Virtual Wholesaling In Alaska: Risks, Regions, And Reality Checks

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Chapters

• 0:00 Setting The Alaska Frame
• 0:34 Population, Scale, And Market Realities
• 1:53 Seasonality, Costs, And Holding Risks
• 3:37 Anchorage Deep Dive And Mountain View Warning
• 6:36 Title Nuances And Submarkets North
• 8:15 Juneau, Remote Towns, And Fairbanks
• 10:04 Ranking Markets And Local Fit
• 11:18 Motivation, Underwriting, And Contractor Shocks
• 12:22 MLS Deals, Final Verdict, And CTA

Transcript

SPEAKER_00: 0:07

Welcome to Wholesale Around the World, the Alaska edition. And of course, in the spirit of Christmas, we had to talk about the state that is home of the North Pole, North Pole, Alaska, the last frontier. Listen, we're we're gonna give our take on whether or not we think we should be virtually wholesaling in the last frontier, Alaska. It is the 48th most populated state with just over 700,000 people. But it is the largest state in land volume. Listen, if you don't have any connections to Alaska, it's a tough place to virtually wholesale in. I'm just gonna be honest with you. But there is opportunity in the state, very similar to Hawaii, but there's a lot that you need to learn about the state, and it is just weird. It's one of the weirdest places I've ever visited, and it's weird when it comes to its real estate transactions. I mean, half the year you're all sun, half the year, you're all darkness. Contractors charge an arm and a leg for everything. Sometimes it's beautiful, sometimes it's a frozen tundra, depending upon where you are. You could be in the mountains, you could be in the woods, you could be on the ocean. There's a lot to unpack when it comes to Alaska. And bottom line is it's just enormous. There's so much, and there's not a lot of people there. And so, overall, you're gonna end up in unless you're in Juno or Fairbanks or Anchorage, where the majority of any types of deals that you should be doing are going to be located. If you're outside that, there's a solid chance it's going to be pretty rural and really going to struggle to find in buyers. That being said, when I look at our history inside of Alaska, the majority of the business that we did was in Anchorage. And I actually really like Anchorage as a real estate market. I enjoyed the deals that we did there. Did we take some losses on some flips that we did? Yeah, but that was more us than the market itself. The one concern that I would give anybody that's doing virtual wholesaling in Alaska is that you have to understand the time of the year is important, right? When it comes to rehab budgets and also when the property is going to be listed by the investor. If you're going to go out and you're going to try to list a property for sale in December, January, February, I mean, it is a frozen tundra there, and it's going to be really hard. It's also really difficult to rehab the properties during that time. And so, because of that, your contractors are going to charge you so much more money. And it's weird. That's not the case. It includes interior work, just to get out to travel, to do tile work, to do painting the interior. It's going to cost you some money. And then the other thing that you need to account for is the holding costs for the investor is going to be higher due to the utilities that are going to need to be used to keep the property somewhat in livable condition, right? Yeah, you know, to make sure that the climate is okay on the inside. And so that can be pretty tough. But looking at Anchorage in particular, the one area that I want to point out that is an area that I probably want to stay away from, and we found out this uh the hard way is Mountain View. It's going to be the northern part of Anchorage, um, right before kind of Highway One starts going up north towards uh Fairbanks. That area of Mountain View is pretty saturated with homeless, a lot of drug usage. It does have some very affordable real estate that from a rental and cash flow perspective really kind of jumps off on paper. Looks like it could be one of the best cash flow markets out there. You know, you're talking about two, three percent rentals, even on section eight. So it looks like it could be really good. But we ran into issues there with taking down properties and being overrun by the homeless, uh, by people that were using joints. They basically squatted in the property, and we didn't really receive much support from the local authorities. They were basically like, listen, you need to handle that. Essentially, you kind of should have known what you were getting yourself into by by buying properties up in the Mountain View. And so that is a tough area, especially if you were on paper, if you're just looking at it virtually speaking, and you weren't familiar with the market, you're probably gonna think you're acquiring something that's very advantageous, and then maybe struggle a little bit on dispositions. That's my particular feelings about that mountain view area. The southern portion of Anchorage. Um, I've we did deals all over the city there, never had any issues with any of that. The numbers always checked out, the the days on market pretty much held strong. And so those areas were really solid for us, both on wholesaling and fix-it-flips and rentals. All of that checks the box. One of the most popular things that happens in Alaska, especially in comparison to other places in the United States, is quite a few investors like the house hack there, leveraging the fact that there are quite a few duplexes, triplexes, and quadplexes. They like to come in, take down that one unit, live on that, and then rehab the other units and use that as the cash flow to support them buying the building. So that is something to kind of keep in mind when you are looking to do dispositions, you're gonna come across some newer investors that are willing to do