage.
On a part-time basis, you can literally add extra zeroes to your paycheck while leveraging your time better than you would wholesaling houses.