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Where are you finding your deals? - 2013 edition

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Steve K

Real Estate Investor from Orlando, Florida

Jan 17 '13, 06:43 AM


I'm having essentially zero luck the past few months finding decent rehab deals at numbers that make sense. Probably averaging twenty cash offers per week and batting a cool 0.00% so far. 250 offers without a single deal seems pretty unlikely so either the market is that tight or i'm simply being too cheap?

I know this topic comes up regularly but figured i'd start the new year version. What's working for you? MLS, direct mail, networking, probate, etc?




Jerry Puckett Verified

Wholesaler from Irving, Texas

Jan 17 '13, 06:54 AM
1 vote


Hi @Steve K,
Direct mail, specifically yellow letters are my bread and butter. The MLS seems to have tightened up all over, but the number of distressed sellers, whose properties would never likely hit the MLS, seems to stay about the same. Once you've set up your "marketing machine" it tends to spit out deals on a regular basis.

Mind you I'm wholesaling, and the majority of my buyers are buy and hold types who tend to pay a little more for a house. Getting properties at true wholesale prices has gotten harder. But at least I'm not competing with dozens of others over listed properties, so I figure the odds are in my favor.



Medium_untitledJerry Puckett, New Refined Images LLC
E-Mail: [email protected]
Telephone: (214) 699-7565
Website: http://marketlikeawholesaler.com
I help Investors buy wholesale | Direct Mail & Internet Marketing


Blair Halver

Wholesaler from Marietta, Georgia

Jan 17 '13, 07:37 AM
1 vote


I recently met with a local here in Atlanta, originally from China, who has been buying houses cash with a bankroll of $1.5MM cash from friends and family back in China.

Because he has the money, and/or because he doesn't know any better, he's been buying houses off the MLS whenever his realtor calls him. He feels he's getting a good deal. Minimum 10% ROI. He buys and holds for rentals. Mostly section 8 he said. All professionally managed. He's pretty hands-off, but I'm sure he's making some good money on his money. It's just an investment to him of course.

Point being, he's going to the MLS, but I don't think he's getting true wholesale deals, as Jerry has mentioned.



Blair Halver, Dealbot.co
E-Mail: [email protected]
Website: http://Dealbot.co
Dealbot.co - Pay-per-response full service direct mail marketing for real estate investors.


Corey Dutton

Real Estate Lender from Salt Lake City, Utah

Jan 17 '13, 09:23 AM


You aren't alone @Steve K. As a rehab lender, most of our regular r.e. investors have dropped off the map in the last few months. They are just not finding the deals that were there 1 year ago. It's a bidding war in a lot of markets since everyone has come off the sidelines in the wake of the news that, 'the market has finally hit bottom and is on it's way up!' All the dummies are out there trying to get rich on real estate and it makes for tough competition in some markets.



David Driscoll

Real Estate Investor from Westlake Village, California

Jan 17 '13, 09:25 AM
1 vote


What's worked for me, on short sales, write the offer at asking price, then add, you will pay $1000 over the highest offer. I let the listing agent represent me. After you tie up the deal get a professional home inspection and with the results negotiate the price



Erich Edwards

Real Estate Investor from Markham, Illinois

Jan 17 '13, 09:25 AM
1 vote


Steve, I have been searching the MLS for deals just to see whats available. Jerry is correct that the MLS is tight but my realtor lets me know what areas investors are buying in right now. I've found about 4 good deals through the MLS over the last month but my problem is that the cash buyers I've contacted don't want MLS deals or don't want the areas I'm in. I have 2 deals directly from the property owners in Chicago that I received a few days ago. One is tax delinquent and the other is 3 years behind on the mortgage. I've got my work cut out to make these deals work.

I recently joined a REIA group in the Chicago area and look forward to getting tips from other active/experienced investors. I've heard that some of the seasoned investors are investing in Gary, IN which I would never have considered but evidently they know more than I do.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jan 17 '13, 09:29 AM
1 vote


We've been focusing on short sales, through direct mail and off the MLS.



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Will Barnard Moderator Donor

Real Estate Investor from Santa Clarita, California

Jan 17 '13, 09:48 AM


Can't speak for all markets, however, short sales are the market majority in many areas as REOs have dropped off dramatically. As such, if you are playing the MLS numbers game, you should be writing lots of offers and a majority on short pays.

First and foremost, building relationships with agents that can bring you deals is essential.

Jerry's suggestion of marketing directly to potential sellers is the new wave that is practically required now if you want to do any kind of quantity. Not to say the strategy is new because it is not, just o say that when the market changes, u must change with it and apply the strategies that work for that market. Once again, we are in a market that you must talk direct with sellers and direct mail is your entry to that conversation.

I have not started that campaign yet as my particular niche has kept me busy enough, but I do intend to.



