Secret To Finding Off Market And Turnkey Properties?

Dayton, Ohio
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Secret To Finding Off Market And Turnkey Properties?

Shera Ewing
Member since 2021 · 37 posts · 18 votes

Does anyone know the best way to finding off market and turnkey listings? I'm trying to purchase my first multi family home to house hack. I'm working with an agent but there just isn't much out here. And if one does come up, it needs more than cosmetic work or it gets snatched up so fast! If anyone knows of a better strategy that could work better for me, please leave all suggestions. Thank you!

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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
4y

You aren't going to find an off-market, turnkey property when you are working with an agent and using an FHA loan. Off-market properties, in general, are for cash buyers. To buy a turnkey off-market multifamily right now, you would have to pay way over market value. The only chance would be finding a lazy owner who wants to get rid of one, but that means it will not be turnkey due to that same laziness. A turnkey multi you sell on the market and get paid by the droves of house hackers that you keep losing out to. Just stay the course and keep looking and know that to win with an FHA, you need a fixed-up option and you need to pay up so if your price point is 300 say, look at 250.

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  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    @Shera Ewing I would advise working with an investor friendly realtor if you haven't yet. Because of the nature of this market, you want someone who is on top of the new listing and can focus on the properties that are a potential house hack. Getting a source of off market properties where the agent has a relationship with the owner would he helpful as well to give yourself a chance at getting the property with an FHA.

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    2Reply
  • Shera Ewing
    OP
    Member since 2021 · 37 posts · 18 votes
    4y

    Hi Joshua!

    I am working with an agent and have been approved for an FHA loan. I get the alerts just about everyday. They're just not what I want in a property and a lot are already occupied. I don't want to put anyone out. I figured if I had a leg up on things or some kind of advantage I could cut out some of the competition. I guess there's no short cut. Lol

    0Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    4y

    You aren't going to find an off-market, turnkey property when you are working with an agent and using an FHA loan. Off-market properties, in general, are for cash buyers. To buy a turnkey off-market multifamily right now, you would have to pay way over market value. The only chance would be finding a lazy owner who wants to get rid of one, but that means it will not be turnkey due to that same laziness. A turnkey multi you sell on the market and get paid by the droves of house hackers that you keep losing out to. Just stay the course and keep looking and know that to win with an FHA, you need a fixed-up option and you need to pay up so if your price point is 300 say, look at 250.

    [email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    9Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    4y

    Market is tough for multi families. I am here in northern virginia and we can't find any multi families. That is the reason I chose the turnkey route and ended up purchasing my 1st SFH in Maple Heights, OH. Let me know if you want to connect and chat about it.

    2Reply
  • Scott E.
    Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    4y

    Keep working with your agent. Sounds like you're new at this. Your agent will be valuable in helping you negotiate the terms of the deal, sort out all of the paperwork, select a title company, etc. Just know that you will be indirectly paying them for their services. Because when you use an agent, they will need to be compensated. Which means you will probably need to overpay for a property to make your offer equal to somebody without an agent.

    As far as finding a deal, start calling multifamily commercial brokers and multifamily property managers. Part of their job is to build relationship with owners. Maybe they have somebody in their circle who is burnt out and ready to sell.

    Another option is to do direct mail and marketing to owners yourself. But that is a skill to hone itself, and I don't recommend it unless you plan on wholesaling or scaling quick.

    3Reply
  • Shera Ewing
    OP
    Member since 2021 · 37 posts · 18 votes
    4y
    Quote from @Jonathan Greene:

    You aren't going to find an off-market, turnkey property when you are working with an agent and using an FHA loan. Off-market properties, in general, are for cash buyers. To buy a turnkey off-market multifamily right now, you would have to pay way over market value. The only chance would be finding a lazy owner who wants to get rid of one, but that means it will not be turnkey due to that same laziness. A turnkey multi you sell on the market and get paid by the droves of house hackers that you keep losing out to. Just stay the course and keep looking and know that to win with an FHA, you need a fixed-up option and you need to pay up so if your price point is 300 say, look at 250.

    Hey Jonathan!

    Thanks for clearing that up for me!  What advice can you give if I have to be owner occupy but the listing I get have tenants in place? I wouldn’t want to put anyone out if they want to stay..
    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    4y

    Off-market turnkey is an oxymoron.  

    A good deal on a turnkey requires speed and few or no contingencies. Speed and FHA are also an oxymoron.

    Off-market and agent are also.... Here's the deal. Focus on off-market creativity on your own- farming and shaking bushes, dealing with owners direct OR have an agent and go the MLS route, competing with every other buyer out there.

