Are there really this many bad deals?

139 Replies

@Antonio Cucciniello

Glad you posted this. I am struggling w the same. I have a few flips under my belt and one rental but am trying to grow the rental portfolio by 10 units in the next few years.

Been analyzing every day and putting out offers that work for me. I am continually shocked by the junk that is out there and the prices people will pay for it.

Forget about legal multi family- 600k+ for a 2 family that would get $4500 in rental income and has taxes near $15k.

I have to put more effort into "offmarket " pipeline. Trying to figure that out

Good luck to you.

Originally posted by @Matt M. :

@Antonio Cucciniello

Instead of looking NJ/NY, you need to look toward Pennsylvania. Nj is ridiculous.

 The taxes are super high here, eating up a ton of cashflow.  I dont know much about the PA area or the market so its hard for me to do that without some visits or extensive studies

Originally posted by @Erik B. :

@Antonio Cucciniello

Glad you posted this. I am struggling w the same. I have a few flips under my belt and one rental but am trying to grow the rental portfolio by 10 units in the next few years.

Been analyzing every day and putting out offers that work for me. I am continually shocked by the junk that is out there and the prices people will pay for it.

Forget about legal multi family- 600k+ for a 2 family that would get $4500 in rental income and has taxes near $15k.

I have to put more effort into "offmarket " pipeline. Trying to figure that out

Good luck to you.

That seems the way to go, because by the time these places hit the MLS/Zillow/Realtor we are catching the bottom of the barrel. How do you plan on going about that?

@Erik B.

Investors are paying a lot for junk properties right now off MLS....maybe reverse your thinking until it becomes a buyers market.

Buy some properties at the sheriff's or tax sales, pressure wash them, add some mulch and flowers and then list them for sale. Make a quick 10k or 20k on each one...save the profits until the market changes. That's what people are doing here to capitalize on the market...investors are buying high priced junk off MLS that the math really doesnt work...be the one to sell it to them until the market changes..

It's definitely hard to find good deals. If it were easy, everyone would be doing it and there would no point in wasting your time. Keep trekking along and analyzing properties for potential cash flow. Eventually one will come along. The worst thing you can do is rush into something. 

You could spend your life analyzing and not doing something. One that was over 10%? Has that slipped through your fingers already? Depending on all the details, I would have jumped on that. 

I have heard NJ is a tough market. In my market, it's hard to find any that return 6%. But, I like to buy new homes from builders that have warranty, 20 years worth of roofs, 10 years worth of water heaters and HVAC, etc. As long as I have a positive cash flow, I'm doing good enough, as I'm in it for the long haul and I'm doing it so my kids can have something when I'm gone. 

Don't get greedy. As long as you are doing the numbers well, and your estimates are in line with actuality, and it's positive flow...what's the holdup? Do something. Doing numbers is a good start and the first purchase is terrifying for sure. Have you thought about other markets? I have, but for now don't want to step outside my comfort zone. As long as I can physically see my investments, I have some sort of psychological ease of mind. But others don't care.

Good luck and keep us posted!


@Amit Golan

KCRAR puts out the stats every quarter so the 2.4 supply was for halfway through the year. Month supply is the measure of how many months it would take for the current inventory of homes on the market to sell. As far as other markets I don't know how they compare since I am not apart of them. But from what I've seen in other markets I would say it should be similar. Hope this helps.

@Antonio Cucciniello

Expand your horizon - talk to people that know other communities within your city. My best referring source right now is friends spotting mls deals on streets or little nooks I’m not familiar with.

Side Note - your not cheating on your realtor by having multiple agents look for you.

Also if your playing on the MLS - come loaded with cash, fast closings. You can often create better deals.

Antonio, at least you came across couple deals that are positively cashflowing. I evaluated 8 properties last night that are listed on realtor.com and all of them were in negative cashfow. I will have to keep digging until I find a property that is positively cashflowing.

Originally posted by @Matt M. :

@Antonio Cucciniello

Instead of looking NJ/NY, you need to look toward Pennsylvania. Nj is ridiculous.

PA pricing has gotten pretty crazy too. 

Problem is there’s too much money out there looking for deals. The valley’s pricing in the last 24 months has gone crazy.

 

@Syed H.

Agreed, but no where near Nj. I’ve bought 2 SF houses in last 5 mos, both off market. And great deals. 

Investing is also very reliant on the time of year you decide to invest. Look around when it gets colder and people don't want to go outside. Prices go down significantly in the winter months.

100% I always find best deals in fall or right around holidays. It's crazy how big a price difference from spring/summer. 

Originally posted by @Payton Pearson :

Investing is also very reliant on the time of year you decide to invest. Look around when it gets colder and people don't want to go outside. Prices go down significantly in the winter months.

 

I don't know if anyone said this or not, but don't hesitate to offer what you want to want to pay. You never know what the seller's condition or motivations are. Also, seller financing might make the numbers work better depending on the deal and the opportunity to increase the rents over time. 


@Antonio Cucciniello

I'm an investment analyst in the Nashville market and I'm seeing a similar story. The asking price is so high on the vast majority of properties. The properties that make sense numbers wise usually don't last very long. This has been mentioned before, but some of our most promising properties are all off market. I found a group of 10 duplexes that were 2 miles from my house. I looked up rent/sales comps in the MLS to see what the cash flow would be on those duplexes and I think they're a pretty attractive investment.

@Antonio Cucciniello Whether a deal is good or bad is largely a point of view. What's good for one investor may not be for you. It depends also on what you are seeking to get out of it. What returns do you need?  What's your main motivator?  Appreciation? Cash flow? Tax shelter? 1031?  Etc.  

Originally posted by @Antonio Cucciniello :


A lot of it is a  function of where you live and currently looking. However, if you are looking in the Midwest or Southeastern fly over states, you can find deals there a lot cheaper and that will cash flow to your delight.  But when you're paying market value  or close to it AND at a much higher dollar value  for property then it makes it a lot harder to cash flow especially if you need to make repairs.  Try new locations.

 

Originally posted by @Gina Cardarella :

@Russell Brazil

Hi Russell what's your thought more of a 7 percent cash flow

 Any individuals cash on cash return has absolutely zero to do with a property or a market. Someone might borrow at zero percent interest and someone else might borrow at 25%.  Neither changes the underlying fundamentals or risks with the property or market.