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


Account Closed

Real Estate Investor from Central Valley, California

Jan 17 '13, 10:07 AM
6 votes


My deals are still coming from my direct marketing. The main issue in my markets is equity. My markets have so many properties with no equity. Unless I create equity (short sales, sub-2 holds, etc) the pool of sellers is too small.

You're probably being too cheap, but only compared to what others will pay. It may not make sense for you to change your buying criteria if the margins get too thin and risky. The main rehabbers in my farms are working volume and on incredibly thin margins by my standards. A house I need to buy for $85K, they are paying $110K for at trustee's sale. They are doing 5-10 houses a month. The smaller players aim for $15K-20K, even on the $200K+ houses. Just one major repair issue and additional hold time and the deal is toast. I don't get it.

Last year an agent brought me an investor buyer on an almost finished rehab. He paid $95K and gave the agent $1500 for finding the deal. He had the flooring done, for probably $2500 plus some landscaping. He listed it with the agent for $5% at $134K. They got lots of offers in the $125K range, but in the end they couldn't get the appraisal higher than $117K and finally sold at that price, after six months. That's not a deal I'd want. But the investor was using his IRA funds and even a few K is more than he had the month before. Those guys are everywhere right now. Someone with cash, building their retirement fund, not needing to make a killing (or a living), is the the real competition. Add to that the new buy-and-hold investors who think cash flow is rent - PITI. Their purchase prices really skew things too.

I'm at a crossroad about changing my buying criteria. My husband always accuses me of being too cautious and needing overly wide margins. My thinking is that I don't get burned by deals I don't do. But I don't make any money on the deal I don't do either. His point is someone with skills, experience and capital (me) should be able to adjust to the current market. Still chewing on that.



Tin Lam

Wholesaler from garden grove

Jan 17 '13, 10:22 AM


Walk your street talk to potential sellers, drive around look for vacant houses, mail them, and that where I get my deals.



Kent Anderson

Note Investor from Black Forest, Colorado

Jan 17 '13, 10:25 AM


My preference is to work with decision makers directly, face-face over the kitchen table.

Therefore, I'm limited to direct mail, referrals, searching neighborhoods for vacant houses and other likely prospects, and talking to neighbors.

As for your numbers, if I get 100 calls from a direct mailing (and hopefully a 5% response rate), after I prequalify on the phone, I would be happy to have 15 qualified prospects I am willing to spend the time and travel their home to discuss business.

Then, I’ll make 10 – 15 offers (when I make that effort to visit personally, I always make an offer, subject too newly unrevealed problems that kills the deal, which happens) and be happy to close one or two transactions.

Please note, My goal is to put one or two houses a year, I keep almost all my transactions so I’m am very picky.

Keep at it, they’ll come and good luck!
-Kent


Edited Jan 17 2013, 10:38 by Kent Anderson


Bill Gulley

Real Estate Investor from Springfield, Missouri

Jan 17 '13, 11:22 AM


It is kinda the same question and while different things work for different folks, I agree that the MLS has potential in expired listings. These houses didn't sell for a reason, usually over priced, but 9 months out they may be more motivated, a cold call can establish that. Many also need updating, they were not ready to sell at that price. You might not buy it, but you can also fall back to doing the work and assisting the seller to get rid of it, at a profit....you can make a profit and never own it! Easy to do as pre-foreclosures too, work with the lender and the owner.

As Kent points out, it's about getting in front of owners, walking and talking and all about the numbers, tell everyone who says no "thank you" because it's one less owner to get to the yes!



Will Barnard Moderator Donor

Real Estate Investor from Santa Clarita, California

Jan 17 '13, 01:48 PM


My deals are still coming from my direct marketing. The main issue in my markets is equity. My markets have so many properties with no equity. Unless I create equity (short sales, sub-2 holds, etc) the pool of sellers is too small.
While such a deal may not work for flipping, don't pass up on leads like this as there exists other ways to make money off of low equity deals.



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


Kent Anderson

Note Investor from Black Forest, Colorado

Jan 17 '13, 02:35 PM
1 vote


Mr. Barnard,

I agree! That’s why this is a get rich SLOW business (if it happens at all). NOT get rich quick!

I know what is going to happen... I work my tail off like the typical self-employed, finally get free and clear, die, my children inherit and sell it all quick at .50 cents on the dollar.

Then do something brilliant like, buy a Cadillac.

My goal… give the kids a down payment each and give the rest away.

If I only knew when I’m gong to die… I could spend it all first!

Ahh, i can't help but laugh.

Take it easy,
Kent



Account Closed

Real Estate Investor from Central Valley, California

Jan 17 '13, 04:28 PM


Originally posted by Will Barnard:
My deals are still coming from my direct marketing. The main issue in my markets is equity. My markets have so many properties with no equity. Unless I create equity (short sales, sub-2 holds, etc) the pool of sellers is too small.

While such a deal may not work for flipping, don't pass up on leads like this as there exists other ways to make money off of low equity deals.

