Can’t find anything good???

Question

First time poster, real estate enthusiast looking for a first time investment:

Looking for a 2 family that can produce a 10% cap rate. Everything on the market near me is between 4-6% at best.

Is there anything out here anymore??

Any tips to grab up a good deal?

Thanks!

Dennis M. · Answer

Your looking in your hot market area is the problem . Expand out a couple hours

Rich Littlefield · Answer

Even in an area with a low cap rate, multifamily housing is a great long term investment.  But expecting a higher cap rate in some areas is just realistic.

Brian Wilson · Answer

One of the easiest ways to run your contractor's is to ensure they are licensed and insured (this varies a little by location). Also set up a pay application process so that they are motivated to come back and finish work. If you're only looking at a few properties a year I would consider shipping all the materials to the site and providing the contractor with a scope of work agreement. Be very specific on inclusions and exclusions for each scope.

Good luck!

Penny Lane · Answer

@Brian Wilson

Good point, will look into it. Hoping to find what I’m looking for within 6 months.

Brian Wilson · Answer

It's the principle. Time is the same for everyone. You just discussed all of the front end work associated with using contractors. After that period, it becomes quite minimal if you do a good job on the front end.

I do this for a living, managing my sub contractors is such a minimal amount of time especially once a project gets off the ground. Which yes is on average less than 5 hours per week. It's effective time management which you'll become better at over time.

Eventually this all boils down to priorities. If your desired 10 cap is only achievable by value add in your market, and you decide you don't have the time to do value add deals, well then your time is more important than that return.

Austin Baiseri · Answer

San Bernardino and Riverside County are where you should be looking.

Penny Lane · Answer

@Brian Wilson

14 second post is definitely relevant to days or weeks of finding a trusted contractor and spending no less than 5 hours a week managing him.

Makes sense.

Penny Lane · Answer

@Rich Littlefield

I’m in the east coast, looking for a duplex/triplex for $500,000 or less. Seems like everything I’m coming across is a 3-5% cap maybe an occasional 6%. Not worth the time or effort.

There’s no way any savy investor is picking up this junk?

Rich Littlefield · Answer

I am here in So Cal. Some areas, say Los Angeles or Orange County, good luck finding a 10% cap rate. Go out to the desert,  you can find them.  I am wondering if that is what you have going on?

Brian Wilson · Answer

@Penny Lane

Use a contractor. If you're able to post on here you likely have the time to manage a contractor.