BiggerPockets

Hi,

I'm still very new but I am ready to start making some offers on properties to get my feet wet and get started in REI.

I have a pretty small amount of reserves myself, but have access to hard money if need be.

I spend hours every day searching on sites like realtor.com, craigslist, and other MLS style sites just looking at properties for sale around the valley where I live.

My issue is that I do not know how to identify a smokin deal when I see one. I look at what feels like hundreds of houses online every day. I drive by ones that seem to be ok deals. I have a realtor that can show me places that i really want to see..

Bottom line is I would like to find a property that is way under market value, could use some work, then move into it and start fixing it up while I decide my next step.

I have no experience at all with rehabing, so I could use some hands-on experience.

PLEASE HELP!! How do I find a good deal?! I am so eager to get started, but just don't want to make the wrong move! I'd live in a SFR, 4plex, condo, anything. I just want to get started!

Mike has given has great advice in his reply.one thing I will add is that you sound very eager to jump into real estate investing. Don't get too eager and end up buying a property that doesn't meet all your checks. Buying no property is better than buying a property that loses money.

Good luck.

Buy desperate sales, don't be desperate to buy.

I highly suggest you read or listen to John W. Schaub's "Building wealth one house at a time" and follow it to a T. I don't think anyone on this site would will disagree with his method.

The key to making a sound investment is having objectives. Sit down and write out your goals. Why do you want to buy? How long do you plan on holding on to it? Is it in a good neighborhood for future resale? How many $$ will you need to invest in it? You don't get rich over night holding onto real estate and renting it out, you get rich by knowing when to buy and sell. Be sure if you are buying as a investment you have the personality to be a landlord, if not you will need at some point a management company. If this is your first home take your time there is plenty on the market. Remember rushing into anything will cause you to have regrets... Seriously sit down and make a sound business plan if you want to be a sound long term real estate investor. Reading all the books in the world will not help you unless you have a sound head on your shoulders! Good Luck!! :)

Scott -

The problem is that you're spending all of your time trying to find a deal without knowing what a deal looks like. And to know what a deal looks like, you need to familiar with all aspects of the investment, not just the purchase side.

For example, how do know if a house that's listed at $60K is a good deal if you don't know whether it will sell for $65K or $165K? And even at $165K it's not a good deal if it will take $100K of rehab work.

Spend time looking at houses that have SOLD. Knowing your resale values cold will tell you whether a house is even a potential deal, as many houses are listed above what you could resell them for, so even if they didn't require any work, they're still not good deals.

Next, get familiar with rehab costs so you can factor that into the equation. If your expected profit on a deal is $15K, and you underestimate rehab costs by $20K, you just lost money!

Lastly, I've written a bit on the BP blog about the formula I use to determine if a house is a deal or not -- do a search for posts on "The Flip Formula" that I've written.

If you look at that many listings you would think you would have an idea of what is a good price. Do you look at many houses? If you dont, you should. Looking at them on the internet only paints part of the picture.

GOOD LUCK

I actually went to a couple of REI club meetings when I was new to Phoenix and found them to be a total waste of time. Most people who attended the meetings were either non-experts trying to pose as experts, or people seeking to learn. I am not sure if REI clubs are as lousy in other cities as they are in Phoenix, but I would not plan on gaining much from such organizations if I were to expand into another city.

I think considerable expertise can be gained by analyzing data thoroughly. As J Scott has mentioned, it is important for the OP to first know what a good deal looks like. With flipping, the most important number to know well is the ARV. This requires checking out houses that have sold. You will need to evaluate the house in terms of its location, square footage, levels, basement, interior finishes and upgrades, views, landscaping, etc. If you do enough of this, you will become good at estimating the ARV of properties.

The second-most important thing in the flip business is estimating the rehab costs. Again, as J Scott has said, you should become very familiar with how to do this.

I think your time will be much better served acquiring expertise than in attending REI clubs where you are likely to meet mostly losers.

Something else you might want to consider would be to get your Real Estate License. Realtors and the MLS have a kind of 'monopoly' on lots of data, especially residential data. If the REI clubs in Phoenix are not good, many times, Realtors will have their own investment groups that meet periodically. I do not know the requirements for an AZ Real Estate License, but it would be a great tool to have.

While I'm sure there are some great REI clubs out there, my experience at my local club (one of the largest in the nation) wasn't very good...

Most of the member were either "gurus" trying to take advantage of the newbies or newbies trying to figure out how to get started. Didn't seem like there was much opportunity for collaboration, mentoring, or decent deal-making.

But again, that's just one person and one club...I'm sure there are some great ones out there...just make sure you go in with open eyes...

Wow.. Lots of replies over the weekend.

Thank you everybody for your input. I believe my focus now will be to choose a specific area or two in Phoenix, then start looking at properties that have sold. This does sound like it will be help me to understand a fair list price on a new home for sale.

The AZREIA has a meeting this evening. According to the website, it looks like you can just show up and attend. It's $20 to get in. Does L Gale or anyone else have experience with this club? I would love to attend.(although I have no idea what to expect)