Being patient in this market
Over the last couple of months, I have been extremely patient. I have made a few offers, but it still appears that sellers are still hopeful for 2021 prices. Stuff is sitting longer, and are less affordable in my area because of the rates.
I was able to make MLS stuff work a year ago, but nothing is working now. I am really focused on developing my skills in getting off market leads. I have sent out mass emails, with the only responses being negative. Ive cold called a bunch with no luck. Sent out post cards, nothing.
There is one or two deals that pop up from time to time, but it opens the flood gates and were still seeing very competitive buyers still. And I am in no interest of getting involved in a bidding war.
Im just fed up with it to be honest. I made an offer on a probate sale. They were asking 275k, the ARV was around 350k, and it needed 125k in work. I offered 175k and received a call back from the listing agent saying I was out of my mind. I said, well if you're familiar with the ARV then it wouldn't seem so crazy given the amount of work it needs? And his response was: "nobody cares about the ARV".
I would think the market is going to change at some point. I was always the optimistic one in these forums over the years, but lately I am on the opposite side. Somethings got to give, and im still remaining patient and ready. In the mean time I will keep developing skills to help me acquire something off market.
#4 All Forums Contributor
- Plymouth, MI
OK. I can understand everything said, except 2 things:
1 - The selling agent saying, "nobody cares about the ARV". After I stopped laughing, ...
2 - Why are you fed up? You know things will level off, and everyone (I'm guessing even that moron of an agent) will come back to reality island, and all will balance out. It ALWAYS does.
Quote from @Joe Villeneuve:Yes, the listing agent really said that. I didnt know what planet I was on for a minute.
OK. I can understand everything said, except 2 things:
1 - The selling agent saying, "nobody cares about the ARV". After I stopped laughing, ...
2 - Why are you fed up? You know things will level off, and everyone (I'm guessing even that moron of an agent) will come back to reality island, and all will balance out. It ALWAYS does.
To answer your second question, im just trying so hard to scrape something by. Ive been doing this a little over 5 years now, and have acquired a few rentals and primary residences. I dont know everyone elses story, but I started from one beat up house, put every ounce of sweat in blood into it in order to be in a position to invest. I get enough money to invest, and im immediately priced out of any deal that makes sense lately. It always seems like the next deal is JUST outside my grasp.
I want to go bigger, but I just cant compete with the big guys. Anything under 500k is gobbled up cash, when I need to use some sort of financing which seems to be harder to get lately (now 25% down for 3 family), not to mention I have decided to do real estate full time and do not have the w2 income to show. Yes, that was my decision and was aware of the challenges.
Im trying to switch gears now and really look for commercial opportunities, where I can get funding. 5+ units or more. So its just a new space for me, and a different marketing strategy. But its definitely been a challenge!
#3 1031 Exchanges Contributor
- Investor
- Las Vegas, NV
But you have to think about your competition. Someone that’s going to live there thinks, this place is worth $350k after we fix it up and they only want $275k. I can do a boatload of work for $75k. So to that buyer $275k is a good deal. Worst case they agree that it might need $125k to make it perfect. So they offer $225k. $50k more than you.
But most likely you get people who can afford $275k but not $350k. Their “plan” is to live in it as is until they scrape up enough to fix it up. 5 years later they’re living with it as it. But $275k was still a steal. You can’t put a $50k profit in it for yourself and then say the realtor is crazy not to taking your offer. 90% of buyers are owner occupants.
40% off is a big ask in any market I’ve invested in. Either you’ll get the last laugh in 6-12 months when they drop 40%. Or it will sell for $250k plus and you’ll have to look at your calculations.
#4 All Forums Contributor
- Plymouth, MI
Quote from @Brian Ellis:If you go to the doctor, and tell him your arm hurts when you raise it. What's the first thing the Doctor says?
Quote from @Joe Villeneuve:Yes, the listing agent really said that. I didnt know what planet I was on for a minute.
OK. I can understand everything said, except 2 things:
1 - The selling agent saying, "nobody cares about the ARV". After I stopped laughing, ...
2 - Why are you fed up? You know things will level off, and everyone (I'm guessing even that moron of an agent) will come back to reality island, and all will balance out. It ALWAYS does.
