Investor 路 Ewa Beach, HI 路 Member since 2016 路 68 posts 路 26 votes
So we've spent the last 7 months looking at deals daily. We have run the calculator on this site to the point I don't even need to think to put in the numbers...but literally nothing has panned out. 5 cities, 600+ properties looked at, ~50 offers made using numbers that make sense (~10 at full asking) and literally nothing.
What to do now? I am all for "keep on trying" but something isn't right. Am i being naive or are others having the same issue? I go to meet ups or listen to podcasts and webinars and see all of these deals out there everyone is getting but not one has worked out using realistic numbers for us.
Money is also not an issue for us as it is for some...at this point we have enough to pay cash for some of these places we offer on but obviously that doesn't make sense for an investment property...
At this point I am wanting to give up on the buy and hold option and find something else...thoughts?
So we've spent the last 7 months looking at deals daily. We have run the calculator on this site to the point I don't even need to think to put in the numbers...but literally nothing has panned out. 5 cities, 600+ properties looked at, ~50 offers made using numbers that make sense (~10 at full asking) and literally nothing.
What to do now? I am all for "keep on trying" but something isn't right. Am i being naive or are others having the same issue? I go to meet ups or listen to podcasts and webinars and see all of these deals out there everyone is getting but not one has worked out using realistic numbers for us.
Money is also not an issue for us as it is for some...at this point we have enough to pay cash for some of these places we offer on but obviously that doesn't make sense for an investment property...
At this point I am wanting to give up on the buy and hold option and find something else...thoughts?
It sounds to me like your expectations need an adjustment.
What are your goals when it comes to owning rental property? Is it to quit your day job or to leverage additional capital to build long term wealth?
You won't be raking in cash by buying a few rental properties. Instead you will benefit long term by building wealth and lowering your tax burden in the process. Think long term, think OPM
OPM (Other People's Money)
You can obtain up to 10 30yr mortgages in your name. If you are married that's 10 for you & 10 for your wife. Assuming you both live in your own home that puts you as a couple at 19 residential mortgages. You will need to put down between 15-25%. The rest will be lent to you by the bank and the bank will be paid by your tenants.
Assuming you purchased 19 single family homes at 100k a piece that would be a capital output of $285,000 to own a portfolio valued at $1.9M. When you are ready to retire assuming zero appreciation & zero rental cash flow throughout the years you will still clear $1.6M+ more than what you paid.
Investor 路 Memphis, TN 路 Member since 2017 路 9 posts 路 5 votes
9y
Try sending a direct mail campaign, if you haven't already, that targets absentee owners with high equity. Tired landlords are generally motivated to sell as well and can pick up killer deals that way. If $$ isn't an issue, I would be hammering the mailers, tons of off-market deals out there!
Cheers!
Investor 路 Mount Bethel, PA 路 Member since 2013 路 45 posts 路 29 votes
9y
First of all, thank you for your service. Have you considered trying a few turnkey properties until your settled in CO? I was buying in my local area in PA but at some point prices and taxes overtook rents. Although I know there are still some deals at some point, for me, it became too time consuming. I now how have 2 turnkeys out of state and the lack of hassle has been a sanity saver as my day job has kept me busy. I know turnkey is not for everyone, hell not even for every deal for me, but so far I've been very happy with my choice. Just another angle to consider. Good luck!
Investor 路 Santa Barbara, CA 路 Member since 2016 路 75 posts 路 35 votes
9y
@Farakh Zaman I believe there was also a recent podcast or article here on BP about this very thing, out of state investing. 馃槃馃槃 probably worth a listen!
