Are there really this many bad deals?

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Are there really this many bad deals?

Antonio CuccinielloPro Member
Investor 路 Austin, TX 路 Member since 2016 路 531 posts 路 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?

732-402-6988
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Mike Dymski
Investor 路 Greenville, SC 路 Member since 2016 路 5k+ posts 路 13k+ votes
7y

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

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  • Antonio CuccinielloPro Member
    OP
    Investor 路 Austin, TX 路 Member since 2016 路 531 posts 路 310 votes
    7y
    Originally posted by @Ola Dantis:

    @Antonio Cucciniello On larger Multifamily deals that we underwrite, it's a ratio of 1:100 to find that one gem 馃拵

    So I gotta work to see and analyze more properties! 

    732-402-6988
    0Reply
  • Antonio CuccinielloPro Member
    OP
    Investor 路 Austin, TX 路 Member since 2016 路 531 posts 路 310 votes
    7y
    Originally posted by @John DeFreitas:

    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.

    I have considered that but I do not know the areas. That is the issue. And investing the money and time to learn another area will only set me farther back in time

    732-402-6988
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  • Antonio CuccinielloPro Member
    OP
    Investor 路 Austin, TX 路 Member since 2016 路 531 posts 路 310 votes
    7y
    Originally posted by @James De Stefano:

    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    Is the house badly outdated?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.  

    Without knowing who the seller is, is it possible to get answers to these questions? If so how?

    732-402-6988
    0Reply
  • Antonio CuccinielloPro Member
    OP
    Investor 路 Austin, TX 路 Member since 2016 路 531 posts 路 310 votes
    7y
    Originally posted by @Herndon Davis:
    Originally posted by @Antonio Cucciniello:
    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鈥檚 the only other area I know of than the areas in New Jersey/NYC.  Would you consider it great place for cash flow?

    Austin is growing quickly.  It's the high tech mecca for Texas. It is NOT new undiscovered territory.  But there's still room for growth given the expansion of major Tech companies there.  You won't be adhead of the curve on that one but you can still find deals there but hurry up!

    Would Katy, TX be a better option?

    732-402-6988
    0Reply
  • Herndon Davis
    Lender 路 Ft. Lauderdale, FL 路 Member since 2019 路 156 posts 路 98 votes
    7y
    Originally posted by @Antonio Cucciniello:
    Originally posted by @Herndon Davis:
    Originally posted by @Antonio Cucciniello:
    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鈥檚 the only other area I know of than the areas in New Jersey/NYC.  Would you consider it great place for cash flow?

    Austin is growing quickly.  It's the high tech mecca for Texas. It is NOT new undiscovered territory.  But there's still room for growth given the expansion of major Tech companies there.  You won't be adhead of the curve on that one but you can still find deals there but hurry up!

    Would Katy, TX be a better option?


    Yes, Katy, Cinco Ranch, Spring Branch

    0Reply
  • Antonio CuccinielloPro Member
    OP
    Investor 路 Austin, TX 路 Member since 2016 路 531 posts 路 310 votes
    7y
    Originally posted by @Christopher Brian:

    @Antonio Cucciniello I'd start with several BP podcasts to answer you on this one. First, try out BP321 then 260: 
    https://www.biggerpockets.com/blog/biggerpockets-podcast-321
    https://www.biggerpockets.com/blog/biggerpockets-podcast-260-ultimate-guide-negotiating-with-fbi-hostage-negotiator-chris-voss

    Then I'd go to this for a direct answer to your question: 
    https://www.biggerpockets.com/blog/why-choose-seller-financing
    Here's my story: I had a seller financing deal accepted partially because the owner didn't want to be the one to collect the rent from the tenants every month and also have to deal with maintenance. They wanted steady, easy, repeatable cash flow. They originally wanted 85k. I got them down to 63k, seller financing, 30 year term. How: I used a spreadsheet to show them that over time they'd receive more because of interest payments than they would have received if they accepted the next best offer at 75k. They didn't want to receive a big chunk of money for the house because they were going to immediately get hit with a capital gains tax.  Ultimately, in the inspection I discovered some major mechanical issues that killed it for me. But, there's an example of how you can go in and, using seller financing as a tool, present a deal that is a better fit for you and the seller. Focus on what they want more than you focus on what you want and you'll generally come out on top. 
    Oh-the other thing - never lead off with your number. Never offer up your number too soon. Try and get the seller to give you their best price first. Then negotiate. You got this. 
     
     First off amazing story. Thank your for that insight.  Negotiation was never a skill of mine but I am definitely working on it. Thank you for the links, already went through the article and some great stuff I had not thought about.

    732-402-6988
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  • Jordan MoorheadBusiness Member
    Real Estate Agent 路 Austin, TX 路 Member since 2015 路 5k+ posts 路 3k+ votes
    7y

    @Antonio Cucciniello how long have you been looking? Typically it takes 3-6 months in a competitive market in my experience when you're just getting started.

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
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  • Roni E.Pro Member
    Specialist 路 Earth 2.0 路 Member since 2019 路 598 posts 路 271 votes
    7y

    If you can achieve an 9% Cash on Cash return in Y1, and if held for 5 years at hit a 16% IRR you are doing great or following simple rule after paying everything I want to make $250 a unit per month in my pocket but still look at your Cash on Cash return. Underwrite correctly and speak to a PM in the area you looking at.

    0Reply
  • Antonio CuccinielloPro Member
    OP
    Investor 路 Austin, TX 路 Member since 2016 路 531 posts 路 310 votes
    7y
    Originally posted by @Jordan Moorhead:

    @Antonio Cucciniello how long have you been looking? Typically it takes 3-6 months in a competitive market in my experience when you're just getting started.

    2 months, but what measurements would make something a competitive market vs an uncompetitive one?

    732-402-6988
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  • Jaron WallingPro Member
    Rental Property Investor 路 Indianapolis, IN 路 Member since 2018 路 4k+ posts 路 4k+ votes
    7y

    A competitive market still has house selling in 48 hrs or less. It's still happening in my market given the property is priced correctly for the location. I'm a firm believer in making deals, not stumbling upon them on the MLS>.

    0Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent 路 Austin, TX 路 Member since 2015 路 5k+ posts 路 3k+ votes
    7y

    @Antonio Cucciniello every major metro in the US is competitive right now. I don鈥檛 know anything about small towns or rural investments.

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
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  • James De Stefano
    Real Estate Agent 路 Houston, TX 路 Member since 2017 路 292 posts 路 233 votes
    7y
    Originally posted by @Antonio Cucciniello:
    Originally posted by @James De Stefano:

    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.  

    Without knowing who the seller is, is it possible to get answers to these questions? If so how?

    Mostly depends on the RE  listing agent. It never hurts to ask questions, the worst they can do is say no or ignore you. 

    Have you received many offers so far?    

    And if the D.O.M. is high, likely they have received dozens of low ball offers ( but.. many could be verbal only). A real, written offer w/ POF has a decent chance to be taken seriously. Good luck

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