All told, between studying, marketing and up to present day where I have made a few offers but have had none accepted yet, I have been "involved" in real estate investing for about 9 months. I know... it's nothing in the grand scheme of things. I feel though, and I'm curious to hear from others who are in the same boat, that everything I've read and everything I'm learning about how to find "deals" or, at the very least, prospects (motivated sellers) is geared towards functioning in a down market. Of course, I suppose it makes sense that there is going to be a lot more distressed properties when the market isn't doing so good, but what am I to do NOW?
I live in Los Angeles. Now, yes, I still have LOTS of learning to do about the market(s) here, but from what I've seen there is virtually no inventory right now, prices are higher then they've been in years and houses are being snatched up off the MLS mere days after they're listed -- and often for more than the asking price.
It seems like many of the "quick-turn" methods I've studied and have tried to pursue are geared towards people who have some reason to work with an investor as opposed to just listing their property with a broker and selling it. With a market like the one I'm in though, what reason does anyone have not to just list it and sell it? If houses are selling faster than they can be listed and people are getting more than what they ask, how does little ol' me compete with that?
Take wholesaling, for example. I know, I probably don't know enough to justify having an opinion, but honestly I have no clue how anyone wholesales in LA. Zero. (I bitched about this in a different thread as well, so if you've read that one my apologies for being redundant). The area is literally saturated with bandit signs. I've also always been told that the appeal to a seller when it comes to an all cash offer is how quickly you're able to close (as opposed to selling traditionally). Well, it seems like that's not so much a draw anymore when people know their house will sell quickly if they list it. AND they get fair market value for it.
I'm rambling, I know. I also know that my woes probably apply less to the buy-and-hold people -- a group whose ranks I hope to eventually join.
Guess I just needed to vent, but if anyone else is starting out and, better yet, finding at least some success in a super hot market I'd love to hear about it.
@Jason Pachomski One really unique thing about L.A. is rent control. If you can figure out how to get high paying tenants in, the property will be worth much more.
@Jason Pachomski my interactions here at BP has taught me that there is always a profitable market within a 1-2 hour drive from one's location. With that being said, you may have to travel a few miles if your market is completely saturated with deals and dealmakers like you have expressed. I live in a market that is investor friendly but I am looking to expand my market because I think a short drive is well worth a great deal. Check out this podcast with Aaron Mazzrillo. One of my favorites. http://www.biggerpockets.com/renewsblog/2013/09/26...
He is from California as well and is experiencing success. I believe the deals are out there but some take a little more digging to find than others. And remember; if it was easy, everyone would be doing it. :) Happy investing!
Hey Jason. From one newbie to another, I think you have answered your own question. If someone is able to list their home and get market price, then they most likely will do so. I think you want to target those sellers who are unable to list their properties, for whatever reason. It sounds like you are primarily going after properties on the MLS. It seems like those who consistently find deals have multiple marketing campaigns in addition to scanning the MLS.
You can't pick the low hanging fruit if there are no trees. Start with wholesaling and it doesn't matter were you are, as you don't need to see a house, you are not buying.
Hi Jason -
I think you touched on a great subject as many of us have, or are in, a similar boat... Several years ago I had a mentor that basically told me that if your market is too difficult for one type, choose another (wholesaling - buying your own fix & flip).
The other advantage that we all have now is the ability to really do business anywhere with anyone! Take advantage of your skills within another market - If you are great at locating distressed properties, then research in another area...
I connect with professionals all over the US, Canada and Virgin Islands... I try to be a good networker and help out where I can and this has served me well to make great professional connects all over.
Hope this gives you some ideas and I wish you great success in 2015!
Have you thought about looking outside LA? Think about checking out Lancaster/Palmdale area. it's outside the LA area, but you might be able to find some deals, and it's not far away.
Very good post! I am in the same position being in the San Francisco area, every time we write an offer we just get outbid buy a cash buyer over our limit. I have been reading as many post's on here as I can to try and find a different approach but think I may have to look out of the area. LA and SF are really on a different level from most of the country.
Well good luck on finding stuff down south.
Thanks for all the responses. @Wednesday Lynn I actually have started looking in Palmdale and Lancaster as well as the other weird little desert towns out there. I want to take one weekend and go out there and "drive for dollars" for two whole days and see what I can come up with. On the whole, though I haven't done any yet, I just have a gut feeling that a vacant property whose owner has to be hunted down via skip trace would be a great lead -- especially if they're in tax default.
Last night I sat down with my friend Google Maps and essentially drew a radius of ~2 hours from my house. Lots of areas I hadn't considered (Bakersfield here I come!) and I think I'm going to start blasting these areas with direct mail. My last campaign was only 500 letters as I didn't want to be overwhelmed by the volume of calls. Well, as it turns out, I didn't need to worry about that as the calls are coming in at a trickle as opposed to a flood. So I think my next one will be bumped up to 2000. We'll see what happens.
Sounds like you have a plan. Good!
In regards to direct mail remember it is a numbers game,so be consistent. The professionals say it takes 5-7 touches to get someone to raise their hand. Don't get me wrong there are circumstances were it only takes 2-3 touches, but it is not the norm. I have heard of people sending out direct mail and getting a phone call from the very first mailing. Just be patient, and the phone will start ringing, and the deals will happen.
Best Wishes :)
Hey @Jason Pachomski who are you using for your direct mail campaign? Good thread here to by the way. I actually just got my real estate license because of that same reason and have decided to try and start listing some properties and get the commission but now after 2 months of marketing I still have yet to get a listing!! ugh, but oh well gotta keep pushing!
Listen to this episode and part 2. I remember them mentioning a couple good areas to target in your market. Plus lots of other really good info.
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