What am I doing wrong?

Member since 2022 · 58 posts · 16 votes

Hey all,

I'm newer to the real estate game and I've been analyzing a bunch of deals but none of them seem to be penciling out. Either none of them work or I'm doing something wrong. I'm inclined to believe it's the latter since I'm new at this. Of course, there's the number that makes ever deal work, but I'm struggling to find any 'reasonable' numbers (not $100k under listed price).

I'm looking in the Winter Haven/Davenport area and I've been analyzing with either conventional loan details or seller financing options. I think the reason may be due to me adding some 'cushion' to be safe on the numbers which is typically: 10% property management fee, 5% capex, 10% maintenance, on top of any HOA fees and so on.

Any advice or guidance would be appreciated!

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Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

Never question your numbers...and never go back and change any of them to make a deal work on paper. If the numbers don's work, you're not wrong...the property is.

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y
Never question your numbers...and never go back and change any of them to make a deal work on paper. If the numbers don's work, you're not wrong...the property is.
14 Reply
Billy Daniel
Rental Property Investor · Russellville, AR · Member since 2014 · 684 posts · 509 votes
3y
That's not uncommon right now. With interest rates where they are, it's difficult to find properties that look good on paper from day one. Keep searching and eventually, something will pop up!
4 Reply
Soh Tanaka
Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes
3y
If your numbers are right, and if you want to buy a property soon, you have to pivot your strategy or you might end up waiting for a very long time.
0 Reply
Michael Paling
Rental Property Investor · Gwinn, MI · Member since 2016 · 174 posts · 103 votes
3y
I'd suggest finding a local investor to sit down with and chat about this. Show them exactly how you're running numbers and they'll tell you if you're missing anything. I had the exact same thoughts before buying my first deal, but after analyzing a bunch, I've come to realize that my numbers aren't wrong and most properties in my area just won't work out for me.
3 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Joe Villeneuve:

Never question your numbers...and never go back and change any of them to make a deal work on paper. If the numbers don's work, you're not wrong...the property is.

Thank you!
0 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Billy Daniel:

That's not uncommon right now. With interest rates where they are, it's difficult to find properties that look good on paper from day one. Keep searching and eventually, something will pop up!

That definitely makes sense. Thanks!
0 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Soh Tanaka:

If your numbers are right, and if you want to buy a property soon, you have to pivot your strategy or you might end up waiting for a very long time.

Thank you for the feedback!
0 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Michael Paling:

I'd suggest finding a local investor to sit down with and chat about this. Show them exactly how you're running numbers and they'll tell you if you're missing anything. I had the exact same thoughts before buying my first deal, but after analyzing a bunch, I've come to realize that my numbers aren't wrong and most properties in my area just won't work out for me.

That's a good idea. It's difficult as I live out of state so I wouldn't be able to find someone local down there to sit with. I'll keep analyzing and see what I can find.
0 Reply
Michael Paling
Rental Property Investor · Gwinn, MI · Member since 2016 · 174 posts · 103 votes
3y
Quote from @Fallon Gilbert:

Quote from @Michael Paling:

I'd suggest finding a local investor to sit down with and chat about this. Show them exactly how you're running numbers and they'll tell you if you're missing anything. I had the exact same thoughts before buying my first deal, but after analyzing a bunch, I've come to realize that my numbers aren't wrong and most properties in my area just won't work out for me.

That's a good idea. It's difficult as I live out of state so I wouldn't be able to find someone local down there to sit with. I'll keep analyzing and see what I can find.

That's where this website comes in handy. I've had several OOS investors each out to me with questions on my local market. Try searching on BP for investors local to the area you're looking at, find one that's fairly active on the website, and then send them a message. If they don't respond, oh well. If they do, then great!
2 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Michael Paling:

Quote from @Fallon Gilbert:

Quote from @Michael Paling:

I'd suggest finding a local investor to sit down with and chat about this. Show them exactly how you're running numbers and they'll tell you if you're missing anything. I had the exact same thoughts before buying my first deal, but after analyzing a bunch, I've come to realize that my numbers aren't wrong and most properties in my area just won't work out for me.