Will: Thanks for your reply. Since this thread is about how to get deals in 2013, I'd like to hear your ideas for other ways to make money off of low equity leads. I just completed a sub2 that took me six months to negotiate a pay off from $275K to $85K. So I created equity in a no equity situation, without a short sale. But frankly I'm not sure how I would create another deal like that.

Regular short sale leads seem like such a numbers game and a lot of marketing dollars, and the agents are going after those as well.

I'm considering a sub2-and-hold deal as the seller is really eager to be done. Good property with a low fixed rate, with tenant paying market rents, currently loan is right about value. I can get in for nothing, and rents cover PITI and then some. But it's an appreciation play and after 75+ deals I've never bet on appreciation. According to Bruce Norris this would be a good year for that. :)

Any other thoughts about low equity leads?



Dell Schlabach

Rehabber from Canton-Akron, Ohio

Jan 17 '13, 05:29 PM


We are still getting all our deals from the mls..seem to be the outlier here.

Bought sixteen last year for myself, six for a solo rehabber who I feed deals, in return for inexpensive money.

I notice we are getting a lot more of our deals at the back end, instead of first day on market. We dont have the kind of margins k.marie.poe. does but we are consistently in the 13, 000-17, 000 range, had two over 25, 000 last year.



Dell Schlabach, BenchMark Properties
Telephone: 3304326927
Dell Schlabach BenchMark Properties


William Bannister

Commercial Landlord from Oshkosh, Wisconsin

Jan 17 '13, 05:49 PM


Steve I think certain markets that were exploding in the boom have recovered faster then others. the key here is demographics. Orlando continued to grow even after the bubble burst as did a few other cities. When the bubble burst in 07 the over build inventory was sucked up faster then other cities. As a result your now seeing a few cities that baby boomers are still moving to bringing steady amounts of cash to the market. The city of Orlando just like Miami and Tampa are the fastest growing markets 2000 thru 2012 in your state. Orlando is 19th fastest growing city in the nation.
80 million baby boomers moving south to either Arizona or Florida.
If I lived in Orlando I would buy and hold big time. il probably be there either way within 12 months too bad I didnt get there like 3 years ago.
As an investor some times things get tough. During our last boom i quit buying after 2006 because I couldnt find anything. I just gave up the bums on the street were getting better loan offers then I could get as a investor with cash down pmts a net worth and 15 years management and rehab experience back then.
I sold off half my portfolio most of my small stuff houses and duplexes and moved south started with cash and sat and waited for 2+ years from 2007 to late 2009 before I dove back into the market down here in the Ohio river valley. I got lucky selling my last home up north 4 weeks before the sub prime melt down. About 6 months later it struck me that I had gotten very lucky. I went from rehabbing back to landlording since I still had apts I just retrenched and stopped buying. My rehabbing was over and I began to focus back on the apts I still had after I sold off the houses. Now i am creeping back into the rehabs but Im doing deals with cash no debt.
I think Orlando will continue to grow for another 4 to 6 years then boomers will probably drop off as customers and growth with slow.



Account Closed

Real Estate Investor from Central Valley, California

Jan 17 '13, 07:07 PM


Originally posted by @Dell Schlabach:
We are still getting all our deals from the mls..seem to be the outlier here.

Bought sixteen last year for myself, six for a solo rehabber who I feed deals, in return for inexpensive money.

I notice we are getting a lot more of our deals at the back end, instead of first day on market. We dont have the kind of margins k.marie.poe. does but we are consistently in the 13, 000-17, 000 range, had two over 25, 000 last year.

Dell Schlabach: What's your selling price on a house with a $13-17K profit? Nothing wrong with those numbers if you don't have to tie-up $100K for 3-6 months. But that's me. That being said, I may be in for an attitude adjustment about margins if I want to stay busy this year.



Glenn Espinosa

Rehabber from

Jan 17 '13, 07:34 PM


Are others adjusting their margins in order to stay in the game? I read somewhere on BP that the ideal adjustment would be to stick to your buying criteria, keep looking for the 1 or 2 real deals, and to keep cash at bay until others start to fall off...

Obviously this all depends on your goals, but there have to be some investors who are choosing to stay out of the market due to the increased competition.



Will Barnard Moderator Donor

Real Estate Investor from Santa Clarita, California

Jan 17 '13, 08:51 PM


K. Marie Poe - Since we have an ongoing appreciating market again (in the FHA limits of CA) and likely will continue for 2 years or so, getting a low equity deal creatively (sub2, lease option, etc) and placing a tenant could bring a small windfall down the road. If the home can cash flow, you can MLO the deal or buy sub2 and lease. If you find a low to negative equity deal, you could pass on to a RE agent for a listing referral fee or sell for them (if you are an agent).

Many ways, just think creatively. (My eyes are opening wider these days to such opportunities)



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


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