Wholesaling is one of the best and most lucrative real estate investing strategies. It’s less capital intensive, and beginners with no capital whatsoever can always maximize on options like transactional funding that allow them to purchase investment properties without tapping into personal funds.
The best part? It’s a short-term real estate investment meaning quick ROI. However, real estate wholesaling is just as profitable as the market it’s in. Target the right location, and you’re guaranteed healthy profits. That is why we compiled some of the best wholesale real estate markets and important pointers on how to determine the right wholesaling market conditions below.
Here are some of the best housing markets for wholesaling in 2022:
Texas is one of the country’s hottest markets not just for wholesaling real estate, but commercial real estate in general. As the second-largest state in the country in terms of size and population, The Lone Star attracts hordes of experienced job seekers and employers annually creating consistent year-over-year job growth.
It is home to fifty Fortune 500 companies including McKesson and Oracle and boasts an impressive string of A-list names in tech such as Google, Apple, IBM, Tesla, and recently, Samsung. Even better, Texas is a zero income tax state making it an even better market for wholesalers and other investors in the real estate business looking to bag good profits.
Don’t know where to start? Head to Austin. It’s one of the best cities for wholesaling in Texas.
It has a booming tech industry, reasonable living costs, and is one of the fastest-growing big cities in the country meaning wholesaling opportunities are bound to be plenty. Here are some basic stats for realtors and wholesalers looking to explore the Texan market:
Although Zillow predicts home prices will increase at a slower rate this year than in 2021, Arizona also known as the Grand Cayon state remains one of the best wholesale real estate markets in the country.
It has been a hotspot for retiree's relocation in the past few years, but it’s slowly turning into a hotbed of job seekers, students, and investors seeking to enjoy the state’s zero income tax benefits, warm weather, high job availability, and a strong public school system.
As a result, the state has been experiencing high rates of domestic migration in recent years, with the highest increase reportedly happening in 2021, particularly in Phoenix. The city reported a 1.7% increase in population, with most newcomers settling around its metropolitan area for affordable housing options available, and numerous entertainment, and modern lifestyle opportunities available.
For wholesalers, investing in Arizona means no taxes, hence low investment property prices, and as a state with high domestic migration rates, they’re also guaranteed a market for their wholesaling units.
Florida has been and is still one of the best markets for real estate investments, especially wholesaling houses. The Sunshine State is the third most populous in the country and is predicted to gain about 850 new residents daily in the next few years, creating even more demand for residential, and commercial properties.
The population growth is however no surprise. Florida boasts fantastic year-round weather(hence its nickname), it’s an international tourist destination, and is home to numerous global business giants meaning investment and employment opportunities are often plenty.
Florida is also a zero-income tax state and has a government focused on supporting development through incentives making it a prime location for real estate investments.
Florida had an average annual appreciation rate of 34.03% for properties in 2021 (thru Q3).
Georgia is the eighth-most populous state in the country with an annual net population gain of approximately 114,000 new residents. Her economy is expected to grow by 4% this year, and is home to global conglomerates like Equifax, Aflac, and NCR, making it a prime option for job seekers and investors.
Job growth coupled with affordable living costs and low taxes makes it one of the most desirable places to live and invest in. As a result, the Peach State usually has a tight housing inventory, and high demand, meaning investment strategies like real estate wholesale is a pretty viable option. Home prices skyrocketed in Atlanta last year, and continue to do so at a steady rate, making it one of Georgia’s hottest real estate markets in 2022 and beyond.
Tennessee, fondly nicknamed the Volunteer State is experiencing major population growth, as more people move out of California, to Middle Tennessee. While reasons for migration vary, a majority of the new residents cite the state’s wealth in natural wonders and ease of access to nature, affordability, and political neutrality some of the main draws to Tennessee.
The Nashville housing market in particular is expected to be even hotter throughout 2022 due to low inventory, and high median prices. Now would be a great time to explore the region’s wholesale real estate. Here are some stats to give you an idea of what to expect
The annual appreciation rate for properties in Tennessee in 2021 (thru Q3) was 30.32%.
