Real Estate Investing Guide: The Wholetail Strategy
You’ve heard of the BRRRR strategy and wholesaling as well. But what about the wholetail strategy for real estate investing? This is a relatively new concept in the world of real estate and it is undoubtedly one of the most unique strategies. With that said, here’s what wholetail investing is about and how you can get started (even if you have no prior knowledge in real estate at all)
What is the Wholetail Strategy in Real Estate?
Although the wholetail strategy hasn’t been around for that long, it has become a popular choice both among novice and experienced real estate investors. This strategy combines the benefits of purchasing properties at multiple financing options while combining it with great exit strategies.
Most simply put, wholetailing is the combination of wholesaling and flipping a property. In other words, it includes finding properties at huge discounts and locating investors who’d be willing to purchase it, just as if you were doing the wholesaling strategy.
However, as a wholetailer, you will go one step further and actually purchase the property rather than just assigning the contract and collecting the finder’s fee. However, you will not be doing a traditional flip here because you won’t complete a full renovation.
Instead, you will only do a few select projects to enhance the property enough to increase its value above the amount you paid for it. In that sense, wholesaling falls somewhere in=between wholesaling and flipping a property.
The Difference Between Wholesaling and Wholetailing
Since these two terms sound quite similar, it is very easy to confuse these two strategies. The main difference here is that the wholetail strategy entails that you actually purchase the property rather than just finding it for the right buyer and assigning it to that third party. In that way, the wholetail strategy also includes a bit more risk and commitment. At the same time, you will get a chance to earn a higher profit compared to wholesaling.
Another reason why the wholetail strategy might be more advantageous is because the investor can market the property to a larger pool of buyers, including both other investors and regular buyers through the MLS. Moreover, the wholetail strategy differs from flipping a home because you will only be doing necessary repairs instead of investing a bunch of money in a full-blown renovation project. While flipping projects can take over two months to be complete, wholetailing is usually a lot faster.
How to Find Wholetail Deals
In order to make wholetailing work, you will have to do a lot of marketing. This will include social media marketing, networking (both online and in person), door knocking, cold calling, and direct mail. If you’re not comfortable with any of these, you should first take time to breach that barrier and learn how to put yourself out there.
Once you’re ready, start putting together a buyers list that should include investors with rental properties, flippers, and other wholesalers. These are all people who might be interested in the deals you have to offer.
As soon as a deal pops up through your marketing funnels, visit the property and conduct a walkthrough to see what renovation projects you might be looking at. Always create a checklist of potential repairs and upgrades so you can properly analyze the situation and take note of what is going on. This will help you determine whether the property is worth your time and if it will actually pay off to invest in it.
After the walkthrough, you’ll have to do a bit of what I like to call “detective work” to further analyze the property. Look at the comps or comparables in the surrounding neighborhoods and get a better idea of the prices in that area. If you have enough connections, you might want to work with a realtor here to help you find the right info.
Once you determine the ARV and calculate what your cost to profit ratios might be, decide whether or not you’d like to close that deal. You might want to consult with repair teams and construction workers first to get a better idea of how much money the renovation process is going to cost.
Once you purchase the property and complete the repairs, the next step is to market it to flipper investors or cash buyers. These are the people who would be willing to take over the project and continue renovating the place until it’s fully ready to be flipped. That way, you’re only doing half of the work yet you’re still gaining a profit through that transaction.