    There may be better loan options for you than FHA. There are conventional OO loans, USDA, etc with 3% down or less, don't have lifetime MIP and are more seller-friendly.

    FHA and VA loans can have a lot of seller-corrects and sellers know that. Against other loan types, you will probably lose with FHA.

    5Reply
  • Andrew Moore
    Real Estate Agent · Grand Rapids, MI · Member since 2016 · 89 posts · 51 votes
    4y

    Unfortunately, with it being FHA financing you are required to occupy the property within 60 days of close. If there is a vacant unit, or one that is less desirable than the others you could fill that unit. While living there, you could fix it up. If at that time you are still ok with your inherited tenant, you could give them the option to upgrade to the unit you are in paying a higher price.

    If you are trying to improve the property, and the tenants aren't willing to leave, you may have to wait until their lease is up and not resign. At the end of the day you have to do what is best for your investment. You may look at it as "putting someone out" right now, but if you are able to get someone in there who is just as good, paying a higher rent because you've renovated it, or brought rents up to current market rates. Either way it is going to be beneficial either way. 

    I also want to make note that just because you aren't renewing their lease, doesn't mean you can't be a resource for them to find another place to go. We try and treat all of our tenants like humans should be. If we are making the choice to end their lease, and for all intensive purposes they have been a good renter; we will try and give them extremely advanced notice, we will make introductions to other landlords we know in the area who may have vacancies they are looking to fill. There are ways of removing tenants without feeling like you are throwing them out on the streets!

    1Reply
  • Shera Ewing
    OP
    Member since 2021 · 37 posts · 18 votes
    4y

    @Aj Parikh

    I will add you. I’m sure you have some experience I can learn from!

    0Reply
  • Shera Ewing
    OP
    Member since 2021 · 37 posts · 18 votes
    4y

    @Steve Vaughan

    You can tell I’m a newbie, but hey, that’s what I’m here for. Yo learn from people like you! 😃

    So, here's my situation… I want to build wealth in real estate while also leaving a legacy for my kids. I was told house hacking was the best way to get started. I don't have enough of a down to do 20% on a conventional loan, but good for FHA. Plus the thought of using/leveraging other peoples money to pay the mortgage so I can concentrate on buying my next was appealing! If you know of a better way to go about doing this, please let me know!

    Thank you!

    1Reply
  • Shera Ewing
    OP
    Member since 2021 · 37 posts · 18 votes
    4y

    @Andrew Moore

    Ok. That makes me feel better but now I realize I may have missed out on some good deals… oh well, I live and I learn. 

    I have a question though… what happens if I purchase a property that’s fully occupied and have to occupy it in 60 days but the tenants lease’s aren’t up for another 6 months or so? How do you get around something like that? Do I just let the deal go or are there other options like maybe pushing closing back? Or should the realtor know this ahead of closing so I don’t waste my time?

    0Reply
  • Andrew Moore
    Real Estate Agent · Grand Rapids, MI · Member since 2016 · 89 posts · 51 votes
    4y

    @Shera Ewing You may have missed out, but you also want to make sure you aren't jumping in without fully understanding what you are getting yourself into. 

    You could try, and push back closing. However, one issue here is that it pushes back when the seller may be able to get their money out, so they might not really want to do that (but you don't know until you ask).

    In most cases, I would say that this type of scenario wouldn't work for you. You are probably going to be looking for someone who is month to month, who you can give 30 days notice to, or you have have notice being given as part of your offer. So you write an offer contingent on the seller giving 30 days notice to one of the tenants. That offer is accepted. You'll need 35-45 days to close an FHA deal, so there is a chance they are out by the time you close, and you didn't have to give them notice yourself.

    I would say that your realtor should know that based on the terms you are using! If they don't I would recommend someone who is more familiar with what you are dealing with and look for. 

    0Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    4y
    Quote from @Shera Ewing:

    @Aj Parikh

    I will add you. I’m sure you have some experience I can learn from!


     Sounds good. Looking forward to chatting with you. 

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    4y
    Quote from @Shera Ewing:

    @Steve Vaughan

    You can tell I’m a newbie, but hey, that’s what I’m here for. Yo learn from people like you! 😃

    So, here's my situation… I want to build wealth in real estate while also leaving a legacy for my kids. I was told house hacking was the best way to get started. I don't have enough of a down to do 20% on a conventional loan, but good for FHA. Plus the thought of using/leveraging other peoples money to pay the mortgage so I can concentrate on buying my next was appealing! If you know of a better way to go about doing this, please let me know!

    Thank you!

     Sure. There are just better loan products out there than FHa that still only require 3%-5% down. 

