What is your biggest problem you face right now as a REI?

Rental Property Investor · Denver, CO · Member since 2018 · 183 posts · 172 votes

Hello Bigger Pockets Community:)

What's everyone's biggest frustration/problem you face right now as a real estate investor?

For myself, it would be deal flow. My partners and I will look at 100 deals and about 5-8 of those will fit our invest criteria. The more deals we have to analyze the better.

I'd love to hear your answer.

My biggest problem I face right now as a REI is..............

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Funds to purchase. I can find deals regularly, even in my difficult market. But getting the funds together takes time because I'm not willing to over-leverage and borrow my way to success.

The truth is, I could sacrifice more of my personal time or family and work more to get the funds. However, my family is more important to me than an accelerated business plan.

We can't have everything.

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Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
7y
Originally posted by @Nathan Gesner:

@Cody L. you didn't understand my post. What I said is that I don't want to "over-leverage" or "borrow my way to success".
Too many people over-extend to make a deal work. They want to buy property with 3% down or 100% financing. I would buy 100 properties tomorrow if I had the money but I'm going to pass on deals until I've saved up the necessary 20% and invest a little slower and wiser.
Make sense?
Gotcha. There is ZERO wrong with being conservative iwth leverage. I just didn't understand the relation between not having the funds and not wanting the debt. I guess I'm of the school that if I could finance at 3% or 0% down I'd pretty much buy an unlimited amount of properties.
I'm not big on going to conferences but a buddy dragged me to one put on by a title company. One of the speakers was asked about what to buy or something (don't recall the exact question). He said "if you can finance it, buy it". I have a similar mindset.
I've already switched from buying w/ financing, to buying with cash then refinancing. Why? Let's take an underpriced $1m building. If I get a loan, I come up with $200k, bank does $800k. If I pay cash, I can then get it appraised at $1.3m, bank does a $1m refi, I'm in it for $0 and have my cash back to do the same thing again. That's what I started doing this year and have added more units this year than any other by far.
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Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
7y
Originally posted by @Juan Vargas:

Originally posted by @Cody L.:
Originally posted by @Juan Vargas:

Finding value add multifamily properties where the broker hasn't added the "value add component" into the whisper price. The whole point in buying a value add is to "add value", not to pay premium for it and STILL have to inject more capital into it.
I think that describes a deal I’m closing on shortly to a T. It’s being pitched as a value add deal. It’s a mess. But it’s priced as if it’s fixed/stabilized. 110 units near galleria. I’m paying way more than I would have 2 years ago. Hell, maybe even a year ago. It’s jist the best of a bunch of crappy deals out there
You're right, could be the best out of several not so good deals. And we can't necessarily blame the brokers for pricing them like that either. If guys keep coming in and paying for the value up front, they're gonna keep pricing them that way.
Well I'm paying way under original asking and a good deal less than what I was told was his drop dead 'won't go below' number. I have a lot of deals going so I tossed out my number and said "If he can come to this cool, if not, that's cool too". Took a few weeks of waiting but it came my way.

I'm still not stoked even at my price but it cash flows nicely even in it's bad condition and there are some low-hanging-fruit upgrades I can tackle. Plus the comps suggest I have an easy exit from the property if need be.
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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
7y
@Matthew Baltzell I am limiting my growth way more than any external factor. I bet that is the case with most people if they got real about it.
2 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Originally posted by @Cody L.:

Originally posted by @Dennis M.:
Originally posted by @Cody L.:

Originally posted by @Dennis M.:
Easy to find good cash flowing deals . The funding is the issue for me .
Maybe you can find a partner? It seems for most people, the problem is finding deals. Funding is easier.
Do you mean the 70%-80% lender money you’re having problems finding? Or are you able to get the loan but not come up with the down payment? I know guys that are able to come up with most or all their down payment money in addition to their bank financing
Well it’s the fact my idea of a deal isn’t exactly what a bank thinks is a deal or perhaps even a hml . I look for distressed apartment houses under 50k and also I am not at a point where I want to be over leveraged
Not being over leveraged is a worthwhile goal. But if you're looking to grow in this business, it's hard to do so any other way. Leverage is what separates RE from everything else. I now own $60m in RE and gobs of units. No way I could have done that by trying to save up the cash flow of my first deal to buy another little deal, rinse wash, repeat. I'm not saying that leveraged growth should be the goal. But if growth is the goal, you'll have to accept that leverage will be a big part of it (to the point where it's pretty much tied. The more leverage, the more/faster growth)
60 M ..That’s incredible . I will certainly consider your advise on that . Thank you
1 Reply
Bob Prisco
Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
7y
Need more buyers, plenty of inventory, I am doing on avg about 7- 8 per month, SF MF,
0 Reply
Daniel Campbell
Lender · Detroit, MI · Member since 2017 · 36 posts · 30 votes
7y
@Matthew Baltzell I’d say the biggest problem in my area as a whole is banks. Nationally it’s difficult to find investor friendly lenders, but add that our local banks have tightened up the strings after a 275 unit investor defaulted for $15M, and its near impossible to get loans. No bank will even look at anything under $50k. As a wholesaler and beginner buy/hold, I basically have two buyers. Luckily, they swing a heavy bat. 👍🏽
0 Reply
LeAnna Davis
Member since 2018 · 37 posts · 12 votes
7y
Being new. I'm still learning the ropes and am trying to figure my first flip out and this particular one will work out. I have everything but the holding and financing costs figured. Without those it is a 20,000 but I'm stuck trying to figure those two out.
0 Reply
Rob Sawyer
Rental Property Investor · Syracuse, NY · Member since 2017 · 156 posts · 72 votes
7y
Funding without a track record and little personal funds to show "skin in the game". Finding decent deals is hard enough but when one is found, I'm unable to execute. Very frustrating.
0 Reply
Kate J.
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
7y
@Matthew Baltzell I dont see any deal, that's my biggest problem.
0 Reply
Bola A.
Rental Property Investor · Houston, TX · Member since 2014 · 146 posts · 35 votes
7y
@Nathan G. Can you share your deal with me to look at ?
0 Reply
James E Regan
Member since 2018 · 2 posts · 1 vote
7y
what is secret sauce?
0 Reply
Jennifer PetrilloPro Member
Investor · Asbury, NJ · Member since 2015 · 226 posts · 205 votes
7y
Acquisitions, expensive HMLs, failed septic systems, fussy buyers, flattening market in NJ!
1 Reply
Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
Originally posted by @Account Closed:

