Investor · Ewa Beach, HI · Member since 2016 · 68 posts · 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.
Realtor · Camarillo, CA · Member since 2014 · 162 posts · 102 votes
9y
First of all I would suggest you never give up on your dreams! Life is too short.
Second I would suggest you call the listing agent (after it closes) and ask them directly why they choose the current offer and not yours. Was it price? Terms? You will learn a lot talking to them and can make better offers.
Also I would suggest you keep in contact with the Agent after the other offer was accepted. As an agent in a hot market you would be surprised how many deals I see fall. They may have not accepted your deal the first time but it would look more attractive after they dealt with a flaky buyer. Sell your self that you can close the deal!
One more thought. Focus on a specific market. This will allow you to really understand the value of that home and invest in marketing to get off market deals. Perhaps some of your deals were a better deal than what you calculated and would have allowed you to make a higher offer and get the deal.
Best of luck!
Also kudos to you for MASSIVE ACTION! You should pat your self in the back for that.
Investor · Colorado Springs, CO · Member since 2017 · 65 posts · 5 votes
9y
@Shawn Ackerman how did you go about finding contractors, realtors, etc in the midwest being so far away in NY. How did you know who to trust and if they were actually doing what they said they were doing? I'm intrigued by investing remotely, but don't see how at this point.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Mitzmichael Sumilang I spent 18 months in the market vetting my team. so I've had several visits to the city, several meetings and countless conversations with the team members put me at ease. And I started with 1 SFR and took it from there. I'm in the city at least quarterly to check up on items that I paid for since the last visit in addition to before and after pics. I look at them as my partners and I have ways to incentive them whether it's helping my property manager expand their portfolio with landlord referrals(I also wholesale property with property management in place), this also keeps my contractors and handyman busy, title company is constantly closing, lender is constantly closing on purchases or refinances and insurer is constantly insuring new properties. My modo with my team is "If I eat, you eat" if you keep your people full they are less likely to take food off the table.
@Carolyn Morales Hawaii is like Los Angeles, it doesn't make sense ever...however we have been primarily looking in Ft Collins/Loveland area of CO, Denver, CO, Colorado Springs, CO, Pueblo, CO, Kansas City Metro (Missouri side), Springfield, MO, Satellite Beach, FL (up and down the space coast).
You are looking in the wrong places. Hawaii is a fantastic market for buy and hold, even better for flipping. Most of my portfolio is in Hawaii, rent growth every year and a dream to manage! Why are you looking in Denver, when you live in paradise?
Because I am active duty and only in HI for another 12 months. I can't work on a flip with the amount I travel and literally nothing I have run in HI has come out with more than a -8% CoC ROI
How are you calculating this?
If you put down $200k for a $1M property, for example, and it appreciates to $1.1M (very conservative and realistic), your ROI is 50% annualized (assuming a zero cash flow).
Rental Property Investor · Lakewood, OH · Member since 2016 · 73 posts · 32 votes
9y
Consider changing your search strategy. Ignore the MLS. Honestly, in most cases if it's on the MLS people are going to pay too much for property in most cases.
A 6% cap rate is common on the MLS in MM and ridiculously low IMO.
Think of ways for motivated sellers to find you, or for you to find them before there is a for sale sign in the front yard.
Investor · Colorado Springs, CO · Member since 2017 · 65 posts · 5 votes
9y
@Shawn Ackerman So did it take you that 18 months to make your first investment purchase remotely? How did you find these contacts in the first place? Do you prefer the wiley veteran or the young and hungry professionals? Pros and cons with each, but what do you find is the best route?
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Mitzmichael Sumilang Yes, I began investing after 18 months in the market. Not a rule of thumb, that's just what I was comfortable with as I was also looking and taking trips to other markets. The first person I found in my market was a wholesaler. They recommended people for me and I expanded my network from there. I googled the wholesaler. I googled alot of other people and spoke to many people over the phone. With everyone I spoke to I explained to them what I was planning to put together and what I was looking for. You can scrap google as BP is a great way to expedite your network You can tell if people are verified on BP, if they have references and get a general feel of who they are bye looking at their posts. Your on your google my friend.
Turns out that my team members are either my age or older. Nothing against younger energetic types. Everyone I work with are seasoned in their respective disciplines. However my PM and I began scaling our businesses together. I wanted someone new that I could mold and who was not stuck in bad ways. I'm a realtor here in NY and manage alot of rentals so I know how the game goes. One thing I know about my PM is that they were honest. i can work with that. There is no "best route" you have to hit the ground and connect with people on a personal level. When a house is built on a solid foundation it will stand the test of time. If built on sand it won't be around for long.