To answer your second question, im just trying so hard to scrape something by. Ive been doing this a little over 5 years now, and have acquired a few rentals and primary residences. I dont know everyone elses story, but I started from one beat up house, put every ounce of sweat in blood into it in order to be in a position to invest. I get enough money to invest, and im immediately priced out of any deal that makes sense lately. It always seems like the next deal is JUST outside my grasp.
I want to go bigger, but I just cant compete with the big guys. Anything under 500k is gobbled up cash, when I need to use some sort of financing which seems to be harder to get lately (now 25% down for 3 family), not to mention I have decided to do real estate full time and do not have the w2 income to show. Yes, that was my decision and was aware of the challenges.
Im trying to switch gears now and really look for commercial opportunities, where I can get funding. 5+ units or more. So its just a new space for me, and a different marketing strategy. But its definitely been a challenge!
After that, when the rules change, you need to change along with them.
Quote from @Bill Brandt:I didn’t say the realtor was crazy for denying the offer. I said he was crazy for calling me to tell me nobody cares about an ARV.
But you have to think about your competition. Someone that’s going to live there thinks, this place is worth $350k after we fix it up and they only want $275k. I can do a boatload of work for $75k. So to that buyer $275k is a good deal. Worst case they agree that it might need $125k to make it perfect. So they offer $225k. $50k more than you.
But most likely you get people who can afford $275k but not $350k. Their “plan” is to live in it as is until they scrape up enough to fix it up. 5 years later they’re living with it as it. But $275k was still a steal. You can’t put a $50k profit in it for yourself and then say the realtor is crazy not to taking your offer. 90% of buyers are owner occupants.
40% off is a big ask in any market I’ve invested in. Either you’ll get the last laugh in 6-12 months when they drop 40%. Or it will sell for $250k plus and you’ll have to look at your calculations.
it costs on average $375+ a square foot to renovate here. I could do the work myself for 125k, gut remodel. Place was a disaster. I was a contractor and project manager, nobody would be able to make that a live in flip. No bank would finance it, and anybody looking to buy would need to pay cash. And anybody willing to pay cash is likely an investor.
Quote from @Bill Brandt:If you had 250k cash and were willing to buy a place and sink another 75-100k in it yourself to get it to market value, why wouldn’t you just go buy something turn key at market value without the headache?
But you have to think about your competition. Someone that’s going to live there thinks, this place is worth $350k after we fix it up and they only want $275k. I can do a boatload of work for $75k. So to that buyer $275k is a good deal. Worst case they agree that it might need $125k to make it perfect. So they offer $225k. $50k more than you.
But most likely you get people who can afford $275k but not $350k. Their “plan” is to live in it as is until they scrape up enough to fix it up. 5 years later they’re living with it as it. But $275k was still a steal. You can’t put a $50k profit in it for yourself and then say the realtor is crazy not to taking your offer. 90% of buyers are owner occupants.
40% off is a big ask in any market I’ve invested in. Either you’ll get the last laugh in 6-12 months when they drop 40%. Or it will sell for $250k plus and you’ll have to look at your calculations.
Quote from @Joe Villeneuve:I’ve seen you on here for quite a few years, and respect your advice. What direction have you seen investors take?
Quote from @Brian Ellis:If you go to the doctor, and tell him your arm hurts when you raise it. What's the first thing the Doctor says?
Quote from @Joe Villeneuve:Yes, the listing agent really said that. I didnt know what planet I was on for a minute.
OK. I can understand everything said, except 2 things:
1 - The selling agent saying, "nobody cares about the ARV". After I stopped laughing, ...
2 - Why are you fed up? You know things will level off, and everyone (I'm guessing even that moron of an agent) will come back to reality island, and all will balance out. It ALWAYS does.
To answer your second question, im just trying so hard to scrape something by. Ive been doing this a little over 5 years now, and have acquired a few rentals and primary residences. I dont know everyone elses story, but I started from one beat up house, put every ounce of sweat in blood into it in order to be in a position to invest. I get enough money to invest, and im immediately priced out of any deal that makes sense lately. It always seems like the next deal is JUST outside my grasp.
I want to go bigger, but I just cant compete with the big guys. Anything under 500k is gobbled up cash, when I need to use some sort of financing which seems to be harder to get lately (now 25% down for 3 family), not to mention I have decided to do real estate full time and do not have the w2 income to show. Yes, that was my decision and was aware of the challenges.
Im trying to switch gears now and really look for commercial opportunities, where I can get funding. 5+ units or more. So its just a new space for me, and a different marketing strategy. But its definitely been a challenge!
