Having trouble finding a good deal? Anyone else too?

Question

I am in Houston, TX. I invest in Missouri City, TX. I was doing great at finding really good deals with an average of a 30% cash on cash return ( I am still a newbie, I feel that is good for me). The biggest problem is that real estate seems to be roaring back and I can't find good deals! People are starting to get insane with their asking prices and homes are going for above the asking prices Is anyone else having these problems? I refuse to participate in this insanity! Am I just going to have to wait out this storm or possibly a new bubble?

Ehren Williamson · Answer

I buy single family homes around beltway 8 in Missouri City, Texas. I just see a bubble. The insanity isn't part of the fun for me. I am a buy and hold investor so I make all of my money on the buy. I have a really good agent I work with and we are getting outbid like crazy! I am actually giving full asking price sometimes and get turned down. The house will sell for about 5 to 10% higher then asking price! I have noticed a particular group of novice investor, but I have seen these hedge fund types as well. I am waiting for the people making these bad moves to go broke I guess.

Harry M. · Answer

Ehren Williamson - I'm definitely seeing the same thing up here in the Dallas area. We finally got one under contract but it took 2+ months, 5 offers, a dozen plus viewings, and 65+ properties that initially made it onto my spreadsheet! Everything was going at at least a little over asking, with a lot of offers.
-Hary

Natasha Hylton · Answer

Have you thought about cold door knocking? Cost effective marketing. 
Since I have a lot of free time inbetween my full time job schedule, Ill be giving this a green light starting next week

Simon Campbell · Answer

I am hearing about above listing prices across the board. So our choice is either jump on the band wagon or wait for prices to return to "normal" when everyone else jumps off the band wagon.

Rather than looking for the great deal. Establish your minimum acceptable return and cash flow and then focus on finding properties that meet or exceed these - even if the final selling price is well over listing price.

It is either get in now while prices are still lower than 2008 or miss out. But I will agree it kinda takes the fun out of things.

Ben Hughes · Answer

Yeah, stuff is going for about 106% of the asking price.  It is insane, we have been trying to find stuff like crazy but it's just hard.

Andy Mallos · Answer

lol! @Brandon Turner I might take you up on that : ) Is this where the next hang is?

Brandon Turner · Answer

Andy Mallos that's why you gotta come down to sunny Grays Harbor ;)  Cheap prices... "fun" people!

Andy Mallos · Answer

I am also experiencing this (Seattle, WA area). I've been using looing for 6-9 mo.s now on the MLS and had 6-8 offers turned down. I'm a buy and hold investor and I refuse to pay too much, meaning I won't pay so much that it fails to cash flow. So, I'm changing my buying strategy to cope. So, I will continue to participate, just differently.

Derek M. · Answer

Hi Ehren Williamson,

Sorry you're not finding deals at the moment.  How's your marketing?  And it is getting tighter out there.

Not sure which strategy you're after, but if you have $ in place, I have two SFR's under contract... one in S. Houston, and one in N. Houston... both within the beltway.

-Derek

Ali Boone · Answer

With investing Ehren Williamson you have to be fluid and be able to adapt to the changes. The days of the stupidly high returns are mostly gone, yes, but that doesn't mean you should quit or start waiting anything out. If anything, keep buying now before the returns just get worse! Then when the returns are to levels you really don't want, figure out another game plan.

Don't just refuse to "participate in the insanity" or you'll miss out on some great deals :) The insanity is half the fun.