Hey everybody! I'm beginning to look for my 1st deal, but I'm not sure where to start. I know that I want to look for small multifamily (2-4 unit) where I can house hack near my job using a FHA loan for a single guy. But in my area, there's just not a lot to go around, there aren't that many deals available. Any tips? I dont want to be big, I'm just looking for that freedom number real estate can provide. Thanks guys!
@Chia Yang - it's a tough market right now to find good deals. The perfect situation might be a deal that is close to your work, but with the conditions today, you might have to look further out for the right deal. Perhaps you go with the longer drive (an listen to BP Podcasts on the drive) to get your first deal and make it work for a year or two.
I think some of the best deals are on the fringes. Look in that area where you didn't want to be a year ago, but seems ok now, but is in the direct path of growth.
If you really want to find that perfect situation, you have to work hard for it. Network with wholesalers, drive for dollars, create your own mail list of target properties and mail right to them, talk with older investors potentially looking to sell. You basically need to be looking at every channel to find those good off market deals.
thanks for the response Andrew!
@Chia Yang Good deal is dependent on an investor's expectations. For instance, in certain parts of the country, cash flowing SFRs are very hard to find (SF, LA). But in other parts of the country - Midwest - you will find cash flowing properties. That catch is that the former has and is expected to benefit from capital appreciation whereas the latter is in a "sideways" market with little or no capital appreciation.
In you particular case, you will have to decide what factors are the most important for you and fit best within the parameters of your investing style, personality type and budget.
Nonetheless, I agree with @Andrew Kerr that networking is essential. It is the one way through which you can compete against experienced investors with deeper pockets.
@Chia Yang What would be helpful to know is where you are in your search. Are you in week 1 or week 100? If "there aren't that many deals available" but you've been at it for a month, well, who knows. It's hard to say. It's winter so it's not like tons of inventory gets pushed on the market when it's snowing outside. If you've been at it for 2 years and can't find a deal then you probably have to revisit your plan, assumptions, investment thresholds, etc.
The nature of a free market and a good economy is that "good deals" are few and far between. If you've looked at 100 deals and they are "all bad" you probably have to revisit your assumptions. If you've looked at 100 deals and missed out on 10 because someone else made an all-cash offer, at least you know you're in the ballpark.
So here is what I'd do in your shoes. I'd go on Zillow and basically create a spreadsheet of all of the properties that have been sold in that 2-4 unit range. I'm assuming that Wisconsin isn't a non-disclosure state, this won't work if they are. Then just work through all of those sold properties with sold prices and start to ask yourself if you would a.) pay less than the sales price, b.) pay the same as the sales price, or c.) pay more than the sales price.
The net result you should have a good understanding of how reasonable your expectations are. I could look for the next 12 months and I'm not going to find a 2017, low mileage, never wrecked, Range Rover for $50K. My failure to find this hypothetical car isn't a "process issue" is an "reasonable expectation" issue. Not sure if that helps :-)
appreciate it guys.
@Chia Yang - a quote from Dolf DeRoos "the deal of the decade comes around once every week". A lot of investing is actually mindset. If you don't believe in finding deals you won't find any. Finding deals is what you get paid for as an investor. That's where you make your money. And you may have to toughen up a bit. Don't expect a deal to sit out there on a silver platter just waiting until you happen to come along (because you are the only one who is looking for a deal, right?). Step one is the find an agent who is an investor and understands and can show you the ropes. Step two is then to define what your deal looks like, locations, price, size, condition. Step three is then to work the market and find opportunities and negotiate until it is a deal. Good luck!