Am I wasting time sifting through the MLS?

Question

I am in the West Palm Beach area. I have been more focused this year with trying to get the first property under my belt. I analyze properties pretty regularly (my focus is on 2-4 unit multifamily). Every listing is quoting a 8-10 cap and when I put any expenses to it it quickly goes to a negative cashflow. After putting in all the numbers i run goal seek of a $100 a month cash flow (iterate to get lower taxes with the county tax appraiser) and it shows that my offer should be about $17k on properties listed for $400k. It seems ridiculous.

My expenses usually look like this:

• Taxes - tax appraiser calc at sale price
• Insurance - guestimation of my house and fiance's condo
• Mortgage (+mip) - 1.15% (of purchase price - down payment)/12
• Rental Eff - 11/12 * monthly income
• HOA - 
• Utilities - (check for seperate meters in listing or not ~150-200 per unit)
• Lawn - 100-150ish
• CapX - roof sq ft times $6.00 (difficulty multiplier) / 30 years / 12 month ; # water heaters ; # HVAC ; # wall shakers ; Septic Tank pump out per 10 year
• Property management - 1/12 of monthly income
• Other - usually left blank

My Income is usually whats listed. Sometime I look via trulia for "comps." problem is the MLS program the photos rarely show up. Also most multifamilies never show interior pictures on listing.

Should I keep on trucking? Should I try a mail campaign? Should I offer 17k on a 400k listing (My agents I have talked too don't seem to get what I want to do, seem kind of un-responsive to me)? Are my expenses way off? Try a new market? stockpile money for the next dip (i want the experience more than staying out of the game waiting for a better deal)?

John Thedford · Answer

you are doing something wrong if your analysis comes to the conclusion that you should offer 17000 on a $400,000 property

Andrew Johnson · Answer

Account Closed That’s exactly my point, the deals are “riskier” than the listing price implies.  So you have to adjust your offer price to compensate.  But after 120 days your “adjusted” offer stands less of a chance of being viewed as a “low offer” and a solid chance of being an “only offer”. If you’re the only offer after 4 months and you (the owner) have been stuck with 4 months worth of carrying costs, well, fatigue can set in.

Scott Rosslow · Answer

@Christopher Phillips

These were the number based off the listing I recieved.

David Sicherman · Answer

Oh, and no you aren't going to find that deal, at least nothing that looks like that fresh off the MLS.

You will need to value add, rehab etc. to get anywhere near that "real" cap rate here in Palm beach, everyone has cash and wants MF's here.

Andrew Johnson · Answer

Account Closed Before MLS?  Agents with pocket listings, investors who direct-market, wholesalers who direct-market, could be Craigslist for all I know.  But the reality is that with 2-4 unit properties you do end up with owner-occupants.  And owner-occupants have some aspect of emotion involved.  Emotion means that they are happy/happier to pay “retail” where investors are looking for a good ROI.  That’s why if you want to find “good deals” you can go to a neighborhood where nobody owner-occupies but those come with other issues.  Half of the battle is defining what a “good deal” is to you.

Account Closed · Answer

@Andrew Johnson Interesting. I will target/network with target those people in Bakersfield and learn how to find deals. Thanks,

Account Closed · Answer

@Andrew Johnson Thanks for your comment.  Then where are those a lot of good deals going to before making it to MLS? How those good deals are coming down to experienced investors?

@Anthony Gayden I just started looking my first deal off of MLS. I will continue to check to find the "pop up", but it sounds like the chance is slim. I definitely have to explore the system that leads to my funnel.

it would be great if you could share some of your experience how did you find your deals and what is your favorite way that works to leads potential deals into your funnel?

Thanks!

Account Closed · Answer

Hi everyone, I'm a newbie in REI.

I've been looking for my first deal on MLS and also found that purchase price has to be reduced to like 60% of asking price in order to get good cash flow.

@Andrew Johnson Is it likely that >120 properties on MLS could be something left over with more risk?

Sam Shueh · Answer

Your numbers do not look different in other parts of the US.  The reason your realtors are unresponsive is your price is not high enough.    Your negative cash flow suggests this is probably wrong time of cycle to purchase and if that is the consensus you are wasting your time on MLS.

Am I wasting time sifting through the MLS?

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