First time buyer...tough in a sellers market!
Fort Worth, TX · Member since 2015 · 3 posts · 0 votes
First time buyer...tough in a sellers market!
Most Popular Reply
Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes
10yYou can also come to terms with the fact that this may not be the right time to invest. I firmly believe that the market is transitioning and there will be better deals just around the corner. Here are a few tips:
Look regionally, Texas as a whole is a strong market but Houston for example is just starting to soften.
Save money, now is a good time to store away resources like a squirrel storing away nuts. When the market transitions to a buyers market then you can put those nuts to use.
Get financing in order, this can be time consuming so go as far as you can with getting any financing you may need lined up. Define what your niche is and model deals to present to hard money, private lenders, or local banks. Starting the conversations and bringing in examples that reflect what you are going to invest in can get the ball rolling. You may not plan on using hard money but having someone on the sidelines that knows you, knows what you do, and knows how you do it is valuable if you find yourself in a predicament where you need quick cash to jump on a good deal.
Fall brings lower prices, flippers go a bit dormant, rehabbers tend to slow down, and you can find better opportunities in the fall.
Look at it as the off-season and do what all successful teams do in the off-season they prepare, practice, and get focused on what is ahead. That is better than just jumping on some deal that really is not a good deal, just because you want a deal.
18 Replies
- Specialist · Toronto, Ontario · Member since 2016 · 564 posts · 425 votes10y
@Steve Scanlon This is very normal. Instead of making a bad decision, look broader and in different ways. I know in my market that you can't really find deals on the MLS. You need to either look outside of major cities, or change the way you search for deals. Market to sellers, and maybe a deal will come to you.
Good luck!
- Investor · Lake Forest Park, WA · Member since 2015 · 108 posts · 35 votes10y
what strategy are you pursuing? Wholesaling? Flipping? Buy and hold? If flipping or buying and holding, could you just connect with some local wholesalers to purchase from? Or connect with them anyway if you are wholesaling?
- Fort Worth, TX · Member since 2015 · 3 posts · 0 votes10y
LB, thanks for insight!! Marketing to sellers is a tactic I'm looking into.
CM, I am buy and hold all they way for now. I am trying to work with a gentleman in my market that is broker/property manager. But I see signs posted saying "investors wanted" in various parts of the city. I plan to call. Bad idea? Thanks a lot for reply
- Agent/Investor · Murphy, TX · Member since 2013 · 542 posts · 304 votes10y
Calling is most likely a bad idea, you are being lured in by Renatus. Do a search on the site, there are volumes of postings on them. Finding anything on the MLS that makes sense to buy these days is about as likely as running into Bigfoot while you are riding your unicorn through the lollipop forest. If you do find something you need to offer fast, as high as you willing to go, with as few contingencies as possible. You should probably looking outside of Ft Worth, think Azle, Weatherford, Cresson, etc. Less competition that way. You also should get on the email list of all the local wholesalers. It's rough out there, good luck.
- Turnkey Service Provider · Fort Worth, TX · Member since 2013 · 135 posts · 41 votes10y
Totally normal what you are going through. Best way to prevent doing a bad deal or an impulse buy, is to know someone you can use as a sounding board or another set of eyes for anything you might be considering.
If you want, send me a PM with your buying criteria and we might be able to help source you a property. I'd also be happy to schedule a call and provide some feedback.
In our area (N Ft Worth), most of the "Investors Wanted" signs are from NetWorth Realty or New Western. They are professional wholesalers...and I've bought houses from them before. But you have to know what you are looking at, because their CMAs and their rehab estimates are usually not accurate. Still a way to source properties if you know how to do your due diligence.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes10y
In a competitive market you will need to act fast, and make your offers aggressive. Escalation clauses...and if you are competing against all cash offers, and your offer is using financing..you will need to escalate large amounts over the 2nd best offer. You may need to consider waiving contingencies if you are in a position to do so.
District Invest Group545 Reviews - St. Petersburg, FL · Member since 2011 · 57 posts · 30 votes10y
@Anderson Schulle I can't speak to the business practices of any other companies in the industry but as an employee of New Western I'm curious about one of the things you mentioned. As a company we decided about two or three years ago to not throw bandit signs across the fourteen offices we now operate. If you did in fact call a bandit sign and were somehow connected to one or my colleges I'd like you to PM me so we can resolve whatever may have happened. While we are are technically independent contractors we impose very clear guidelines on our associates on what is not only an acceptable way to conduct business but a more professional way which clearly outlines forbidding the use of bandit signs.
