Not enough deal flow or being impatient?

Question

Hello BP,

My father who is my private money lender has required me to focus on my city of Toledo. I currently own 15 units of small multifamily here and I only buy B class properties. These properties are hard to come by and I've purchased all of the ones I own via cold calling. I'm trying to purchase larger multifamily here in the area  (8+ units), which is even more difficult to come by, but I want to scale as quickly as possible.

I'm starting to catch the shiny object syndrome again, maybe it be due to lack of faith, or impatience. However I've been thinking I might need to switch my strategy or I may be waiting forever. Another part of me feels like this is a good test of patience and the right deal will come even though I have underwritten anything for quite some time.

My options are: wait, find another market, or change the asset.

Thanks BP!

Paul Moore · Answer

Hi @Stephen Brown! I think we have interacted before on one of the other forums.

Your father's seemingly strict rules might be a blessing in disguise. Even thoughToledo is not the town I would have chosen, I think there is great reward in being hyper-focused on a specific market, or even sub-market. There is also great potential reward in being focused on asset class and strategy. Though others above said differently, I believe that if you are extremely focused on one thing, and execute that one thing better than anybody, you will win in the end.

I'm writing a book on Warren Buffett's principles for real estate investors and I have found that he is a master in hyper-focus. Gary Keller, the world's most famous real estate broker, and founder of Keller Williams, says the same thing in his wonderful book The One Thing. If you can't convince your father to go elsewhere, I think you can make the best of what you have by diving very deep, and getting to know every submarket in your area, getting to know the brokers, reaching out to sellers, and staying in your lane. Good luck and happy investing!

Fernando Alfaro · Answer

Personally, my focus is on finding what ever deals make sense, I don't limit myself to any specific asset class. My suggestion would be for you to go out and find a deal every month that makes sense. Whether that's a SFH, Duplex, Multi, Commercial, Self Storage, as long as the deal is a good deal, you are headed in the right direction. My problem is keeping my focus on 1 deal at a time because there are so many deals in Toledo popping up right now.

Michael P. · Answer

That’s exactly what I was going to say, I don’t really care as much about the exact type of asset as I do about getting a great deal.

Jackelyn Lee · Answer

Same. And personally, I think it’s good to try different strategies out. That way, you can see what excites you, and makes you the most money. In the past it was multi family - now it’s BRRRR for me. As long as it’s a good deal, and it’s calculated risk, I don’t really care about the type of asset. Multi family is a long term play so if you decide to only stay with that, you’ll need patience. I only buy value add properties so it takes a bit to recoup the funds.

Nick Belsky · Answer

@Stephen Brown

The markets are slowing and inventories growing steadily.  If you like the market, I'd say be patient.  Set some metrics or goals and if your patience runs out, have a back up plan.  I like @Charles Seaman comment about strategy.  Targeting a few markets makes things a bit more feasible.  At the same time, casting a net over too large of an area can be cumbersome too.

Cheers!

Andrew Syrios · Answer

If larger is more difficult to come by, perhaps continue looking for smaller properties as well. We planned on going almost exclusively at large multis when we arrived in KC but ended up focusing on SFR and small multis for a variety of reasons.

Charles Seaman · Answer

@Stephen Brown A strategy is only as good as one's ability to execute it.  The property size/type and the geographic region that you're looking for deals in will definitely limit your deal flow.  This isn't a bad thing, but it will certainly require more patience.  If you only have a single funding source, then you're somewhat limited with what they want.  If you have multiple funding sources, then looking for deals in different markets and/or different sizes/types of properties can be option.  So start with the big picture in mind and then reverse engineer your course to figure out what action is needed to get there.

Not enough deal flow or being impatient?

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