Posted by Tony (CA) on July 14, 2001 at 21:23:09:
I see wholesaling and lease options as two tools in you toolkit for solving problems for motivated sellers. Like any other tool, each will work best for different situations.
More specifically, the answer to your question really depends on your own desire, the houses you find, and the sellers. The average price of the homes doesn’t really matter. What matters more are the specific deals you find. The Bay Area is too large of a region to generalize. If you plan to go after houses only in areas close to the colleges, you may find the market different than another area that’s 20-50 miles away. Wholesaling houses is profitable only when you can buy them at a low enough price that you can turn them over and sell them at a profit. Given the high demand for housing in Berkeley, Palo Alto, or SF, three centers centers, you may find it difficult to find a seller who is motivated enough to sell you their house at a low enough price. Of course it could be a completely different situation if you look at some of the areas nearer to the smaller colleges.
Lease optioning has its pitfalls in being able to put only houses under contract that the owner doesn’t require a lot of up front money. You may find “tired” landlords close to campus who will allow you to lease a house from them with an option without much consideration money. Again, it all depends on you being able to locate these sellers.
Whichever route you take, the key is to find motivated sellers, not search for houses.