To address your other contention, I'm sorry you feel that our figures on both rehab estimates and ARV's didn't come out exactly where you had hoped. But based on how you phrased it it seems like after doing your due diligence on the resale values and after inspecting the property yourself you still decided to move forward with the transaction. In my experience it seems that an inaccuracy in our estimated figures typically tends to work out in the benefit of the buyer. I can't, however, run someone's entire rehab for them.
Like any business, I loathe the idea of a dissatisfied customer. I came from our San Antonio office and helped open up our Tampa/St. Pete office. If there's any help I can add to make your next experience with us more pleasant please let me know! Putting out a competitive product that someone can make money on is clearly objective number one. Having a customer that we can build a long term relationship based on a superior level of customer service is equally a number one priority for us!
- Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes10y
You can also come to terms with the fact that this may not be the right time to invest. I firmly believe that the market is transitioning and there will be better deals just around the corner. Here are a few tips:
Look regionally, Texas as a whole is a strong market but Houston for example is just starting to soften.
Save money, now is a good time to store away resources like a squirrel storing away nuts. When the market transitions to a buyers market then you can put those nuts to use.
Get financing in order, this can be time consuming so go as far as you can with getting any financing you may need lined up. Define what your niche is and model deals to present to hard money, private lenders, or local banks. Starting the conversations and bringing in examples that reflect what you are going to invest in can get the ball rolling. You may not plan on using hard money but having someone on the sidelines that knows you, knows what you do, and knows how you do it is valuable if you find yourself in a predicament where you need quick cash to jump on a good deal.
Fall brings lower prices, flippers go a bit dormant, rehabbers tend to slow down, and you can find better opportunities in the fall.
Look at it as the off-season and do what all successful teams do in the off-season they prepare, practice, and get focused on what is ahead. That is better than just jumping on some deal that really is not a good deal, just because you want a deal.
- Specialist · Dallas, TX · Member since 2009 · 20 posts · 95 votes10y
Steve,
If you are truly looking to do buy and hold I wouldn't worry too much about finding a deal with instant equity right now. I'm a big fan of a good long term strategy with real estate. It always works out better as a marathon verses a sprint race. One of the great things you have going for you now is financing. Fannie Mae 30 year fixed mortgages are still close to all time low rates and they are expected to rise in the coming years. If you are fully approved for a long term loan, now would be a great time to get into a small rehab and get your feet wet with little risk given where rates are and your strategy is long term.
If you wait for a buyers market when you can get into deals again at 70-75% of ARV but the fixed rate is 6-8% like it was 10 years ago you are actually in a less favorable position for going long.
My advise is get as many rentals as you can right now, start slow if necessary to gain experience. Don't worry too much about buying at a deep discount for rentals (that's like a 2 minute head start in a 4 hour marathon). Focus more on getting good, manageable properties and how your financing terms affect your long term returns.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes10y
Better to keep your cash fluid then to buy into a bad or marginal deal and have debt you can't get rid of .
Not only then are you getting little to no return but now you have debt that affects your ability to buy the great properties when they come along.
If you wait all year and just buy 2 properties over 12 months but are winners that is better than accelerating to buy just to buy and you have 6 properties ( 2 losers, 2 marginal, and 2 that do well). Now you are working 3 times as hard to be at about break even to carry the debt for all properties.
Patience and sticking to your numbers is the key.
- Investor · Weatherford, TX · Member since 2015 · 43 posts · 40 votes10y
Another tip that I use is find a realtor who is experienced dealing with investors IN YOUR AREA and preferably who is an investor himself/herself. Those agents really know how to help you find a deal that makes sense and often have contacts with other investors who may be interested in selling. I have been working with the same agent for over 5 years now and he has found all 4 of my current properties (sometimes with some guidance from me). He invests in the same market but cannot buy all the deals himself - in fact he owns a rental almost identical to mine and 3 houses down the street from my 3rd unit!
My most recent purchase was a 3-2-2 in the Chapel Creek area of West Fort Worth. This was late 2015, during a time when homes in this area are getting multiple offers above list. In this case it was not a listed property but was an investor who has relocated and wanted to get rid of the last property in this area. I was willing to take on the existing tenant, which was the biggest pain point for the seller - not being able to provide a vacant property!