Honolulu, HI · Member since 2017 · 28 posts · 11 votes
9y
Steven C. Suarez thumbs up on our post Steven...love your pitch a tent idea! Thanks too for the drop rec on the minimalist podcast..gonna check that one out as I'm always looking for new ones to explore.
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
9y
You shouldn't have to be in 5 cities and have you personally looked at all 600 properties or are you making blind offers? 50 offers would usually net 1-2 real deals. There should be plenty of deals with 20 miles of where you live for almost all areas in the county. I am not sure about Hawaii but I would bet there are.
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 :)
Steven, if i may, I would encourage you to look into it with a different formula which i learnt from Gary Vaynerchuck (JAB JAB JAB, Right Hook). He mainly uses it for the idea of focusing on bringing more value before expecting to receive benefits from the market (i.e. bring at least 3 times more value than you expect from the market). I'm referencing it here because i think you should use it as (Steady, Steady, Steady, Right Hook). In other words, before you go MORE MORE MORE or LESS LESS LESS; what i found worked for me, was the ability to take a step back and re-calibrate my strategy to be able to move much faster/smarter on my next sale/move. My main message that i'd like to suggest to you is that i agree with you that some folks may make it seem too easy but i can almost guarantee you that they had a lot of lessons learnt before they established a smooth business model that worked for them.
Real Estate Investor · Montreal, Quebec · Member since 2015 · 95 posts · 42 votes
9y
@Farakh Zaman, reading through this post, i loved the great content being put out here for you by the community!
I second everyone who suggested, ABSOLUTELY, DO NOT GIVE UP!
Like Milton Berle said: "If opportunity doesn't knock, build a door".
The only comment i would add here and i may be biased because it's my line of business now, is to start looking into another strategy of getting into real estate.
To give a different spin from what's suggested here, maybe it's worth your time to consider,
Trying to be creative here but the point I'm making is that with notes, i believe you can easily achieve your expected returns and the flexibility to accommodate your travel schedule.
Hurst, TX · Member since 2016 · 192 posts · 114 votes
9y
Great analogy @Mazen Al Ashkar I've been throwing jabs and waiting for the right moment to land a knockout. I keep making offers and not getting into bidding wars. So far I have 2 houses and looking for #3. At the same time getting rid of possessions I don't need. Minimalism is a state of mind! ;)
Investor · Colorado Springs, CO · Member since 2017 · 65 posts · 5 votes
9y
@Shawn Ackerman I really appreciate the time you've taken to respond. I'm sure I'll start investing remotely at some point. I may come reaching out to you again when that time comes. Thanks again.
Investor · in, MI · Member since 2013 · 226 posts · 102 votes
9y
What other options do you have but to keep looking for good investments? I don't limit my search to only real estate investments. I think that would be unwise to that self-restricting.
I don't think you should give up. I also think you should not lower your standards. You may have to wait until you are stationed on the mainland to find a deal that works for you.
Investor · Ewa Beach, HI · Member since 2016 · 68 posts · 26 votes
9y
Originally posted by @Account Closed:
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!
Thanks for the info...will check out that area as I expand my search. If you would send me an example report, I would very much appreciate it. If you can, just send me the link from BP or a PDF to my inbox.
Fort Collins and most of the Front Range is extremely hot!
Have you attempted to get deals in markets with a bit less pressure? And have you availed your self of the services of any wholesalers? There are a ton of deals out there, esp if you have cash to close/rehab, and wholesalers do all the marketing necessary for you for an small fee. Just make sure you get some first hand knowledge of markets you want to invest in long distance and talk to other investors there! There are some whole salers who are extremely good at what they do and will even run comparables for you or make a package showing rents ROI etc.
Shaun,
I have not worked with any wholesales. I tried a couple in the KC area, but the things they were providing were absolute ghetto properties in the worst areas of town...sure it was 15K for the property, but I would be in a D or F neighborhood with a methlab out of the place.
If you have any you could recommend in the Front Range area, I would very much appreciate it.
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!
Roxanna, you're welcome...it has been a privilege to serve. I tried looking at turn key properties in Kansas City, however, the more I researched, the more I got nervous about them. Most seemed to be in D neighborhoods and I could not find any info on the two turnkey companies I was looking at.
If you have any companies you would recommend, please let me know. Colorado in particular would be great, but I am open to other places as well.