How your off market mindset is killing your ROI

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Most everyone has had this thought, "Why should I buy this deal when it has been on the MLS?" Investors will on occasion scoff at the idea of an income opportunity that was listed—the term on-market has become a pejorative, a sin to consider it. I am exaggerating, of course, but the sentiment remains: if everything else were equal and the property were either on or off market—which would you choose?

If your renovation is up to snuff, i.e., you take pride in your Flip and don't cut corners, there is absolutely no benefit in where you purchase. You think you are the only one who has seen the property, it helps with appraisals… it is all a fugazi, fugazy. In the state of Arizona, every purchase is public—deed history is public—the only thing that matters is whether or not the property is a deal. Building out a pipeline of off-market properties is not only difficult but may in fact be obscuring your search for the best deals. You have properties in front of you but what does the rest of the market have to offer? Competition is fierce—procuring property, fixing them up to rent or sell, or listing them, etc.—In order to be a good investor, proficiency in at least one of these fields is a necessity; trying to control too much process stifles growth, creates stress while straying thought and wastes precious time. Focus on one and by all means continue to learn, your education is never over, the point I am trying to make is: cultivate relationships with the best sources in the areas that you're not focusing in order to save yourself time, money and the headache.

Every transaction has a cost. Purchase price, rehab costs, agent fees, closing costs—but what about those that are harder to quantify; this color paint vs that color, fixtures, lighting, time a property sits listed. What about your time? From whom you source your next deal should be reliable, consistency matters. Here is why your typical real estate agent, even if you talk to a few, aren't that. Properties are falling into their laps. Wholesalers are not getting off the hook, when your agents do not have anything of substance you turn to combing through hundreds, if not, thousands of emails trying to find what would seem like a unicorn in a sea of daisy chains and potentials that you will come to find out are no longer available or were never deals to begin with.

That's right. Chance. Your acquisition funnel is fueled by chance. ROIreturn on investment—you are not just investing your money. What about the other three; energy, emotion, time. Ask yourself, what is my ROI on my energy, on my time?

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Great topic! I agree - the stigma against MLS deals is not well founded. If the numbers work, it doesn't matter where they came from. Off market deals carry a lot of risks that aren't accounted for in the purchase price!