Market is so hot!! Dont have 100k cash

14 Replies

Hey!! So I’m a new investor in the Denver area,

I am really trying to get my first property to BRRRR, I have many connections in the construction side so I'm thinking this strategy can work for me!!

However, the Market rn is so hot I can’t even have an offer that competes with its competitors, they are giving 50k plus or more as down payment and homes are going well over asking (as you may know)

What can I do? Thoughts? Advice?

@Eric Shiva If you're investing in the Denver market it's going to be tough. My advice is to go off market and change your mindset. If you want to find a decent DEAL start looking for properties differently. Conventional buyers take the shortest route ownership and they paid a hefty price for it. 

All of the hot markets are experiencing what you described and it's going to continue this year. The recent national jobs report was promising and unemployment is already way down. Get out there and look for distressed property and motivated sellers. Connect with wholesalers and see what deals they have. That's the best chance you have currently. 

I agree with Jaron. wholesale is the way to go for fix and flip. I have a client that refuses to use wholesalers and he cant find the properties he's looking for. I wouldn't even bother with what's on MLS right now you cant find deals!

@Dominic Kosteris Agreed. It's crazy how much growth that market has had. Five years ago $100K could get you something but not anymore. My boss bought a SFH in 16" for his kids to live in during college. Best investment he ever made. They sold it two years ago for 3x the price. That property is probably worth more today, but he didn't want to be a long distance landlord. haha

@Jaron, wow! that was one hefty profit. I invest on the south side of Chicago. This last October, I picked up a 3 bed 1 bath townhouse for 45k that needed 5k in repairs. I could probably sell it for 90k. Section 8 pays higher than market rent, so these houses are selling fast because there's still a profit margin, especially with these interest rates.

@Eric Shiva

That's so funny. I just put up a post up in the Atlanta real estate Facebook group because I have a client down there who is working with a realtor and he is trying to find fix and flips on MLS lol! So hopefully my post will land me some contact information. What market are you in again?

I guess I disagree with most that have posted here. Number 1, you are not and should not be competing with any retail buyers. You are looking for a BRRRR. This means that the property will typically not pass a conventional or government type appraisal. The only retail program that might compete with that is an FHA203K or a Fannie Mae Home Renovation loan. Most retail buyers don't want to do these programs because they cant see the vision to get these loan types done.

That said, your only other competitors will be the other investors in the market. The loans that will be used will be Hard Money or Fix N Flip loans or cash. All of which can actually be considered cash. So then it is down to how much you offer, and how fast you can close. 

Off market deals should be where you spend a fair amount of time. Also deals that have been on the market for an extended period of time. There may not be a lot to choose from as far as being on the market for and extended period of time, but expand your search area, there will be some. 

Wholesalers typically don't know what they are doing (most of them) but occasionally you will run in to one that knows how to get a deal done and what an actual deal is? Its because its the lowest barrier to entry and tends to get newbies that just don't have the experience. Get a good wholesaler, you better keep them, they are like gold to you.

I hope this helps.  

I've heard wholesalers mentioned a few times, but in my experience you're not going to have that much luck there either for reasons mentioned by @Kevin Romines .  I'd recommend going direct to seller.  Direct mail, driving for dollars.  Tell everyone you know you are looking for these types of deals too.  You never know who knows someone in a tough spot looking to get out.  Distress is your opportunity.  

You have to get creative in this market.  But if it doesn't meet your criteria, don't overpay.  No deal is better than a bad one.  There's also a lot of other ways to make money in RE.  And a lot of ways to make money investing outside of RE.  Try to bring more tools into your investing toolbox.  

Originally posted by @Kevin Romines :

I guess I disagree with most that have posted here. Number 1, you are not and should not be competing with any retail buyers. You are looking for a BRRRR. This means that the property will typically not pass a conventional or government type appraisal. The only retail program that might compete with that is an FHA203K or a Fannie Mae Home Renovation loan. Most retail buyers don't want to do these programs because they cant see the vision to get these loan types done.

That said, your only other competitors will be the other investors in the market. The loans that will be used will be Hard Money or Fix N Flip loans or cash. All of which can actually be considered cash. So then it is down to how much you offer, and how fast you can close. 

Off market deals should be where you spend a fair amount of time. Also deals that have been on the market for an extended period of time. There may not be a lot to choose from as far as being on the market for and extended period of time, but expand your search area, there will be some. 

Wholesalers typically don't know what they are doing (most of them) but occasionally you will run in to one that knows how to get a deal done and what an actual deal is? Its because its the lowest barrier to entry and tends to get newbies that just don't have the experience. Get a good wholesaler, you better keep them, they are like gold to you.

I hope this helps.  

Spot on.  Wholesalers being touted as some kind of magical solution.  


Shore up the financing and go after the non retail deals. Also consider a line of credit to help get you the equity to close. A commercial lender typically wont care where the down payment comes from.

 

Even the wholesalers here are dry. People just are not moving unless they have to. I'm finding off market stuff, but it's hit or miss. You are wasting time right now looking on the MLS and will be for the foreseeable future.