That's a good idea. It's difficult as I live out of state so I wouldn't be able to find someone local down there to sit with. I'll keep analyzing and see what I can find.

That's where this website comes in handy. I've had several OOS investors each out to me with questions on my local market. Try searching on BP for investors local to the area you're looking at, find one that's fairly active on the website, and then send them a message. If they don't respond, oh well. If they do, then great!

Thank you!
0 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y
Quote from @Fallon Gilbert:

Quote from @Soh Tanaka:

If your numbers are right, and if you want to buy a property soon, you have to pivot your strategy or you might end up waiting for a very long time.

Thank you for the feedback!

...and that should be fine. The goal is to make money, not just buy properties. The two greatest attributes a REI must have are discipline and patience.
0 Reply
Ben Firstenberg
Investor · Cleveland · Member since 2021 · 247 posts · 240 votes
3y
Two things about this.
First, in general MOST properties aren't going to be good rentals. The life of the investor is a life of searching through all of the bad deals and opportunities to find good ones. Even the very best have this problem, so don't lose hope there. As you get better, you'll start to develop a better understanding for what's a good or bad deal without having to go through a whole analysis.
Second, with debt as expensive as it is and values as high as they are, even MORE properties are going to have trouble making the cash flow work. Interest rates are so high that a lot of deals aren't going to look very good. Seller financing may not even help you that much, as the seller will likely demand an even higher interest rate than the bank will.
It's just a tough time to make deals work and if you're going to find good deals you have to be prepared to search hard for them.

3 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Joe Villeneuve:

Quote from @Fallon Gilbert:

Quote from @Soh Tanaka:

If your numbers are right, and if you want to buy a property soon, you have to pivot your strategy or you might end up waiting for a very long time.

Thank you for the feedback!

...and that should be fine. The goal is to make money, not just buy properties. The two greatest attributes a REI must have are discipline and patience.

That's a great point. I just feel like I'm struggling with where to start. The market I live in is very expensive making investing here difficult. Very high home prices, high rehab costs, and very high taxes make it difficult which is why I started out of state. I've been focusing on building my knowledge but that might also be proving to be a detriment causing analysis paralysis.
1 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Ben Firstenberg:

Two things about this.
First, in general MOST properties aren't going to be good rentals. The life of the investor is a life of searching through all of the bad deals and opportunities to find good ones. Even the very best have this problem, so don't lose hope there. As you get better, you'll start to develop a better understanding for what's a good or bad deal without having to go through a whole analysis.
Second, with debt as expensive as it is and values as high as they are, even MORE properties are going to have trouble making the cash flow work. Interest rates are so high that a lot of deals aren't going to look very good. Seller financing may not even help you that much, as the seller will likely demand an even higher interest rate than the bank will.
It's just a tough time to make deals work and if you're going to find good deals you have to be prepared to search hard for them.

This is great feedback, thank you!
0 Reply
Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Make the offers that make most sense to you. Do not let the listing price deter you.
3 Reply
Lawrence Rutkowski
San Antonio, TX · Member since 2013 · 87 posts · 42 votes
3y
Leveraged SFR rentals aren't working in most places now, for reasons other have already mentioned. Try looking for properties you can take sub-to with more favorable financing or owner financed wraps. Other than that, searching for SFR rentals right now just isn't worth it if you need cash flow now.
0 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y
Quote from @Fallon Gilbert:

Quote from @Joe Villeneuve:

Quote from @Fallon Gilbert:

Quote from @Soh Tanaka:

If your numbers are right, and if you want to buy a property soon, you have to pivot your strategy or you might end up waiting for a very long time.

Thank you for the feedback!

...and that should be fine. The goal is to make money, not just buy properties. The two greatest attributes a REI must have are discipline and patience.