After that, when the rules change, you need to change along with them.
#4 All Forums Contributor
- Plymouth, MI
Deals are not found, they are made...from opportunities. Yes, you can find deals, but when you do they are usually found by every other REI looking for deals. That means competition. That means a bidding war. That means all the REI's are in fact bidding against themselves, because if/whoever gets the "property", the "deal" disappeared long before the final offer was accepted. This isn't a scenario that is restricted to a market like we have today. This scenario happens all the time...in any/every market.
The secret now, and has always been, to not look for deals. Look for opportunities, and design the deals from them. All deals, at any time, are made up of two things:
1 - Minimum Cost to the REI. That means as little cash out of pocket as possible, since the only actual cost to the b
The best deals are made because the buyer understands how money works, and is able to design that deal
@Joe Villeneuve I agree--deals are usually made (not found), and often, this can require some creative thinking...
@Brian Ellis I definitely get the frustration--it has been a very challenging market for buyers for a long time...that may be changing--it certainly seems possible that the market may look very different in the next 6-12 months (we've already seen a big increase in inventory and DOM in my market, so perhaps more and more sellers will start coming back to reality over the next 6-12 months).
As for making deals; pretty much every deal I've ever done had some weird issue that drove other buyers away. For instance, I bought a place that is a fantastic rental (cashflows $1,000/mo), but it has a staircase awkwardly placed right inside the main entrance. The staircase is completely functional, and doesn't really bother tenants, but it turned off buyers, so I was able to get it at a good price. ...I have another rental that turn-key cashflowed $1,100/mo when I bought it (and today cashflows $2,200/mo) that turned off buyers because it was on a busy street (again, that issue hasn't turned off renters). ...another time, I found a property with a funky floorplan that was turning off buyers, but I could see that with some fairly easy changes, the floorplan could be made much more appealing--the changes I made transformed the property from a place that would have lost about $400/month into a place that now cashflows $1,200/month!
...and BTW; ALL of those properties were on the MLS, and all were acquired during the worst buyer's market in the city's history!
So, for me, the key has been being flexible and imaginative enough to see the opportunities that nobody else can see, and finding a property that does not work for most other buyers, but which can work for my purposes.
The irony is that we're often told to have a strict "buy box"--which, I think can be a double-edged sword. On the one hand, a strict buy box cuts down on time chasing properties that don't fit your goals, but on the other hand, it can blind you to the types of opportunities I described above... Every time I've bought a property, I've gone into the market with some idea of what I was looking for, but I also had the mindset of "if I find something that pencils out, I'll take it--even if it's not the exact type of property I'm trying to find" ...and sure enough, most properties I've bought are actually quite different than what I was looking for at the start of my search!
Good luck out there!
Quote from @Leo R.:
@Joe Villeneuve I agree--deals are usually made (not found), and often, this can require some creative thinking...
@Brian Ellis I definitely get the frustration--it has been a very challenging market for buyers for a long time...that may be changing--it certainly seems possible that the market may look very different in the next 6-12 months (we've already seen a big increase in inventory and DOM in my market, so perhaps more and more sellers will start coming back to reality over the next 6-12 months).
As for making deals; pretty much every deal I've ever done had some weird issue that drove other buyers away. For instance, I bought a place that is a fantastic rental (cashflows $1,000/mo), but it has a staircase awkwardly placed right inside the main entrance. The staircase is completely functional, and doesn't really bother tenants, but it turned off buyers, so I was able to get it at a good price. ...I have another rental that turn-key cashflowed $1,100/mo when I bought it (and today cashflows $2,200/mo) that turned off buyers because it was on a busy street (again, that issue hasn't turned off renters). ...another time, I found a property with a funky floorplan that was turning off buyers, but I could see that with some fairly easy changes, the floorplan could be made much more appealing--the changes I made transformed the property from a place that would have lost about $400/month into a place that now cashflows $1,200/month!
...and BTW; ALL of those properties were on the MLS, and all were acquired during the worst buyer's market in the city's history!
So, for me, the key has been being flexible and imaginative enough to see the opportunities that nobody else can see, and finding a property that does not work for most other buyers, but which can work for my purposes.