That tenant has since moved out and I have rehabbed the property. I have a new tenant at a higher rent, the outgoing tenant was able to buy her first home, the seller got out of the area, so it was win-win-win-win for all parties! Add another win for a realtor who was able to make a deal in an area where deals are few and far between!
Keep looking and learning - there are deals out there if you stay focused. But make sure it's a good deal - always run the numbers before you buy. I have seen many "great deals", even from my agent who knows how I buy, that just did not have the payoff to make it worth my time and money.
- Turnkey Service Provider · Fort Worth, TX · Member since 2013 · 135 posts · 41 votes10y
@Ryan Harthan I usually call those signs to network with wholesalers. Don't know specifically when I was connected with someone from your company, or if it was maybe your competitor.
- Keller, TX · Member since 2015 · 49 posts · 25 votes10y
I wouldnt hesitate to call the signs. They are stereo-typically wholesalers which doesnt bother me. They do the leg work and find some deals and they make a cut. Its much easier than you advertising or devoting all the time to boots on the ground/driving for dollars.
That being said, Im in the same boat as you. Im looking for some buy and hold and deals are almost non-existent. Im saving for better deals and going to wait it out. I can appreciate what @Kurt Carlton says though and looking at the long term game more than the short term. Low interest rates are great right now and can save you a ton over the long term.
- Specialist · Dallas, TX · Member since 2009 · 20 posts · 95 votes10y
There are a lot of areas with double digit annual appreciation over the last several years, including much of GA, and believe it or not we are actually coming out of a bit of a 9 month soft landing with housing and there are some good days ahead again. I know all will disagree with me so I posted US median home prices. We bought 2,000+ houses in 13 metros over the last 12 months and have to track this stuff closely.
Had you bought a GA rental at 95% of value two or three years ago and it was in a good, manageable area you would be far better off than if you had waited and purchased a home today at 65-70% of value. You would have experienced compounding appreciation and two years of debt reduction and taken advantage of tax depreciation, not to mention you would likely be raising rents with each new lease.
The charts below represent the drop in interest rates and the consistent rise in rental rates since 1987. This picture will not look so pretty in the coming years. Rents will consistently rise as always with inflationary pressure but interest rates will not continue to drop. There is an unprecedented opportunity now to hedge the dollar with rental real estate and you should be buying as much of it as you can get your hands on.
- Sewickley, PA · Member since 2016 · 18 posts · 8 votes10y
@Steve Scanlon I feel your pain. I'm in a very similar boat and it's hard to resist the urge to get my first deal under my belt when the numbers really don't work out. I'm going to increase my networking and try to find some wholesalers in my area. I'll let you know how it goes.
- Investor · San Antonio, TX · Member since 2013 · 213 posts · 182 votes10y
@Steve Scanlon I started where you are now, what I did and what I know do for people in your position is partnering.
I recommend looking for someone that is willing to partner with you on a deal. Look for someone with a good reputation and not a fast talker.
You will get burned! I'm sorry but it's a right of passage just make sure they don't see you are a motivated buyer because they will use your money instead of theirs.
The great thing about being a buy and hold buyer is that you can out bid every flipper and in Dallas that works pretty good.
I focus my attention in San Antonio and because I do buy and holds I can out bid almost anyone who isn't a retail buyer. It does help knowing how to structure the deal and understand the market, which is why I STRONGLY recommend partnering.
See what kind of value you can bring a savvy investor and offer it to them in exchange for knowledge.
If you have any questions feel free to reach out!
- Plano, TX · Member since 2014 · 197 posts · 33 votes10y
One thought which might be helpful to you is to move further away from the major metro plex areas like Plano, Dallas or Fort Worth. My investments are in Sherman Texas which are about 45 minutes north of Plano near Oklahoma. As the metroplex continues to expand these areas will be part of the path of progress and create some great increases in rental rates. Also these areas are not as targeted by out of state investors so there are more deals to be had. I am a lender and a ton of the sales coming through my office are from people in California purchasing houses. They do not know the local areas as well as someone who lives here so we can check out places they know nothing of.
- Fort Worth, TX · Member since 2015 · 3 posts · 0 votes10y
To all, I can't thank you enough. Amazing knowledge from this sight, I appreciate your candid feedback.
Steve
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