Investor · North Richland Hills, TX · Member since 2013 · 1k+ posts · 1k+ votes
I am trying to find my first rental but in order for it work it has to meet seemingly impossible criteria.
Here is what I am looking for:
SFR, 1600-2000sqf, 3bdr, 2+bth, 2 car garage, built after 1985.
Location: Midcities area of DFW (Dallas-Fort Worth).
These houses are listed between $110K and $130K and rented for $1200-1600/mo depending on the area.
However, once I calculate effective cash flow after all expanses are paid, my total purchase price must be at least 30% less than the list price.
I asked several listing agents if the seller would lower the price but response was always the same: "we already have multiple offers". Foreclosures are no better. They are listed for less but require a lot of repairs and also have multiple offers.
Should I just stop looking and wait for the next recession/crisis/whatever for the sellers to become more motivated?
There are bargains to be found in any market. Maybe they are not as plentiful as they were during the recession, but still out there. The thing is to be patient and work to source out the gems. A good realtor, especially one who has experience working with investors, is able to help you find those deals. If you have your license and access to MLS, I suggest you attend the training they offer to members to get skilled in setting up searches that will help you be first at the table when a great deal comes along.
Put an Offer in at numbers that make sense for YOU, then move on.
John
Are you suggestuing to just keep sending out lowball offers? Is email to the listing agent enough, or do I have to meet with them and hand over an actual paper offer?
it sounds like you are making offers for properties on the MLS so you are competing with literally everyone. Not sure if you are willing to do repairs or have access to buy with cash - if so you should network with wholesalers in the area to get non-MLS deals or to make your MLS offers stronger.
Phoenix, AZ · Member since 2014 · 6 posts · 1 vote
12y
John is absolutely right. We are investors and as investors we must rely on our analysis. If the numbers don't work for our analysis we offer a number that makes it work for us. If the numbers still don't work then don't "make the numbers work". You certainly do not need to wait until the next recession to find motivated sellers lol. There are MANY deals out there right now.
it sounds like you are making offers for properties on the MLS so you are competing with literally everyone. Not sure if you are willing to do repairs or have access to buy with cash - if so you should network with wholesalers in the area to get non-MLS deals or to make your MLS offers stronger.
I don't mind repairs (except foundations) and can do all cash deal up to $60K.
That's actually my business plan in a nutshell: find a property with ARV of $100K but selling for $50K + $10K repairs, buy and repair it (all cash), refinance to take out all my money, rent, move on to the next one.
Real Estate Investor · WI · Member since 2013 · 125 posts · 33 votes
12y
There seems to be some type of stigma attached to the term "Lowball Offer" so I try not to use the term around here.
If Your serious and can close the deal from Your end, always hand in a paper offer.
A very wise investor on this board, broke it down for Me like this: "Your basically buying a business right, You wouldn't buy a business that did not make money for You, would You?
Soo, when every body seems to be buying at high prices, in a hot market and You feel like Your gonna miss the boat. . . . .STOP! Do what, and bid, at the price that makes Cents for You and no body else.
I have to tell Myself this almost every morning. Does it work long term, I dont know. But all My properties make money, and most likely will continue to make money 10 years from now.
there are a couple of DFW wholesalers on BP who regularly post in the BP marketplace so I would say setup a keyword notification and check out the marketplace to find a few. The other suggestion is to attend local REI meetups to network and find wholesalers. I am not a flipper so while I have seen posts from wholesalers I have not worked with any to recommend them.
These houses are listed between $110K and $130K and rented for $1200-1600/mo depending on the area.
However, once I calculate effective cash flow after all expanses are paid, my total purchase price must be at least 30% less than the list price.
Should I just stop looking and wait for the next recession/crisis/whatever for the sellers to become more motivated?
Hi Nick,
I guess some posters above took away the easy answer. However, if it were that easy, everyone would be doing it.
Based on the numbers you provided above, it's a nice problem you have there. How do you think investors in the Bay Area are doing it, where the rents are $1,200 - $1,600/mo, and those properties are selling for $300k to $400k? Do you think we just stop making offers?
You're an investor. You get paid to solve problems. The harder the problems you could solve, the more money you would make. I think you just need to fine tune your analysis a little bit to make it work.
Investor · Fort Worth, TX · Member since 2012 · 209 posts · 37 votes
12y
@Nick B. agree with everything previously stated. Also keep in mind that sellers in DFW are getting very good prices for their homes, rental or not. North Richland Hills is a GREAT example of 2 things: 1) Owner-occupants flooding the market (500+ ppl move to Texas per day, along with numerous businesses moving to Texas weekly) and 2) Investors are settling into long term cash-flow investments that produce longer-term returns over a period of time with these bread 'n butter SFR. They may be sacrificing on the short term cash flow number to do this. (i.e. Joe Smith investor would rather get 15% total return YoY in a SFR than 2-6% in the slots market)
As others stated above, you may need to differentiate your market or method of sourcing deals. MLS right now is like grocery shopping for properties.