Diff ways to find Buy-and-Hold Properties

13 Replies

Hello BP'ers,

I am new to BP as well as REI side. But my primary focus is on Buy-and-Hold property as a starting point to generate cash flow. I have been looking SFH (Single Family Homes) in North Dallas area thru MLS listing and RE agent. (Main focus is on: 3 bedroom, 2 bath, attached 2-car garage, under 2000 sqft, 0-20 years old), I have seen many properties and put an offers on 3 homes (Almost near to listed price), but seller has decided to go with other buyer. Also, with my short experience, I have realized that these single family homes are going under contract within a day-or-two. With my more reading on BP, I have realized that the contract is not only going for first-time home buyers but there must be investor like me, who are looking for a investment property.

Am I doing something wrong on these offers or is DFW market is too hot for this type of MLS listing for buy-and-hold, but I am sure my friends on BP must be using a different ways (other than MLS) to acquire these type of properties… Any help on finding these avenues are greatly appreciated…

Thanks a bunch…

DP

The same thing is happening in Houston right now. The market is just hot and flooded with investors. Cash offers will usually have preference or you may need to go above asking price (check your numbers!). To really find the great deals, you'll have to get ahead of the MLS somehow - usually through pocket listings or lead generating marketing campaigns. Good luck!

@Sebastian Gast Thanks for response. When you mentioned about pocket listing, does BP has some short of listing also avail or are you talking about some other place? Lead Generating campaign will be other thought I have but I thought that might be more for flippin (Motivated Seller type of campaign).

DP

Pocket listings are pretty much listings that never reach the MLS. They are listings that get offered to you before everyone else by having a relationship with a realtor or listing agent.

@Divyesh (DP) Patel Are you offering cash? Do you have contingencies? I made an offer last Wednesday on a property listed Tues. I offered a little under the really low list price. It was accepted within 2 hrs. Why? I offered cash, no contingencies. My brother did an inspection Wed. afternoon and we knew what it needed and what it will cost in repairs. I had done a quick valuation of ARV while he did the inspection, so as soon as he was done we made a verbal offer and got it submitted in writing. Sellers are hesitant to accept contingencies if they have a no-contingency offer. To them a contingency is nothing more than a bailout clause, and that can cause them to lose a solid buyer. But of course not everyone has the experience or ability to offer without them.

In a hot market, there are at least three requirements ... speed, cash, no contingencies. Contacts can also matter.

Also, as noted above, doing your own marketing is where the good deals will mostly come from, especially in a market flooded with investors like DFW.

@Walt Payne I am going with Conventional loan with 20% down. But, I have no contigencies in my offer. So, most of my offers were within a day, but I guess as @Sebastian Gast also mentioned, I might have to start looking for some alternate lead generation in hot market like DFW. Other than Pocket listing and Lead Generation, do you guys can think of any other approach?

Originally posted by @DP Patel :
@Walt Payne I am going with Conventional loan with 20% down. But, I have no contigencies in my offer. So, most of my offers were within a day, but I guess as @Sebastian Gast also mentioned, I might have to start looking for some alternate lead generation in hot market like DFW. Other than Pocket listing and Lead Generation, do you guys can think of any other approach?

If you are using financing, you would normally have a contingency. Quick closings also matter, and financing prevents that. It may not be avoidable, but it matters.

Try to find good wholesalers. If they are good the deals will make money for both of you.

here's a few ideas to find buy and hold properties that aren't on the MLS.

1. Calling For Rents to see if the person renting the property may want yo sell I.e the accidental land lord. If you're looking on line like on Craigslist, you're looking for amateur landlords: no websites or company names Acme Rental Co, poor photos, lack of important photos like kitchens and baths, poorly written descriptions.

2. Calling For Sale By Owners. Be sure to arm yourself with what houses sell for in the area so you know if the asking price is reasonable along so you're not wasting time with unmotivated sellers.

3. Driving for dollars. Recently I drove by one house that looked not so great compared to the surrounding houses on the way to look at a FSBO. It could be vacant and there were no signs either as listed or for rent or for sale by owner. So this may be an opportunity to wholesale or flip the property.

4. Direct marketing to absentee owners out of state or at least 3 hours outside of DFW. Person owns a house in DFW but had to relocate Utah quickly for work. Now they have a house in Texas they own and making payments and a current home they live in a Utah and making payments on. Two houses, two payments. They don't need the house in DFW and may not want to be long distance landlords. Here is your opportunity to solve their two houses, two payment problem.

Private lenders and hard money might be worth considering as well. We use them on foreclosures, hold them for 6 months to 1 year and refinance based on improved appraised value for holds. Ideally, we can refinance for enough to pay off the cash lender and recover our improvement costs.

Also, you may consider removing the financing/appraisal contingency. If you are getting a loan, you can't close as fast as a genuine cash buyer, but at the end of the day, the money is the same to the seller.

Wm

@Jason Fraser , All your points well taken and thanks for passing additional ways.

@William Hochstedler aaahhhaaa, Learned something new to buy with Cash, No wonder, why CASH IS KING... My initial thought: With Conventional loan (20% down), I am on advantage compare to FHA, but there is a Cash option.

@Walt Payne Thanks for explaining contingency with Finance. I thought that with Excellent score and 20% down, you are on game ahead... lol But, I guess not that ahead...

I know the feeling. I've made over 10 offers above asking and still have not got one accepted.

@DP Patel I just saw this post and the timing is really coincidental. I host a weekly real estate investment radio show and I'm putting together talking points for my next show on the challenges for beginner investors. This is a classic challenge. If you're buying off the MLS, you will be consistently competing with all cash buyers and you can't win. You need to find alternative sources. The way I see it you can either find a debt partner or equity partner to work with or do your own lead generation to motivated home owners. Another route that is a lot easier is to buy from a turn key company. Many are ok with financing and can even refer you to an investor friendly lender.

Best wishes,

Mike

@DP Patel

Are you dealing directly with the listing broker or are you using a broker? Split commission usually looses.

Have you checked to see what price the houses sold for?

If you can come up with the cash ask the listing broker what does he have that he needs to close in the next 30 days.

Paul

@Ben Hughes I am in the same boat as you but trying to learn diff ways to generate a lead as @Mike D'Arrigo has suggested. I have started taking actions on alternate route.

@Paul Timmins I like your idea to go directly with listing broker, I have never thought of loosing commission part, which is a big chunk and can be a great way. Yes, but I am monitoring the sale price for that homes, once it will reach to the SOLD status. Thanks for your tip.

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