You could then wholesale or assign contracts "sometimes" as an exit strategy to unload inventory for the rehab entity.

Having experience with all three spectrums of the rental market, to me it just seems like there is more benefits and upside with mid and high end ... with low end there defintely is a market for it and you're correct a fourtune can be made there but like you also mentioned the big problem with low end market is when trying to sale the inventory its takes alot more effort to find buys that are willing to pay a fair price.

@garrick oconnell: I know this is an older thread but I am actively looking for a multifamily in San Diego but there is almost no inventory.

I do plan to keep it as a long term rental (it's 4 blocks away from my house), I just don't like that almost all the applicants have pets (only 1 didn't have one) so that being said I would hate for a cat/dog to ruin my brand new hardwood floors with their pee but maybe I'm being to paranoid and maybe it's worth the risk and make it a high end rental and hopefully keep the high rent.I still haven't put in the granite, this was one of the conditions for me to charge $1,700/month, I haven't done a good job on doing my homework about the type of upgrades on the rentals in the area, I do remember seeing a couple that mentioned granite, I definitely need to be sharper and get to know my market real well, I was thinking the best way to do this is to become a "prospective" tenant and go check out all the inventory for rent in the area.

First off they would not even have D's or C-'s in their inventory (they all claim they don't but its not necessarily true).

I should mention that my market is low inventory with no shortage of Buyers who will commit to a short sale.Every good agent has contingencies that protect a Buyer in the event they have to back out.

There are many who believe flipping qualifies as an investment, but it the real estate is really held as "inventory" in a real estate business and not held for "investment."

My area is North New Jersey which is notorious for high prices on multi-units and very low inventory 3 family house, 2 car detached garage and driveway. listed at $345k, hoping to pick it up around $320-$325k 3 units to rent, a 3 bedroom, a 2 bedroom, and a studio Current rents: 1300, 950, and 650 Taxes: 7000, (flood insurance is required although unit does not seem to show signs of previous flooding in last 2 major storms, electrical from 1990 and gas furnace is over 10 years old) Flood insurance: $1600 (450k worth of coverage) I got approved for a mortgage at 5% rate after 25% down.

Today, their hands are tied and this is just not as likely.Also, while REO listings use to dominate the inventory, they are now the minority of listings.Sorry I don't have better news for you, however, that does not mean you should not be goring relationships or stop going after REO deals.

@Shalan WinterDealer property or property held as inventory are not eligible for Section 1031 exchanges.Normally a tax free Section 1031 exchange would be for a property held for more than a year, but there could be exceptions that are held for less time.A buy and hold, a property that you rented for some time like more than a year would all be good candidates for 1031.A very good candidate would be a property that you held for a very long time and have lots of appreciated value.