Why buying a property with 15% Equity Sucks!

So I'm listening to a Webinar today at work and had to share this with you guys. Basically, Real Estate Investment Companies are wholesaling properties (selling you their contracts for a fee), hoping to get investors, such as yourselves, jumping at their properties that typically have only 15% Equity. The crazy part is they believe this is a successful strategy.

Now this may be a good thing for some, and the strategy may be paying off for these guys. Personally I find this hard to believe. The market is rough right now and smart investors know this is a buyer's market. In order to satiate their craving for cheap deals, you have to buy right in order to sell competitively. This sounds cliche' but I'll give you an example that is almost a staple in our company for how we do business:

-We typically will not wholesale any property that, with acquisition & rehab costs combined, won't leave the investor with at least 30% under market value.

Now that's a win-win strategy. Investors continue to buy from us religiously, and we don't get stuck holding onto properties for too long. I almost get the sense that were we to target properties that would end up yielding the investor (our client) only 15% equity, we would not be doing too well.

Think about this next time your about to purchase an investment property. Are you really getting a good the best deal?

--Keep your eyes out for an upcoming post on why buying at Sherrif's Sale could be the biggest mistake of your investing career.