The past two years have been pretty good to flippers, wholesalers, and other real estate investors in the New York market. Although there was surplus inventory between 2018 and 2020, the 2020 pandemic spurred an increase in demand, leading to a steady but consistent rise in home prices throughout that year, up until now.
Housing demand is expected to increase even more by the end of this year as rental discounts offered by landlords due to the pandemic slowly come to an end, forcing priced-out renters to explore their house-buying options.
This combined with limited inventory, and an ever-growing population makes The Big Apple is a premium destination for wholesale real estate in 2022, and beyond.
The pandemic hit Michigan’s real estate market hard, but it’s slowly and steadily recovering. The recovery comes as no surprise, as the state’s real estate has been pretty resilient in the past.
Property values increased by 7.8% in 2021’s last quarter, and are about to increase further due to low inventory, and high demand created by the high numbers of people moving to areas like Detroit city in search of greener pastures. Here are some important stats about Michigan’s real estate market:
In Michigan, the average annual appreciation rate of properties was 22.54% in 2021 (thru Q3).
Housing markets are pretty diverse and change all the time, but there are several market conditions successful real estate investors use to determine a market’s wholesaling viability. These conditions include:
An easy way to determine whether a market is suitable for wholesaling is by reviewing the property values. Appreciation suggests a strong real estate market and a suitable one for wholesaling.
Although the rising values in such a market mean it might prove tricky to find properties at discounted or below-market rates, wholesalers can secure homes at relatively standard prices, and resell them at a big profit since it’s a seller’s market. Wholesaling in a failing market on the other hand requires top-level experience since you’re essentially looking to make profits in a real estate market with high inventory supply and low demand.
Take note of inventory supply as well. Wholesaling in a real estate market with limited inventory increases the likelihood of earning good ROI since there’s high demand, which in turn leads to rising wholesale property values.
Demographics refer to the composition of a population in an area in terms of age, gender, race, and ethnicity. These factors directly impact wholesaling real estate market prices and the type of properties in demand.
For instance, demand for condos and detached townhomes is likely to be high in an area with a large population of baby boomers at 59 and above, since they’re maintenance-free, and have amenities nearby. As a result, flipping or wholesaling condo units in such an area is likely to earn you good profits. Demand for larger, multigeneration homes on the other hand will be high if an area’s population is largely young boomers(below 50)since they’re looking for units with extra room for their extended families.
Things are entirely different when it comes to Millennials and Gen Z. The former generation values experience, freedom, and convenience, and will often buy homes in culturally-immersed markets like Atlanta and New York. Gen Z potential buyers on the other hand prioritize the saving culture and are likely to opt for reasonably sized homes that offer the best bang for their bucks.
So, even if a wholesale property seems lucrative, and you already have a motivated seller at hand, research an area’s demographics to determine whether it fits your target audience prior to investing. While weighing demographics, ensure you consider population growth too. An increasing population often comes with increased demand, meaning high list prices, and consequently, good profits in wholesaling properties.
Vacancy rate as the name implies is the percentage of units in a rental property that are unoccupied. High vacancy rates indicate poor rental sales, while lower rates suggest strong sales.
The higher the vacancy rate in a market, the better when it comes to wholesaling, and similar real estate investments. The high rate indicates either a shortage in rental units or excessively high rental property rates meaning the majority of the population might choose to buy over renting, hence creating a market ideal for wholesaling.
Like demographics, government legislation directly impacts a market’s real estate demand, conversely affecting wholesaling. By offering tax credits and deductions, governments make it easier for people to buy homes, consequently increasing the demand. Such incentives also motivate homeowners to put their homes on the market in anticipation of good returns. The result? A balanced market where wholesalers can bag quality properties, at a discounted rate.
Besides incentives, government legislation also impacts how easy it is to buy and sell properties in a particular market. For instance, California was for the longest time a prime market for wholesaling, flipping houses, and other real estate investment strategies thanks to her excellent year-round weather, and consistent job growth.