Hurst, TX 路 Member since 2016 路 192 posts 路 114 votes
9y
Simple answer. If it doesn't bring you joy, don't do it. I'm in the same boat as you but for different reasons. I started bigger pockets a few months back and got excited by hearing the podcasts. They make it seem so easy! Of course it isn't. Plus it's very frustrating. At the same time I started listening to The Minimalists podcast. And instead of me wanting MORE MORE MORE (Real estate, rentals, buy n holds etc.) I'm starting to see that perhaps LESS LESS LESS may be the answer to a happy life. So I'm at a bit of crossroads with what direction I want to take my life. You say you have plenty of money, and you live in Hawaii which is awesome! A cool way to get into the real estate game w minimal stress could be to Airbnb out a room in your house (or a tent in your backyard.) Meet interesting people from all over the world and make good money doing it! Just a thought. Good luck :)
Real Estate Broker 路 Aurora, IL 路 Member since 2017 路 159 posts 路 53 votes
9y
Farakh Zaman
Hey Farakh,
As Ozzy Smith said a while back in this thread check out the Midwest a by more! I have heard many like Ozzy say Ohio is great. I also am able to find buy and holds very easily Cash on Cash returns around 20% using the same calculator you are using with the same expense terms as you replied earlier in the Chicagoland suburbs here in Illinois. My problem has been putting together the creative finance to get these deals closed fast enough. Look into it and let me know if you need any help with the area. I could send you some of my biggerpockets calculator reports I've already finished if you need as well. Let me know!
Time of ownership is the most important aspect of an appreciating and income producing investment - When I first started investing, monthly income wasn't a crucial part of my investing strategy. I was investing for the long term play. So, I bought marginal properties based on the cash flow calculators that are commonly used. One property didn't move the needle much- two, three, and even four properties didn't amount to much ----BUT as TIME went on, and rent prices increased -- as tenants payed down debt and properties appreciated --- as I took advantage of the tax benefits --- BIG things started happening... I sold some of my first purchases and took equity gain and moved to better neighborhoods -- Now I have quit a job that I had no intention of leaving when I first started investing... the growth took on a life of its own and now, looking back, I wouldn't be in the position I am in today had I not made those marginal purchases to get the ball rolling...
You mention that money isn't really a problem for you like it is for others - Maybe relax your numbers a bit to get started --- go out and do what is takes to acquire some property and let a few houses start carrying a bit of weight --- they may not do much in the beginning, but as TIME works its magic, you will be surprised by the outcome.
I'm all for the "less is more" philosophy - I was initially on the path of buying as much real estate as i could - now---> less debt, less property, less hassle --- More Free TIME
Investor 路 Alameda, CA 路 Member since 2015 路 12 posts 路 1 vote
9y
@Farakh Zaman. If I am in your position, I would probably get in with a cash offer first, then refinance later. A cash offer should give you an edge over others
I may be late to this discussion but I think you are on the right path. I have an engineering background and analytical skills but after being in this market for about 2 years, I have realized that relying on specific numbers doesnt always make sense - I will give you an example from a very recent transaction.
1) I follow a buy and hold strategy and was scouring through FSBO site and came across a duplex for sale for $69k. I was told that one side was already rented for $800/month while the other needed about 10-15k in repairs. There was one comp in the area within 1 year and nothing else, which was tripping up all the number crunchers. Whoever was trying to bid was going by the numbers to get the home at 70% ARV but no one saw the fact that the property would cashflow at $1600 a month. Even with around $38k out of pocket including closing costs, repair costs and HM holding costs for 1-2 months, it would fetch a net of $800 cash flow (conservative) every month from both units, which is a 25% CoC after PITI and property management. A decent return in my opinion but here is the kicker - the property finally sold for $48k through a wholesaler after being rejected by many investors - that gives even better CoC returns than I projected. Granted, these kinds of deals dont come often but they still happen in this crazy market. So, I stopped believing in going purely by numbers like buying at 70% ARV etc - there are other factors that need to be considered as well to get some deals going.
2) Since you mentioned that you have enough money to put cash down and the fact that you already attend REI seminars and meetups, why dont you advertise at those meetings that you are a private investor willing to loan money against a first lien on the property for 7-8% interest only for 2-5 year period ? I am sure a lot of people need that kind of money and you can get tons of connections to get you better leads. I am not sure about the Hawaii market but if you are interested in DFW market, please PM me and I am always looking for private investors as I cannot fund all the deals myself.
