first time investor, putting in an offer/ bid

Jersey City, New Jersey
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first time investor, putting in an offer/ bid

Brandon MorganPro Member
Member since 2023 · 124 posts · 132 votes

Hi all, I am a first time investor and I have been looking at a few multi families in my area. things are pretty competitive in my area and it doesn't look like the competition is slowing down any time soon and there are constant bidding wars. what is your opinion on bidding above asking price? it seems to be the only way to get a property that I want. I have already been approved for FHA and FHA 203k. would you recommend bidding above asking price given I am in the NJ/ NY area? and if so is there a certain percentage of the asking price I shouldn't go over?

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Jeremy Horton
Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
3y

I would bid to where your numbers work the way you want them to

Put in lots of bids and get used to hearing no more than yes - this means you're doing it right

Now for the first one...GETTING STARTED is the main goal I feel. Above almost all else you need to get started. So take a little less of a return on the first if you need to, just to get started. Make sure PITI, PM and all budgeted expenses (repairs/maintenance/CapEx) are covered. Maybe you end up with lower cashflow - ok no problem, you got started. You'll get a feel from the process and be able to go farther from there

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  • Jeremy Horton
    Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
    3y

    I would bid to where your numbers work the way you want them to

    Put in lots of bids and get used to hearing no more than yes - this means you're doing it right

    Now for the first one...GETTING STARTED is the main goal I feel. Above almost all else you need to get started. So take a little less of a return on the first if you need to, just to get started. Make sure PITI, PM and all budgeted expenses (repairs/maintenance/CapEx) are covered. Maybe you end up with lower cashflow - ok no problem, you got started. You'll get a feel from the process and be able to go farther from there

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Brandon Morgan:

    Your offers should be based on what the property is worth to you. Bidding up the price just to win is a sure way to lose.

    The market hit a peak last year and people are still throwing cash into investments like the money is burning a hole in their pocket. Everything I see indicates we have not paid the Piper for all that free COVID money and that bill is going to come due. I still expect property prices to drop another 10%, maybe more, before we really normalize. I would hate to pay 5% over asking price in an inflated market, then lose another 5-10% in a correction, and take ten years to recover my equity.


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  • Brandon MorganPro Member
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    Member since 2023 · 124 posts · 132 votes
    3y
    Quote from @Jeremy Horton:

    I would bid to where your numbers work the way you want them to

    Put in lots of bids and get used to hearing no more than yes - this means you're doing it right

    Now for the first one...GETTING STARTED is the main goal I feel. Above almost all else you need to get started. So take a little less of a return on the first if you need to, just to get started. Make sure PITI, PM and all budgeted expenses (repairs/maintenance/CapEx) are covered. Maybe you end up with lower cashflow - ok no problem, you got started. You'll get a feel from the process and be able to go farther from there

     makes sense, will just make sure my numbers are goo for me and just go for it. thank you. 

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  • Brandon MorganPro Member
    OP
    Member since 2023 · 124 posts · 132 votes
    3y
    Quote from @Nathan Gesner:
    Quote from @Brandon Morgan:

    Your offers should be based on what the property is worth to you. Bidding up the price just to win is a sure way to lose.

    The market hit a peak last year and people are still throwing cash into investments like the money is burning a hole in their pocket. Everything I see indicates we have not paid the Piper for all that free COVID money and that bill is going to come due. I still expect property prices to drop another 10%, maybe more, before we really normalize. I would hate to pay 5% over asking price in an inflated market, then lose another 5-10% in a correction, and take ten years to recover my equity.


    I see, Thank you. 
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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    3y

    Hi @Brandon Morgan the biggest hurdle I see 1st time buyer running in to in NJ is using FHA loans. Most listing agents will educate sellers not to accept those offers. good news is there are portfolio lenders that will offer different types of loans that can be more favorable for you. For example low money down convectional mortgages with no PMI exist which make the process a night and day difference. I just got a property UC this week in North New Jersey and I know my offer was less than others but we won the deal because it was conventional.

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