Why Can't I find buyers for my package deal?

Question

Hey BP family,

I'm here in Jackson, MS and I've acquired contracts on 6 properties for $250k which we are marketing package deal for only $234k and they are already rented producing $61,680 yearly which at my calculation is 3.79 CCR. Most of the properties have been renovated and properly taking care of by the owner. If you had the opportunity to bite at something like this what do you think will be making this go sour?

Susan Maneck · Answer

If you bought then before the recession they are probably underwater right now. I bought a house as my principle residence back 2003. It is two-stories, 1900 square ft. I paid 73K for it from HUD. Zillow says it is worth 69K now. I could either cry about it being underwater or buy up the neighborhood. I now own five houses on that street alone. The house is rented for $950 a month now, so I can't complain.

Susan Maneck · Answer

You don't buy property in Jackson if you are hoping for appreciation. You count on the income, period. The population is declining here but I have never had a problem renting my houses. I usually have people asking to rent as soon as moving truck shows up in the driveway or they see someone working on the house.

I know it is really hard for people from California to understand, but I currently own nine properties in Mississippi and a condo in Tahoe. If I sold them all I couldn't buy anything in your neck of the woods.

John Thedford · Answer

LOL it sounds like you may end up owning six properties you never planned on owning unless you have some FRAUD and SCAMMER exit clauses. Hopefully you HONOR your word instead of screwing over the homeowner like most unlicensed brokers do.

Julian Lyons · Answer

Account Closed I haven't decided yet lol, I'll probably end up just wholesaling it to another investor. I need some quick cash for another project.

On most of our other rentals, we do self manage. We are still learning the ins and out of the landlord game though. We try to target tenants with government assistance or sell to tenant buyers via owner finance. Its been a pretty good way of avoiding the traditional landlording pitfalls common to these lower-income areas.

Account Closed · Answer

@Julian Lyons are you going to self manage that 25k property your buying.

Those kids of deals sounds almost to good to be true.

I have a handful of rentals in Mississippi from a number of years back.

Julian Lyons · Answer

@Aaron K. You can find them all the time here. I have one under contract for 25k that's rented to a long term HUD Tennant for 800/mo lol. Everyone thinks Jackson is so bad, they practically give properties away. Sucks for the fix and flippers, UNBELIEVABLE for the buy and holders.

Susan Maneck · Answer

I can confirm this is quite possible in Jackson, MS. And these are not bad properties. The house I live in is 1700 square feet. It has 3bdrm 2ba with a family and living room on a third of an acre. I paid 30K for it and could probably rent it out for $900. I've only bought one house from a wholesaler. The rest I found on HUD and FANNIE MAE websites or even on MLS. I manage most of my own properties but since I'm going back and forth to California a lot these days, when a property goes south while I'm.  gone, I left my real estate agent manage the property

Susan Maneck · Answer

Depends on the size of the properties and where they are located. If they are in NE Jackson, I would say yes. In West Jackson I would say no. South Jackson would be a maybe if they are all 3bdrm 2ba. and located south of McDowell.

Aaron K. · Answer

In that price range I'd be concerned about the area, that is extremely inexpensive and I'd be wondering about the long term prospects of the neighborhood.

Julian Lyons · Answer

In my experience, Jackson Cash buyers want 20-25% CAP Rate. This package is closer to 15%.

You'd probably have to find an out of town buyer that's okay with taking on 6 properties @ once, or get the price/terms closer to 20-25% CAP.

Why Can't I find buyers for my package deal?

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