I am sure that with a slight change in your strategy, you will get on the right track. I wouldnt want to give up after all that effort. Good luck my friend !!!
Investor 路 Jacksonville , NC 路 Member since 2015 路 143 posts 路 54 votes
9y
Farakh Zaman , one small piece of advice- get comparison insurance quotes from other insurance agencies than USAA. They are a good place to start but check out insurance agencies local to the area you are investigating.
Palm Coast, FL 路 Member since 2017 路 1 post 路 2 votes
9y
just started reading about wholesaling and buy and hold.
I am so thankful to all of you awesome investors who took the time to answer questions for the man in Hawaii because I have been reading up and studying up on which investment route to take and. I have learned so much more from you who are actively investing than I have from some 'how to' tutorials.
@Zach Quick, the rents here, while high, do not cover a mortgage usually. Asking price for a normal house here is about 700K+. With taxes and other expenses rolled in it doesn't make a sound investment.
MF are over $1.25M for a fixer upper and being active military, it is hard to commit to a BRRR like that.
Quick input for you.
It depends on your budget and desire for appreciation. We invest in areas of the Midwest that are located in Class C neighborhoods in and around large metro areas. Although we know we will never get much for appreciation (which is fine by us) we do know the ROI via cash-flow is high...very high. We just purchased with cash a home last week that wouldnt even be enough for a down payment for a house here in Salt Lake City.
Try different markets. We had to do a ton of research to find areas of the country that worked for us. We are two school teachers and we make it work (Utah is lowest paying salary in US...).
San Diego, CA 路 Member since 2017 路 28 posts 路 4 votes
9y
My question to you would be why does those number not make sense. Your in Hawaii have you thought about vacation rentals? People pay high end to stay in hotels there and in houses... what locations are you looking at on ohau? Even then what about the big island? Properties are Cheever there and you a hopper plane away..
Property Manager 路 Kihei, HI 路 Member since 2016 路 85 posts 路 97 votes
9y
Have you looked at properties that have ohanas and main houses that have been split up for rentals? With some creativity and a little bit of value add there's a lot of possibilities in hawaii, look at this property for example
Developer 路 Santa Clarita, CA 路 Member since 2008 路 15k+ posts 路 10k+ votes
9y
Giving up or quitting is NOT an option in my book. A good investor changes strategy and approach when the market conditions change. In this highly competitive market condition, buy and hold single family market is very difficult in most areas and in areas where it is not, you may not want to be there.
Building capital right now is important and creating cash flow is certainly possible with the rightvplan and in the right place.
My guess is you need to hook up with a mentor that does this successfully to diagnose what is causing you to miss by so much. I've taught a lot of people how to go about buying duplexes and I find they often just use calculators and use exactly what the information off MLS says. Anyone can do that. It takes a much deeper dive into know if it is rented at too low a price, can you add bedrooms, is the space being underutilized, is the current owner paying for utilities when they could be passed on to tenants. There are a lot of ways experienced investors see opportunity when newbie's can't. I just bought my 4th multi family this year and I still have people saying they can't find anything that cash flows. Good luck
Investor 路 Atlanta, GA 路 Member since 2013 路 3k+ posts 路 3k+ votes
9y
Since what you've been doing is not working, you'll have to change something Of these criteria.
...location....not only means city..but also neighborhood. If you're looking in A neighborhoods do some research in B or C neighborhoods. look further away from the center. Don't listen to what your relatives are telling you on where to invest.
...condition....the more rehab is necessary the less competition. Most investors want easy fluff jobs.
....type of house.....maybe move from sfh to duplexes or quads or bigger. If the zoning allows...buy a large house and split into smaller units.
Price....look at more expensive houses that need more rehab. Offer in your budget.
Size...look at tiny houses that noone wants and add on.
Emd....offer high earnest money without a ton of weasel clauses. Show the seller that you're serious.
Be willing to give somewhere. Instead of finding reasons why certain situations don't work for you....ask'how can I make this work?'