@Dennis M., but everybody says if you have a good deal the money will find you?...
This is a very false statement. Yes the money will find you if you’ve already build the relationships with investors and have a good track record.
Now, what I would say is that if you find a really good deal and put it under contract, you will be able to find somebody that’ll buy the property from you. Even in this case though you need to be having good relationships with investors.
1 Reply
Albert Ng
Rental Property Investor · San Jose, CA · Member since 2015 · 401 posts · 221 votes
7y
For me, the price is too high. It's hard to find a deal with enough margin of safety
1 Reply
Jaime Moore
Real Estate Broker · Rushville, IN · Member since 2015 · 7 posts · 1 vote
7y
Wholesalers selling properties for more than market value. Trust a local REALTOR® to find you the deals before they hit the market.
0 Reply
Nathan Wankel
Investor · Denver, CO · Member since 2018 · 57 posts · 30 votes
7y
My biggest problem I face right now as a REI is finding good and reliable contractors in the Denver Metro and Colorado Springs area.
0 Reply
Erik B.
Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes
7y
Finding deals with meat on the bone and value add rentals. Market is up and every seller thinks they have struck it rich
0 Reply
Erin Genz
Rental Property Investor · Colorado Springs, CO · Member since 2018 · 8 posts · 8 votes
7y
My biggest problem I have right now as an REI is imposter syndrome. I have owned two rentals for 10 years. Technically, I am decently successful at this. But we're thinking about making a change and I'm finding that I just don't feel like I know enough or am dedicated enough to be "successful". Is there such a thing as a casual investor anymore? I don't need thousands of properties and millions of dollars. I'd just like to make my money work for me instead of me working for it.
1 Reply
Medi Sarwary
Pleasanton, CA · Member since 2016 · 73 posts · 48 votes
7y
To echo a lot of statements here, finding the right deal where the numbers work has been tricky. Even with the pro forma numbers the cash flow is pretty mediocre. Like others have said, prices are based off of potential value rather than the current condition. An option for me would be to look in an OOS market however I'm not comfortable with that at the moment.
0 Reply
Andrew Flora
Rental Property Investor · North Vernon, IN · Member since 2018 · 136 posts · 192 votes
7y
My biggest problem is finding and keeping a reliable handyman. I invest in rural markets so there's not many available, they say they want the work but then dont show up and stop answering my calls. My skillset is very amateur, I plan to get better at doing things myself but I will still at some point need a good handyman.
0 Reply
Steve Oswald
Investor · Panama City, FL · Member since 2017 · 45 posts · 19 votes
7y
@Matthew Baltzell Finding the right deals. It was so much easier 5 years ago LOL! I didn't know what a great time it was. Anyway working on expanding into other locations to diversify and hopefully open up other opportunities.
0 Reply
Terrell Garren
Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes
7y
I get automated eMail notifications from Cozy telling me that monthly rent has been deposited. I could hardly fish the other day due to email interruptions.
6 Reply
Cody Z.
Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
7y
@Nathan G. Very real talk... I constantly struggle with the ambitious parts of myself and the reality that tomorrow is not guaranteed.. thanks for the input, I feel like this is rarely mentioned on BP
1 Reply
Roderick Smith
Investor · Birmingham, AL · Member since 2015 · 74 posts · 25 votes
7y
funding for my deals is my biggest frustration. I can not find a lender that will lend under $50k for some of my buy, fix, & hold deals. Also trying to use my credit cards to do those kinds of deals has my debt to income ratio higher than i would like. If can find a private individual i can work with long term i would share ownership or equity to get the deal done and buy them out later.
0 Reply
Milton Harris
Member since 2018 · 1 post · 0 votes
7y
@Dennis M. So what do you do how do you find funds to be able to do what you can do? Hard money?
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