Here it is the first weekend in February already, and if you are a new or part-time investor, you may been hit with the realization that, “Hey, I have already lost a month of this year.” And those months will continue to fly by, as we all know they do.

Let me see if I can give you a little nudge or jumpstart to get you off the sideline, if you are still hesitating or delaying getting that first investment property of the year.

Step one is simply committing to the fact that it is time to take action.

It’s very common—regardless of whether you are an experienced investor, slightly experienced, or new—that you may not be where you want to be in terms of reaching your goals, only a little more than a month into the year. That is especially true for you new or part-time investors, who are not doing a lot of transactions but are looking for a way to start and probably have some apprehensions. That is perfectly natural, and I was there when I started many, many years ago.

You’re probably looking at your options and going, “Well, gosh, I see the three primary exit strategies with investment real estate: I could rehab a house and sell it retail on the MLS. Or I can buy a house and hold it as a rental property. Or I could even wholesale a house” (which simply means buy it and sell it off-market to private investors or individuals). You could easily find yourself very overwhelmed at the thought of any one of the three.

Daunting Strategy #1: Rehabbing

You may be looking at strategy number one—rehab—and thinking, “Golly, I already have a full-time job. I already work 40, 50, 60 hours a week. How am I going to find the time to buy a house, rehab it myself or even manage others who will rehab it for me, and then ultimately sell a house?” That may be a very daunting task to you with your current commitments and your current full-time career.

Daunting Strategy #2: Buy-and-hold

You may also be looking at that second strategy—buy-and-hold, or rental property—and thinking, “Well, I’m just not there yet. I need to build up some cash reserves in my real estate investing so that I can ultimately have enough money to put down on a rental property, buy it, repair it, and hold it long-term as a rental.” So maybe a rental is a little daunting also.

Daunting Strategy #3: Wholesaling

Then you may be looking at that third exit strategy and thinking, “Wholesaling—boy, that sounds great. I can buy a house and sell it real quick for cash as-is and start to build up some cash in my business so I can buy more homes or even buy those rental properties that I am ultimately seeking to buy.”

But at the same time, you may be thinking, “How am I going to find a property and be able to buy it deep enough so that I can wholesale it to another investor and still allow them enough room to make a profit?” Or, “What if I do find a property and buy it? I have a full-time career that I am fully vested in. I do not have an exhaustive real estate buyers list that I can use to ultimately market this property.” That is something that takes time to accumulate, and if you are new to the business, or only a part-time investor, that can make wholetailing seem a little daunting, too.

So what is a new or beginning investor to do?

There is Another Option—A Hybrid Solution

Well, what I want to talk about in this blog post is a hybrid strategy that you may or may not be aware of. Either way, let’s talk about it and see if we can uncover some stones or an opportunity that motivates you and enables you to overcome what’s holding you back from making your first residential real estate investment of 2016.

This hybrid strategy is called “wholetail.” Very simply, it’s a cross between two of those exit strategies that we just spoke of earlier: wholesaling and retailing.

An important footnote here: This is not an assignment of contract. This is an exit strategy that does require you to purchase the house.

Let’s Examine What ‘Wholetail’ Means

Let’s talk about the first part of the word—“whole”—or the component that refers to wholetaling. It means that you are going to buy a property, and you are going to do very minimal work on it. This minimal work can vary depending on the property and on your objective. You may do as little as cut the grass, trim the shrubs and vacuum the carpet. Or, additionally, maybe you put on a fresh coat of interior neutral paint, or install an affordable rental-grade carpet. The point is that the extent of your work is very limited within that spectrum. You are not doing a full rehab by any sense of the word. You are basically just making the property presentable, marketable and/or livable.

I’ll give you an example. Last month, I purchased a home. I simply went in and vacuumed it, removed any remaining small items, removed any nails or hooks—or anything like that from the walls—and wiped down the kitchens and baths. That was the extent of my work, and this was ultimately a wholetail deal. So that gives you the definition of the wholesale component of wholetailing.

Now let’s talk about the second part of the word—“tail” —or the retail component of the term “wholetail.” Once you have bought this property and put that minimal amount of work into it, you are going turn around and market it on the MLS. You are going to hire a Realtor who will ultimately list the property and market it and sell it via the MLS.

How to Spot a Wholetail Deal

You may see these types of properties out there today on the MLS. The way you know it is a wholetail-type deal is that you are going to see comments like: “as is,” or “seller will make no repairs,” or “price reflects condition,” or “needs TLC,” or “investor special.” This type of verbiage is meant to indicate to the potential buyer that, “Hey, this is not your traditional retail property. This property needs work, and therefore it is priced accordingly, and it will only appeal to a limited buyer pool, typically to investors.”

