Hey everyone! I’m new to BP and have decided Real Estate Investing is the path I’m going to take.
Im looking for a little input. I’ve been reading/doing research and I am kind of stuck trying to figure out how to make my first move.
I currently own a home and have about 80-100k equity. (I also have a decent savings and can borrow from my 401k if I need as well). My house is probably as high as it will get and my taxes are Insanely high for the area I live in. I want to purchase a triplex or quad and house hack it to start and also purchase something else after moving in but maybe in a better market for investment. I currently have roommates and they will move with me but finding a deal seems real tough in this market.
Does anyone have any recommendations for finding a good deal in Broward county Florida? Preferably closer to Fort Lauderdale. I’m not sure how I should be calculating my returns as cap rates seem to be quite low no matter where you look.
The best way to find off market commercial and multifamily properties is to compile lists through a paid service like List source, Reonomy and CoStar or you can use free resources like Loopnet, CREXI, Craigslist, tax database, brokers, property managers, title companies, multi family inspectors, appraisers, landscapers and other companies that service commercial and multifamily properties and driving for dollars.
The real key is in how you approach the owners and then the follow up.
You can send letters but cold calling is by far the most effective method but you really need to know what you’re doing, how to open the conversation, what questions to ask and more importantly when to listen and not talk. Most importantly you need to convey confidence and assurance you are a player and not just wasting their time. Remember you are building relationships with the owners.
Follow up is crucial and where 90% of investors and sales people fall short. You have to consistently follow up in a meaningful way and you will get deals.
I agree with everything Greg said. Majority of prop on the MLS right now the numbers simply don't work with a financed purchase. I get every listed multifamily property from Dania to LW into my inbox daily from my Realtor. Nothing jumps out as a deal as of late. With that said, you can always make offers..
I invested in Broward and found a deal after months of searching. I would recommend taking the steps below.
1. Choose a target area. Because you are living at the property this will narrow it down a bit as you won't want to live in certain areas. Get a Realtor to put you on an auto listing email for multi's in your target market.
2. Analyze deals analyze deals and analyze more deals. Even those that don't make sense. Find the number that does.It will help speed you up when viewing properties. Become an expert on market rents and values based on the unit sizes. Do not pay much attention to the current rent. My property rent was under market by 22% and I knew that at first glance.
3. Do not be afraid of deals that have value add opportunity. Because you are living in the property you and your roommates may see an older outdated property and get discouraged. The deal I bought I completely renovated the 3/2 side of the duplex. It was a dump and will soon be brand new, in a cost efficient manner. All that equity is mine. (get inspections and dont go overboard on reno because you plan to live in it).
4. BE AGGRESSIVE WHEN A DEAL COMES UP. My property was an MLS deal listed under market as the out of town owner was getting a divorce and needed to liquidate fast. I was 5 mins from the property when the email came in and got it under contract full price within mins of list site unseen. My due diligence of the area allowed me to do so confidently. Turns out I beat a cash buyer friend to contract by an hour.
5. Do not get into a deal just to get into a deal. Set your criteria and don't try to jam a square peg into a round hole. It won't work.
@Greg Dickerson 's suggestions is what will get you a deal in today's market. I also "drove for dollars" writing down addresses and contacting owners in my target area. I got a couple responses but end of day they weren't the size I was looking for. It does work though.
Hope that helps. Good luck.
Thank you both for the input. I also have my real estate license and look on the MLS religiously. I just don't know what criteria to be looking for in this market to determine which is a good investment or what I should be offering.
I’m seeing the 1 and 2% rule - what you should be renting for vs sale price.
Cap rates are pretty low around here as well.
I don’t know what is really reasonable to settle for or aim for
Are you analyzing properties through the rental property calculator on BP? If not you need to learn that tool and use it religiously. All the questions you just asked will be answered by analyzing using that calculator. There is a youtube video on how to use it.
Check your cash on cash returns and cash flow and adjust your purchase price from there until you get to the number you want to be at. You work backwards to find the price you can pay.
Yeah I hadn’t thought about working it backwards! Thanks for the tip. Was working numbers before what I’d actually offer
Yea start tweaking numbers based on the property features i.e., is it remodeled and has a new roof? Ok maybe we can reduce the 5% monthly holding cost for cap ex and maintenance and repairs to give the cash on cash return a nudge up.
@Jason Etheridge , If you're looking to source off market deals, you can use listsource to pull the data your looking for with your specific criteria if you're looking to take down smaller multis. If you're looking to go larger the best way to source deals is for you to start building relationships with brokers in your area. It would be good to start building out your network of other investors who are active and passive, as these are great ways to create opportunities to create partnerships with others. Good luck