The irony is that we're often told to have a strict "buy box"--which, I think can be a double-edged sword. On the one hand, a strict buy box cuts down on time chasing properties that don't fit your goals, but on the other hand, it can blind you to the types of opportunities I described above... Every time I've bought a property, I've gone into the market with some idea of what I was looking for, but I also had the mindset of "if I find something that pencils out, I'll take it--even if it's not the exact type of property I'm trying to find" ...and sure enough, most properties I've bought are actually quite different than what I was looking for at the start of my search!
Good luck out there!
Thank you for your experience! Yes, every property ive purchased has been do to either a listing mistake or some issue that turned off other buyers. But we are seeing some more stuff pop up lately in my area as well.
I made the jump to do real estate full time, and I tend to be impatient. I just bought a deal in May, but I want to scale a lot faster.
In time it will happen, just need to be patient for the right opportunity.
@Brian Ellis You mentioned you've had issues on the larger properties due to not having enough cash, have you considered looking for a partner who has the cash to make those deals work to give you the purchasing power you want?
@Brian Ellis
I know what you mean by being impatient.
I’m probably 15 years older than you and I’m impatient, too!
Yes, the last 100 sellers I’ve talked to all want full retail, I’ll just stay in touch with them and see how they do as the market drops.
Like @Joe Villeneuve says- deals are out there. If any seller raises their hand, I’m now getting creative to see how I can best solve their problems.
Stay steady my friend!
#3 All Forums Contributor
- Contractor/Investor/Consultant
- West Valley Phoenix
- 12,146
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#3 All Forums Contributor
- Contractor/Investor/Consultant
- West Valley Phoenix
@Brian Ellis This sounds trite, but you just need to hang in there. Things will change back to 'normal' in time.
You also need to do this: find the houses that no one else wants.....issues that scare people away. Most commonly these will be foundation and slab issues, which are almost always over-rated. But also major electrical, structural, and plumbing problems will drive looky-loos and newbies away.
Also consider removing inspections, contingency periods, etc....do a short escrow, take 'As-Is'. Make yourself an attractive buyer that a seller will want to work with.....
Quote from @Brian Blosser:
@Brian Ellis You mentioned you've had issues on the larger properties due to not having enough cash, have you considered looking for a partner who has the cash to make those deals work to give you the purchasing power you want?
I’ve reached out to quite a few people with not much luck. I had considered starting a networking group in my area to really get some likeminded people together
Quote from @Brian Ellis:
Quote from @Brian Blosser:
@Brian Ellis You mentioned you've had issues on the larger properties due to not having enough cash, have you considered looking for a partner who has the cash to make those deals work to give you the purchasing power you want?
I’ve reached out to quite a few people with not much luck. I had considered starting a networking group in my area to really get some likeminded people together
Awesome idea! More networking is always a good thing.
#3 Innovative Strategies Contributor
- Investor
- Greenville, SC
Sounds like you are doing everything that you can, particularly working the deal flow pipeline. Most "I can't find anything" posts come with little to no marketing efforts, which is really what REI is. The good news is that you have a portfolio; so, have benefited from the huge increase in values and rents and artificially low rates...and have experience should opportunities surface. Keep working and expanding the deal flow pipeline...and maybe get a job for a little while...the labor market is on fire and pay is strong.
#1 Market Trends & Data Contributor
I want to go bigger, but I just cant compete with the big guys. Anything under 500k is gobbled up cash, when I need to use some sort of financing which seems to be harder to get lately (now 25% down for 3 family), not to mention I have decided to do real estate full time and do not have the w2 income to show. Yes, that was my decision and was aware of the challenges.
In our market there're seems too many ghost organization like "we-ll-buy-your-ugly-or-beautiful-homes-for-cash" , they bought anything less than $700k in the market in any conditions with cas, and just re-sell it again 100k higher within 6 months later with zero rehab.
Those ghosts org are really actually destroying the FTHB market. I think you're right.
Quote from @Mike Dymski:Ive been doing small side jobs just to put some extra cash in my pocket while I develop my business as an agent/investor. Property maintenance type stuff.
Sounds like you are doing everything that you can, particularly working the deal flow pipeline. Most "I can't find anything" posts come with little to no marketing efforts, which is really what REI is. The good news is that you have a portfolio; so, have benefited from the huge increase in values and rents and artificially low rates...and have experience should opportunities surface. Keep working and expanding the deal flow pipeline...and maybe get a job for a little while...the labor market is on fire and pay is strong.