However, the region’s real estate market is steadily facing a decline after changes in tax regulations and excessive bureaucratic red tape. While there are still many lucrative wholesaling opportunities in California and similar states, remember to do due diligence on pending, and upcoming incentives, and policies that might affect wholesaling to determine whether a particular market is worth dipping your toes into.
If an area has a strong economy, it means the job market is booming, inflation levels are low to moderate, and locals have a higher purchasing power. The result? They can afford to buy homes, boosting real estate demand, and conversely leading to high, profitable list prices for wholesaling, flipping, and other types of investment properties.
The beauty of wholesaling houses is that it has a low entry barrier. Investors only need to identify motivated sellers and transfer real estate contract rights to interested potential buyers. That means you can wholesale real estate both in and out of state.
With this virtual wholesaling is made possible as technology has completely transformed the real estate industry. You’ll agree on a buying price with the homeowner, find a reliable potential buyer in your network, and transfer contract rights to them. Property tours, appraisals, price negotiations, and even document signing can be virtual thanks to platforms like Zoom and Skype.
Once the deal is done, the end buyer sends cash to the homeowners, after which he/she sends you your profit. Wholesaling in other states allows investors to tap into less competitive housing markets and is less stressful as most of the processes, from appraisals to closing are often virtual.
So it is no question that you can wholesale in different states and work in multiple markets. You just need to do the right research on which are the best states to wholesale real estate so that you can plan out the strategies you'll need to take.
However, note, that different states have different real estate regulations, and the line between wholesaling and brokering can be pretty blurry to some sellers and end buyers. Be sure to seek a detailed wholesale training program to determine what strategies work best and take a step in educating yourself regarding a state’s real estate laws and regulations before you start exploring distressed properties for wholesaling in its market.
Although most people buy investment properties in entirely different, far away markets, wholesaling houses in your market first is a smart choice. You can physically attend property appraisals, allowing you to make wiser investment choices.
You are also well familiarized with the market conditions which makes it easy to determine the right time to sell the wholesale unit to flipping investors or interested cash buyers. Additionally, real estate wholesaling in your market first makes things a tad easier as you already have an established investor network unlike in other markets where you may have to start building it from scratch.
For first-time investors, wholesaling in your market first lets you learn and improve your trade before you take on larger, diverse markets.
The catch? Competition might already be too high. But either way, wholesaling in your market has more perks than cons and is a particularly smart choice for both new and established wholesaling investors.
Wholesaling is one of the most flexible real estate investment strategies. Investors don’t typically buy properties meaning reduced capital requirements and unlike flippers who need to renovate, they only need to find an end buyer meaning quick returns. Here’s an example highlighting a typical wholesaling transaction;
A motivated seller inherits a distressed property from their parents and as much sentimental value as it holds, they lack the time to deal with repairs and are willing to sell it to the first buyer at market value which is $400,000.
If a wholesaler comes to such a property, they’ll set up a contract at $400,000, and market it to their investor network and other buyer lists they may have at a profit, probably $430,000 or above depending on market conditions.
Once they find an end buyer, for instance, a flipper or rehabber, and the transaction successfully goes through, they’ll keep the profit of $30,000, while the owner keeps the $400,000.
Wholesaling is the best strategy for beginners who are looking to enter the real estate investing market, and seasoned real estate agents looking to make a quick buck. Although it has its disadvantages, it accrues them greater advantages such as risk-free investments, and good profits within a short while. They stand to benefit even more if they’re away
You stand to benefit more when aware of what are the best areas to wholesale which is why we covered not just states, but also some of the best cities and places to wholesale real estate in the country.
Torn between investing in and out of state? Well, both have perks, and whether or not to invest in your market first depends on preference, and most importantly, experience. For beginners just learning the ropes, investing in your market is the way to go.
It lets you learn how to find, assess and acquire pre-foreclosure, foreclosure, to distressed properties at a discounted rate, test your lead generation and management systems and build an investor network before you attempt to explore bigger, complex real estate markets.
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