Choosing Your Niche

Many new investors make the same mistake…. They try to do every type of deal all at once.

At networking meetings, I often hear people say, “Well I’m just starting out.  I’m doing wholesaling, lease options, and shortsales… I also heard commercial is going to be the next big thing… and  I went to a seminar about probate, so I want to get into that as well.”

It is important to get to know the different avenues available in real estate.  How else will you know which one is a proper fit?  However, there comes a time when you need to focus on an area.  If not, you will be spinning your wheels and wondering why you are not making any real progress.

Where do You Fit?

Skills Required for the Most Common Niches:

Wholesaling

If you do not have much cash, but you do have a lot of time.

  • Marketing
  • Working with distressed sellers
  • Negotiating
  • Networking with buyers
  • Estimating value and rehab cost

Rehabbing

You need access to cash for fast closing.

  • Networking with wholesalers & agents
  • Managing contractors
  • Estimating value and construction costs accurately
  • Marketing to investors/ private money

Multi-Family Investing

Buy & Hold
  • Analyze numbers
  • Thick skin (landlords)
  • Managing contractors, tenants, and/or management company
  • Comprehensive understanding of landlord/tenant laws of each state

Lending/Investing

You have access to cash and no desire to manage rehabs yourself.

  • Networking with rehabbers & potential borrowers
  • Negotiating with borrowers
  • Analyze possible deals
  • Comfort with risk

Short Sales

  • Patience (or someone on your team with patience)
  • Negotiation skills
  • Evaluating values
  • Marketing for resale

Probate

  • Tact, sympathy and diplomacy
  • Networking with attorneys
  • Managing contractors (if you rehab)
  • Evaluating value
  • Marketing for resale

Pre-Foreclosures

  • Marketing for motivated sellers
  • Tact, sympathy, and diplomacy
  • Negotiating skills
  • Evaluating value and rehab costs
  • Marketing for buyers (investors or retail)

REO’s

  • Persistence (patience to stay on hold)
  • Networking with Realtors
  • Evaluating value and rehab costs
  • Managing contractors
  • Marketing to buyers (investors or retail)

Commercial

This includes large apartments.
  • Very skilled at analyzing the numbers
  • Often need to fly out to emerging markets to find large apartments
  • Marketing or access to large amounts of cash and reserves
  • Risk tolerance

Updated 7/11/16