Are there really this many bad deals?

Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes

So I am looking to purchase my first property in Ewing New Jersey (after looking at multi family (2-4) in other parts of jersey and NYC), and after doing about 20 calculations for rental properties in the area, and it seems that I have only found 2-3 that even positively cash flow and 1 that would give a significant amount of cash flow (over 10%). Being new, I am wondering if I am being too overprotective with some numbers for the costs for some homes, or is that on average How difficult it is to find a good deal?

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Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

Analyze 100, offer on 10, buy 1...or something similar. REI is all about deal flow...lots of it.

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David Stromberg
Member since 2019 · 2 posts · 0 votes
7y
@Dawal Limbachia When figuring out cash flow are u just taking your income - expenses = cash flow? Is there more to it?
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Dawal Limbachia
Rental Property Investor · Chicago, IL · Member since 2019 · 10 posts · 2 votes
7y
@David Stromberg Income - Mortgage - Taxes - 5% vacancy - 5% Repair & Maintenance - 5-10% CapEx. Plus, i also do a future assumption of 2% annual growth expenses and 2% annual sales expenses.
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David Stromberg
Member since 2019 · 2 posts · 0 votes
7y
Thank you, much appreciated.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
7y
@Antonio Cucciniello almost no deals are good deals as they’re listed. You have to offer below or find a way to add value.
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Amanda Kessler:
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.

Well, at the same time there is a school of thought that says to start sooner. But I am not willing to start soon and be losing money that’s for sure, I am willing to sacrifice a little cash flow to get started sooner though!
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Michael King:
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!
Ah I am not afraid, I am have been offering on properties. But I am not willing to go into a negative cash flow for an earlier start. I will keep you posted!

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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Victor Vella:
@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.

I do not have the cash for the price range in the area, but I totally think I could spend more time meeting people in the area who would tell me about deals that pop up!
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Dennis M.:
@Antonio Cucciniello
Find a non communist state to invest in

HAHAHAHA I wish I knew more about non communist high taxes states
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John DeFreitas
Member since 2019 · 3 posts · 3 votes
7y
If you're serious about doing this consider investing long distance. I live in Miami and spent a year of time wasted looking for a property. I went elsewhere in the state and have purchased 7 in the past 3 years.
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Ola Dantis
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
7y
@Antonio Cucciniello On larger Multifamily deals that we underwrite, it's a ratio of 1:100 to find that one gem 💎
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Angelo Mart
Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes
7y
Originally posted by @John Hickey:
@Angelo Mart is NJ higher then NY?
That’s nuts. I had a property that has tenants bought for 75k taxes taxes were almost 6%.... sold it bc taxes were killing me but as soon as I did they lowered basis and I learned my lesson.
Buy low, get down to that assessors office with the contract and grieve, grieve grieve.

YEs it is...When I did tax appeals for lawyers back in 2011 it was a proven fact that NJ was highest in nation
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James De Stefano
Real Estate Agent · Houston, TX · Member since 2017 · 292 posts · 233 votes
7y
Some great posts so far. It may have been mentioned prior, but MLS is loaded with overpriced listings in Texas, as I assume it is nation wide. But that's to be expected.
Yet, every single house is a good deal... at a certain price.
Are they motivated to move?
Is the house badly outdated?
Do they have a serious problem that needs to be solved?
Answering these questions is simple enough. Just not EASY to do.
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Ryan Proffit
Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
7y
@Michael Ealy comment of the day. That is for the input.
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Dawal Limbachia:
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.

At least I am not the only one! But its alright man, I am wondering if maybe looking for off MLS deals is better than the ones that are already there and I am looking I into how I can get those.

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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
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.

Never thought of that, I guess as an early investor, you must go where the experienced people aren’t (out in the cold) to go find deals while they stay warm, I will be out there in warmer months then!
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Payton Pearson:
@Henry Lazerow Precisely. Same for me. Literally at least a 15% price difference in my area.

That could literally be the difference between a bad deal and a good one. Insane numbers. Great insight. This is why I love these forums
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Sheldon Devine:
@Antonio Cucciniello I’ve noticed the same. I’ve been searching and going over numbers, checking cap rates etc. Lots of folks mentioning add value opportunities but there seems to be a lot of deal that don’t pencil out.

Yes, it was not as obvious as from reading the books and the forums that it would be this BAD. I expected bad but hey, that just raises the barrier to entry, and once you are in it that means it makes other people who will be in our shoes even harder to make it there.
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Joseph High:
@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.

Now, how do you go about finding these “off market” deals? I hear the term a lot but I am not aware how they occur or are found, to me it seems solely from word of mouth.

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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Christopher Brian:
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.

Hm, I have not tried seller financing, but how would that make the deal better for the seller? (I am not sure where the advantage lies for them, their incentive to doing it, cause it seems like a win for me)
Yes, I have been offering first what I would love to buy the property at, each time, I am getting beat by investors in the area with a higher bid all cash! I will not stop trying, just what I have seen

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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Steven Lowe:
@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.

My main motivator is cash flow. Far second, appreciation
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Dustin P.:
@Antonio Cucciniello Why didn't you jump on the one at 10%?

I did! But my offer and escalator beat me out.
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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Herndon Davis:
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.

How do you feel about Austin, TX? It’s the only other area I know of than the areas in New Jersey/NYC. Would you consider it great place for cash flow?

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Antonio CuccinielloPro Member
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Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
7y
Originally posted by @Kyle Clabby:
@Antonio Cucciniello it takes a lot of legwork to find a good deal. When I am analyzing apartments it usually goes; for every 100 you see, 30 will be eligible, 10 will be worth writing offers on, and out of those 1 will actually be a good deal. So my advice is to keep trying and grind it out until you find a killer deal! 💥

That could be it, have not analyzed 100 yet, so I will shut up until I try minimum 200!

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Billy Smith
Shawnee Mission, KS · Member since 2016 · 719 posts · 313 votes
7y
If it hits the M..LS then you are dealing with numbers that will not work for a investor .Networking with folks ,word of mouth is where I am now .
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George W.
Investor · NJ · Member since 2018 · 869 posts · 921 votes
7y
NJ is tough. The taxes are high, laws favor Tennant's and most properties that are in nice areas aren't cheap to purchase. Also it's a sellers market here right now. The last few duplexes I've bid on have been higher than asking. At the prices they sell for often they end up having no or negative cashflow.
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