I know that you do commercial from posts I have seen in the past. You have a big presence here on BP. My goal would be to get into 6+ units, thats really what im looking for. My gut tells me to be patient, and eventually I will land a good commercial deal as long as im actively looking for an opportunity.
Quote from @Brian Ellis:
Quote from @Mike Dymski:Ive been doing small side jobs just to put some extra cash in my pocket while I develop my business as an agent/investor. Property maintenance type stuff.
Sounds like you are doing everything that you can, particularly working the deal flow pipeline. Most "I can't find anything" posts come with little to no marketing efforts, which is really what REI is. The good news is that you have a portfolio; so, have benefited from the huge increase in values and rents and artificially low rates...and have experience should opportunities surface. Keep working and expanding the deal flow pipeline...and maybe get a job for a little while...the labor market is on fire and pay is strong.
I know that you do commercial from posts I have seen in the past. You have a big presence here on BP. My goal would be to get into 6+ units, thats really what im looking for. My gut tells me to be patient, and eventually I will land a good commercial deal as long as im actively looking for an opportunity.
You looking local only or have you expanded the search out of state? I'm rooting for you bigtime, you come across very sincere in your posts.
Quote from @Bernard Joseph S.:
Quote from @Brian Ellis:
Quote from @Mike Dymski:Ive been doing small side jobs just to put some extra cash in my pocket while I develop my business as an agent/investor. Property maintenance type stuff.
Sounds like you are doing everything that you can, particularly working the deal flow pipeline. Most "I can't find anything" posts come with little to no marketing efforts, which is really what REI is. The good news is that you have a portfolio; so, have benefited from the huge increase in values and rents and artificially low rates...and have experience should opportunities surface. Keep working and expanding the deal flow pipeline...and maybe get a job for a little while...the labor market is on fire and pay is strong.
I know that you do commercial from posts I have seen in the past. You have a big presence here on BP. My goal would be to get into 6+ units, thats really what im looking for. My gut tells me to be patient, and eventually I will land a good commercial deal as long as im actively looking for an opportunity.You looking local only or have you expanded the search out of state? I'm rooting for you bigtime, you come across very sincere in your posts.
Thank you Bernard,
Ive only been looking locally, since I self manage all my properties. I have considered out of state, but im a very low-key type of investor. Not sure if that matters much, but it can be difficult for me to network outside of my town/area.
Quote from @Brian Ellis:
Quote from @Bernard Joseph S.:
Quote from @Brian Ellis:
Quote from @Mike Dymski:Ive been doing small side jobs just to put some extra cash in my pocket while I develop my business as an agent/investor. Property maintenance type stuff.
Sounds like you are doing everything that you can, particularly working the deal flow pipeline. Most "I can't find anything" posts come with little to no marketing efforts, which is really what REI is. The good news is that you have a portfolio; so, have benefited from the huge increase in values and rents and artificially low rates...and have experience should opportunities surface. Keep working and expanding the deal flow pipeline...and maybe get a job for a little while...the labor market is on fire and pay is strong.
I know that you do commercial from posts I have seen in the past. You have a big presence here on BP. My goal would be to get into 6+ units, thats really what im looking for. My gut tells me to be patient, and eventually I will land a good commercial deal as long as im actively looking for an opportunity.You looking local only or have you expanded the search out of state? I'm rooting for you bigtime, you come across very sincere in your posts.
Thank you Bernard,
Ive only been looking locally, since I self manage all my properties. I have considered out of state, but im a very low-key type of investor. Not sure if that matters much, but it can be difficult for me to network outside of my town/area.
I could have the wrong feeling here, but it seems like you're looking for deals yourself. You could cast a wider net if you had agents from other markets feeding you deals. It would also allow you to be more focused in your networking, if you focus on only finding the best agents in a few different markets they should also be able to help you with getting connected to good property managers and service providers. Maybe the slower buying period is a good chance to grow your team a bit so when the buying gets good you can really optimize your efforts.
@Brian Ellis I know at least one investor IN YOUR AREA that is still getting deals. But he is spending a LOT on marketing, like 7k/mo. Deals are indeed sometimes made. But for non-commercial properties, there isn't a whole lot you can do to make a deal. I've made deals by changing the layout to increase value, by getting owner financing, by partnering, by forcing appreciation, but the majority I get are FOUND, just not on the MLS, and not without spending some serious effort or cash.