Rental Property Investor · Winthrop, MA · Member since 2019 · 19 posts · 8 votes
I am looking to get out there and buy my FIRST property. I currently need to get qualified for a loan, but I understand that pre approvals only last a couple of months. If that is the case, how do you go about looking for deals headed into winter time when it is snowing? Should I wait until it gets closer to spring? I feel that even if I do lock down a deal in the winter the chances of finding tenants quickly are slim due to the season. I'm pretty sure savvy investors can work with this, how do you go about it?
Rental Property Investor · Western Washington · Member since 2018 · 151 posts · 60 votes
6y
Congrats on getting started on your first property @Darryl Jennings! I personally love shopping in the winter. Things slow down, there's not nearly as much competition, a lot of the inventory starts to get a higher number of days on market going into this time of year and it seems like sellers become more motivated. I bought two properties last winter. One of them was up in your area (in the North Shore). It is true that pre approvals have a little bit of a shelf life but from what I've run across you just need to update the lender with bank statements and pay stubs. No big deal. As far as the tenant scene goes, yes obviously there are less people looking but there are still plenty out there. Even if you have to overcome a month or two of holding costs just factor that into your numbers before hand. There is a high demand in the Boston area and I think you'll be just fine. I would suggest to keep hunting. It takes time to find a deal, make an offer, negotiate, get it under contract, do due diligence, inspection, secure financing, close etc. I'd say just get started. You might not even wind up closing until Spring anyways. Nonetheless, if you buy right it won't matter and a little while down the line you'll be very glad you pulled the trigger when you did. Just get the ball rolling. Best of luck to you in your future endeavors!
Rental Property Investor · Western Washington · Member since 2018 · 151 posts · 60 votes
6y
Congrats on getting started on your first property @Darryl Jennings! I personally love shopping in the winter. Things slow down, there's not nearly as much competition, a lot of the inventory starts to get a higher number of days on market going into this time of year and it seems like sellers become more motivated. I bought two properties last winter. One of them was up in your area (in the North Shore). It is true that pre approvals have a little bit of a shelf life but from what I've run across you just need to update the lender with bank statements and pay stubs. No big deal. As far as the tenant scene goes, yes obviously there are less people looking but there are still plenty out there. Even if you have to overcome a month or two of holding costs just factor that into your numbers before hand. There is a high demand in the Boston area and I think you'll be just fine. I would suggest to keep hunting. It takes time to find a deal, make an offer, negotiate, get it under contract, do due diligence, inspection, secure financing, close etc. I'd say just get started. You might not even wind up closing until Spring anyways. Nonetheless, if you buy right it won't matter and a little while down the line you'll be very glad you pulled the trigger when you did. Just get the ball rolling. Best of luck to you in your future endeavors!
Rental Property Investor · Winthrop, MA · Member since 2019 · 19 posts · 8 votes
6y
That response was epic, I love this site lol. Thanks @Michael Wallimann I appreciate that you took the time to explain that, I actually feel a lot more confident after reading that.
Real Estate Agent · Boston, MA · Member since 2018 · 26 posts · 32 votes
6y
@Darryl Jennings congratulations! I actually purchased a 2 family on 11/27 last year up in Salem ma! I am an agent and do a lot of cold calling (most people hate to do it lol). In the last 6 months I have spoken to countless multi family owners who are getting ready to sell. Some say “bring me an offer” or “make me an offer” and others say, “I’m not ready yet. Maybe a few more months.”
If there’s nothing on the market (which right now there aren’t many multis in our market close to Boston that make sense financially) then I would drive around the areas you’d like to invest in. Write down the address. Make sure the owners are not on the do not call list and see if they’d sell to you (wording is everything. I like to phrase it as “do you have any real estate plans in the near future” or find a point of pain for them like “I’ve owned this place for 20 years and I’m sick and tired of being a landlord”)
It also depends on how close to the city you’d like to be. Like I said, I purchased a 2 family last year 10 mi north in Salem and have turned the property into an 11 cap rate while house hacking. Typically The closer you get to town the lower the cap rates you’re going to find since property values are so high.
Also, join Facebook investor groups. That's not a bad place to find some deals that aren't being looked at by thousands of others on Zillow and MLS. For example I'm part of "north shore investors" on FB.
If you have any questions feel free to DM me and I can give you some other ways I find off market deals and motivated sellers.
Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
6y
If you wait until Spring when everyone is buying, you'll have less chance of finding a deal anyway. For the most part, if you identify a property right now and make an offer, you won't close until early January (remember all the holidays inbetween now and then). Then you can take a few weeks to make sure the units are sparkling clean and do some small updates, if you have empty units. Then you are at 2/1/20. That's the beginning of the spring market, and you won't find a good tenant who wants to move in that day anyway. They will have to give notice. So then you are at March sometime.
So actually, it's the best time to be looking, not the worst. What are you waiting for?
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
@Darryl Jennings This is one of the better times of year to be looking in my opinion and there is really no "bad" time of year to search. Deals are the rare part of the equation, not you or any buyer. So when the deal is there that fits what you are looking for when is the next time it will come around? Who knows.
@Ann Bellamy outlined some good specifics on why searching now is a good idea and I agree with those also.
Rental Property Investor · Boston, MA · Member since 2012 · 257 posts · 139 votes
6y
In terms of getting a pre-approval, you should be able to find a bank that will give you a pre-approval letter by showing your income, expenses, debts and taxes. You may not even need to have a hard credit pull for the pre-approval letter.
Real Estate Agent · Boston, MA · Member since 2016 · 106 posts · 69 votes
6y
@Darryl Jennings First congrats on the decision man. I woudn't worry too much about the pre approval, once you get pre approved they tend to last for up to 6 months (and even if it expires, worst case the lender updates it for you lol).
But like most people said, winter time is probably the best time to get a deal. You have more limited inventory, but if you can find something you like now is the time to pull in the trigger. THough you are right that it might take you a bit longer to rent anything out as a general rule of thumb, there is quite a bit of market variance. If you are getting into areas that are very 9/1 heavy (i.e Boston, Brighton, Cambridge etc), sure it would be tougher. But there are plenty of areas around here where you can get a rental done quickly, even in Jan/Feb. The trick would be also to underwrite an extra month's of holding costs so you are prepared for the costs. Good luck!