    0Reply
  • Kai Kopsch
    Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes
    4y

    @Shera Ewing to win in this hot market you need a great team to score. If you're current agent and lender let you go with FHA run! Look for an agent with a track record in the past 12 months and go with their team (prefer Lender/ Inspectors) There are lenders who can close within 20 days just 3-5% down and you can have a cash backup offer with ribbon for example. Those are the offers that get accepted besides all cash.

    1Reply
  • Michael Deering
    Rental Property Investor · Lehigh Valley, PA · Member since 2017 · 200 posts · 191 votes
    4y

    Network.  Attend a local BP meet up or other meet ups

    1Reply
  • Johnny Xayasone
    DVM · Member since 2021 · 8 posts · 0 votes
    4y

    @Aj Parikh I am from Northern Virginia also. I would like to learn more. DM please

    0Reply
  • Jordan Woolf
    Flipper/Rehabber · Huntsville, AL · Member since 2019 · 117 posts · 57 votes
    4y

    @Shera Ewing off market properties are not only for cash buyers. I have bought multiple off market properties using financing.

    You need to create a marketing funnel that gets you the lead before an agent or another investor gets it. There are many different ways to do this.

    The very first deal we we purchased was two properties using financing and the seller financed the down payment. We found this deal by driving for dollars and sending hand written letters.

    The deals are out there if you are willing to put in the work to find them.

    1Reply
  • Shera Ewing
    OP
    Member since 2021 · 37 posts · 18 votes
    4y

    @Jordan Woolf Did you create a funnel? If so, how? As for driving for dollars, what did you do or I should say what were you driving around looking for? For sale signs? Believe me, I'm willing to do the work Just need advice, tips and tricks. 

    0Reply
  • Daniel Sosa
    Real Estate Agent · Newark, NJ · Member since 2020 · 16 posts · 6 votes
    4y

    @Shera Ewing

    Driving for dollars pretty much just looking for distressed properties that look like they’re lacking attention from the owner. You can use apps like DealMachine which usually have some of the owners info or you can just write the address down and skip trace later.

    1Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    4y
    Quote from @Shera Ewing:

    Hi Joshua!

    I am working with an agent and have been approved for an FHA loan. I get the alerts just about everyday. They're just not what I want in a property and a lot are already occupied. I don't want to put anyone out. I figured if I had a leg up on things or some kind of advantage I could cut out some of the competition. I guess there's no short cut. Lol


     There is often a big difference between an agent and an investor agent.  Look for an agent that owns at least 3 investment properties, knows how to create an accurate pro forma (not with made up rents or absurdly low maintenance/cap ex).  If their pro forma deviates more than 5% from the 50% rule assume something is not accurate until they can convince you otherwise.

    Good luck

    1Reply
  • Shera Ewing
    OP
    Member since 2021 · 37 posts · 18 votes
    4y

    @Daniel Sosa thank you!!!

    0Reply
  • Markis R Kelly
    Investor · Cary, NC · Member since 2019 · 25 posts · 29 votes
    4y
    I would suggest working with an investor friendly agent if you are not or atleast some one that can point you in the right direction in your market. I tell you what though there are so many loan options out here that you can use to fix these properties up that if I was you I would grab on that needs work. You have a better chance of working the deal to your advantage and then getting funding from the bank. Local banks or lenders tend to be better at finding the correct loan tool you need for the project. Some loan options such FHA 203K or 203B are awesome they also have conventional construction that you can use as well and is less stringent than FHA. If you need help with that PM me and I can send you who I use as my mortgage broker but I have been using him for years now but he will help you find the right product for you. All in all you got this keep going YOU GOT THIS!!!!!
    1Reply
  • Gaudys Rivas
    MIAMI LAKES, FL · Member since 2014 · 41 posts · 18 votes
    4y
    Quote from @Aj Parikh:

    Market is tough for multi families. I am here in northern virginia and we can't find any multi families. That is the reason I chose the turnkey route and ended up purchasing my 1st SFH in Maple Heights, OH. Let me know if you want to connect and chat about it.


     how is the ohio market? Ive been curious. i am an investor in Florida , but here everything is overpriced, so looking for new markets

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    4y
    Quote from @Gaudys Rivas:
    Quote from @Aj Parikh:

    Market is tough for multi families. I am here in northern virginia and we can't find any multi families. That is the reason I chose the turnkey route and ended up purchasing my 1st SFH in Maple Heights, OH. Let me know if you want to connect and chat about it.


     how is the ohio market? Ive been curious. i am an investor in Florida , but here everything is overpriced, so looking for new markets


     It is great!

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