There are plenty of investors—maybe you included—who are combing the MLS daily in search of investment properties, and these are the phrases and descriptions they are looking for. They are looking for wholetail-type properties that they can buy at a discount on the MLS, make an investment in, and either then either hold them as rental properties or sell them as retail properties.

That’s what is meant by wholetail: a combination of wholesale and retail. The wholesale component is the fact that it is a very light clean-up or very minor rehab. The retail component is that you are selling it on the retail market or on the MLS.

Wholetailing is Quick, Easy and Inexpensive

So why would this strategy be appealing, or interesting, or beneficial to you, as a new or part-time investor?  Well, first of all, you can probably see that these properties are going to require a lot less of your work in comparison to a traditional rehab. If the thought of doing a full rehab on a house is daunting—and rightfully so—if your full time career is elsewhere, this requires much less work. Just some simple lawn maintenance, trimming the shrubs or painting can be done very quickly, easily and inexpensively.

These require less money when compared to a traditional rehab. If you are thinking, “Gosh this is going to deplete all my cash just to buy a house at 20 percent down. Where am I going to get the rehab money?” Well, you’ve got very minimal rehab expense in these homes because you are just doing a minor rehab. And then you are going to price the property at a discount in light of the fact that it still needs work.

These deals also require less time. You know a traditional rehab can take 30, 60, 90 days, depending on the extent of your work. In contrast, these wholetail properties are prepared for market in a weekend, or in a week at most.

These require less experience. You may be a new investor and you may be thinking, “Gosh, I don’t know the first thing about rehabbing a house. I don’t even have the slightest idea how to find contractors or manage them to rehab a house.” Well, wholetailing is typical handyman work that you probably do around your own home today, like painting, landscaping or simple cleanup work. You can do a lot of it yourself, and you don’t need a lot of experience.

Another of the advantages to you as a new or part-time investor is that you can typically earn a little more profit or little greater margin on a wholetail deal than on a traditional wholesale deal. A wholesale deal is sold off-market for cash, but a wholetail deal is sold on the MLS or on-market, and may involve financing from your buyer. Selling it on this marketplace enables you to gain a little more profit margin because you able to price it a little higher since you are not marketing directly to cash investors off-market. You are marketing to retail buyers, typically, or investors who are on the MLS and who are prepared to pay a little more for properties in exchange for the ease of finding them off the MLS.

No Buyers List? No Problem!

Then finally, on the sales side, you may be thinking, “Gosh, I can’t wholesale a property today, because I don’t know how.” Or, “I don’t have a buyers list. How am I going to sell a property off-market if I do not know who to sell it to?”

Well that’s yet another advantage of wholetailing: You can leverage your local real estate agent to sell this property for you, while you stay focused on your traditional day job or career. Your real estate agent can be at work for you selling that property, leveraging the MLS, leveraging his or her network and experience, and your agent can get that property sold for you while you focus on your other career.

Another relevant point I want to make here is that you don’t have to buy these properties as “deep” as you would if you were doing a traditional wholesale deal. You can pay a little more for a wholetail property because you are going to get a little more. Keep that in mind.

Once again, let me stress that you don’t have to have a buyers list. You can sell the property on the MLS. There is a built-in buyers list right there.

This strategy, as I also mentioned, is going to save you some time and also not require as much experience on the part of a new or part-time investor.

So if you are stuck, if rehabbing is too involved, if wholesaling is too hard to buy and sell, and you are not ready to buy and hold—I seriously stress, please consider wholetailing. This may be the exit strategy that allows you to get into the real estate investment game in 2016. It removes a lot of obstacles. It reduces a lot of risk. And let’s face it, it removes a lot of excuses.

You can listen to Kevin’s podcast here:

http://www.blogtalkradio.com/kevinguz/2016/01/28/getting-started-with-your-first-real-estate-investment-of-2016

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  • Kevin Guz

    Kevin Guz is a Dallas, Texas-based residential real estate investor with more than 10 years of investing experience. He owns a HomeVestors (or “We Buy Ugly Houses”) franchise as well as the Clear Key companies, which focus on residential real estate wholesaling, rental property management and self-storage leasing. He also is a licensed real estate agent in the state of Texas. He enjoys sharing his ongoing personal experiences, perspectives and learnings from his start as a part-time or “weekend investor” and full-time corporate professional through his ultimate transition to a full-time real estate investor and business owner. You can listen to his podcasts at http://www.blogtalkradio.com/kevinguz.

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