that. So that's something that you could target. The only other thing I'd say about the specifically about the Anchorage market is that most title companies are not accustomed to wholesaling. So you kind of have to explain what an assignment is, and especially if you want to double close, it could kind of really convolute the process. Now, moving up further north from Anchorage, there's a couple of areas. Um, Eagle River, Chugiac. Um, those areas we we did deals in. Really solid markets. Eagle River, I really liked that. Was probably one of my most favorite locations to do deals in. Um, it felt like the price points were a little bit higher, more sought out than some of the areas in Anchorage. And so solid places to do deal. Now, looking at another part parts of the state, again, remember Alaska, largest state volume-wise, land volume-wise, so it's huge. Um, we did deals in Juneau. Uh, Juneau was, in my opinion, not quite as good as Anchorage, but we were kind of indoctrinated to Alaska through Anchorage. So that's probably why I feel that way in comparison to Juneau. I I we didn't do enough in Juneau in comparison to Anchorage, but Juneau being the capital of the state, feel like there's plenty enough going on there. Um, we've also done deals in Sitka, which was unique. Yak Yakutat. We attempted to do a deal in Yakutat, but like a deal in Yakutat, it's funny, like that we found out through doing a deal there or being under contract and doing our due diligence. Like the only way you could get there was through helicopter, or I guess through boat, but there's no way to drive there, and and there's like unique things like that throughout the state, and it it kind of comes across as shocking at times. Now, going up to Fairbanks and North Pole, we've done some deals up there, obviously, further north. Winter hits a little bit harder, uh, further away from the coast. Frozen tundra up there. It's rough. Um, North Pole, that's the location where I probably have one of the more emotional seller situations where I dealt with a seller for multiple years. He ended up um being murdered um from a bar fight. And I ended up talking to his brother after that. He saw our offer in his truck, just crazy situation. Um, that's as far north as we've ever gone in Alaska. And and honestly, I kind of rank the the major cities in Alaska as one, Anchorage, two, Juneau, and then three Fairbanks. Um, just because Fairbanks is pretty tough in regards to the weather. I don't know about anything further north than Fairbanks. I haven't had any leads, I've never even talked to a seller in those locations. So I don't know if if there's even population up there. I don't know much about it. I've only been to Anchorage personally myself in Alaska. So listen, the population is 48th, and the common theme here on wholesaling around the world is the population rank normally kind of tells you where this ranks. Yeah, I mean, we're we're probably coming in somewhere in that 47th through 50th in regards to where Alaska ranks in regards to virtually wholesaling. What I would say though is if you do have a personal connection to Alaska, or maybe you live there yourself, there is an opportunity for you to do deals there. It's more of from a virtual aspect, it's gonna be really tough. It's definitely not as um cliqueish as Hawaii, where they're like, hey, are you a mainlander? Right, that's what they'll do in Hawaii. They don't do that as much in Alaska, but they will call you out for being like, okay, so you're not from around here, you don't really know what's going on. That happens quite a bit. But I don't think that if you're trying to get into virtually wholesaling, then Alaska should be a state that you kind of target. If a league comes across, obviously run it, pay attention. Hopefully, it's near Anchorage or Fairbanks or Juneau. Otherwise, probably going to be really difficult for dispositions. I'd say if you had to rank the level of motivation between sellers, there's going to be sellers that you come across that are highly motivated because of the situation. Maybe sometimes it's because they're living in Alaska. I've seen quite a bit of that where it's like, hey, I'm pretty miserable. I need to get out of here. Um, some financial distress because of the market and lack of jobs and stuff like that. But overall, it's pretty middle of the road. Dispositions, yeah, you can find in buyers, but it's going to be tough in certain locations. And underwriting the deals is going to be extremely difficult. Just the cost comparison to everything else here in the mainland of the United States. Uh, a great TU member, Matt Bombic, posted the other day where he had allocated something like$85 a square foot for a pretty simple cosmetic rehab. And the contractors then ended up coming back and saying it was more like$125 a square foot, something along those lines. I mean, it was significantly off, and that's pretty common. Um, and I I joked and I said, I will confirm as someone that has done a lot of flips in Alaska, contractors will just charge you what they feel like charging you. And so that's kind of what happens in Alaska. Same thing with the end buyers, they're gonna want a pretty solid discount, they're gonna offer you what they're gonna offer you, and they'll they'll just move on. It's very commonplace for investors to get their deals off the MLS in Alaska, it's not as uncommon as it is in other places because of lack of competition. So, is there an opportunity? Sure, but it's gonna be tough. There's a lot of learning curve there, especially in comparison to the rest of the United States. So, overall, probably not one of the best markets. That being said, if you have done deals in Alaska, please let me know about them in the comments. Let me know do you agree or disagree with my take on the state of the last frontier? Olaka. Show me some love, like today's video. We'll see you guys tomorrow.