That's a great point. I just feel like I'm struggling with where to start. The market I live in is very expensive making investing here difficult. Very high home prices, high rehab costs, and very high taxes make it difficult which is why I started out of state. I've been focusing on building my knowledge but that might also be proving to be a detriment causing analysis paralysis.
Invest where it makes money. Investing where you live isn't a good idea if you're not making money.
Delays in investing while you gain knowledge isn't a form of analysis paralysis. You're investing in the future based on making better decisions.
1 Reply
Orkeem Davis
Real Estate Agent · Englewood, NJ · Member since 2017 · 93 posts · 31 votes
3y
Don't get stuck in analysis paralysis --- so many opportunities could be missed due to over thinking the outcome and results. Invest and strategize as you go -- you will have growing pains -- it's a part of the real estate business. Join some Meet-Up Groups, speak with some real estate agents, watch some YouTube videos, get more real estate education, but most important get in the real estate business and buy an investment property.
1 Reply
Tim Hall
Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 462 posts · 237 votes
3y
@Fallon Gilbert
Nope there's nothing wrong with your numbers but there's 2 things that are wrong. 1 the number of deals you're analyzing. It needs to be more, obviously because you haven't found a deal yet. Analyze 100 units, find 10 that are deals and drill down into them you'll find 3 that you'll want to offer on and you may get 1. Also when I analyze deals I do the 2% rule. It's just a quick analysis. Property seller wants $50k for their unit and it will yield $1000 in rent. That's 2% return. I'm doing that deal. I then drill down into the real numbers T12 all insurances, class taxes etc and offer if it's a deal or pass when it's not. I can analyze hundreds of deals a day. 2 where are you finding these properties? If you go looking where everyone else is looking then there is a lot of competition. Go where no one is looking and you turn into a big fish in a small pond. So you go direct to the seller then you can talk one on one and get the best deal for both parties. Cut out any middle men that can inflate the price. Don't let anyone tell you that these deals aren't out there because there are and their wrong. Many people on here do them everyday but they're not bragging about it. You're just going to have to work for it.
1 Reply
John Riley
Real Estate Agent · Sikeston, MO · Member since 2016 · 1 post · 0 votes
3y
Right now it is the times because prices are higher, and everything is inflated that goes along with real estate. It will have to balance out, but to find deals that I have found is in the outlying areas, not in the heart of cities.
0 Reply
Bud Gaffney
Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
3y
Exactly what Joe said! Is it plausible to self manage? That would save you 10%...just a thought!
0 Reply
David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
3y
... and, of course, avoid HOAs where ever possible. No one but the owner should assert control over a property.
My $0.02 ...
0 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
Real estate is a tricky game, but it's definitely still possible to find good investments when you look in the right places. With today's interest rates, it can be difficult to locate properties with great returns upfront. However, if you keep your eyes open and search diligently, eventually something fitting your needs should come up! Best of luck on the hunt.

Have any real estate questions? Feel free to reach out; I'm always happy to help! Good luck!
[email protected]832-889-5607
0 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Tim Hall:

@Fallon Gilbert
Nope there's nothing wrong with your numbers but there's 2 things that are wrong. 1 the number of deals you're analyzing. It needs to be more, obviously because you haven't found a deal yet. Analyze 100 units, find 10 that are deals and drill down into them you'll find 3 that you'll want to offer on and you may get 1. Also when I analyze deals I do the 2% rule. It's just a quick analysis. Property seller wants $50k for their unit and it will yield $1000 in rent. That's 2% return. I'm doing that deal. I then drill down into the real numbers T12 all insurances, class taxes etc and offer if it's a deal or pass when it's not. I can analyze hundreds of deals a day. 2 where are you finding these properties? If you go looking where everyone else is looking then there is a lot of competition. Go where no one is looking and you turn into a big fish in a small pond. So you go direct to the seller then you can talk one on one and get the best deal for both parties. Cut out any middle men that can inflate the price. Don't let anyone tell you that these deals aren't out there because there are and their wrong. Many people on here do them everyday but they're not bragging about it. You're just going to have to work for it.

Thank you!
0 Reply
Fallon GilbertPro Member
OP
Member since 2022 · 58 posts · 16 votes
3y
Quote from @Bud Gaffney:

Exactly what Joe said! Is it plausible to self manage? That would save you 10%...just a thought!

Yes, I can definitely self-manage especially with the assistance of all the software available. I was just factoring it in for if I didn't want to self manage in the future. Essentially that 10% would be going to myself for now.
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