With deals getting harder and harder to find, I always like to hear how everyone is finding properties these days. My wife and I have made 14 purchases since July 2008. Here is the list, hopefully there is an idea in here that someone can use.
1. July 2008 - 5 Acres Vacant Land - MLS - Property was in pre-foreclosure, builder was about to go under. Listed for $115k, paid $110k.
2. July 2011 - Bank owned home - MLS - Easy to find, bank owned homes were on every street, listed for $65k, paid $66k.
3. Sep 2012 - Bank owned home - MLS - House was a tear down on a rough street, no one wanted it, listed for $50k, paid $35k.
4. Nov 2012 - Bank owned home - MLS - Tried to buy as a short sale, that didn't work. Kept an eye on it and put in an offer the first day it hit the market. Listed for $89k, paid $89k.
5. Sep 2013 - Single Family home - Short sale/MLS - Short sales with other buyers fell through multiple times, we came in with a cash offer and got the deal. Listed for $112k, paid $112k.
6. Sep 2015 - Single Family home - Off Market/Word of mouth - As we remodeled project #5, the neighbors tipped me off about a meth house in the neighborhood that was going to be for sale soon. I spoke with the listing agent before it hit the market; we talked with the out of state sellers and got the deal. Listed for $145k, paid $115k after they agreed to pay $10k toward meth cleanup.
7. Oct 2015 - Vacant Lot - Off market/Direct mail - Just down the street from #5 and #6 there was a lot where the home had burned down. I checked and it was in pre-foreclosure for unpaid property tax. I mailed a letter to the seller and they called me. Paid $50k.
8. July 2016 - Single family home - MLS - This was an estate sale, got our offer in on day 1. Listed for $149k, paid $138k cash.
9. Mar 2017 - Single family home - Wholesale - Our first exposure to a wholesale deal, made an offer on day 1, paid $105k cash.
10. May 2017 - Single family home - Wholesale - Same wholesaler, another deal that made sense. Paid $138k cash.
11. Nov 2017 - Single family home - MLS - Distressed seller, home in rough shape. We went direct to the selling agent and got a good price. Listed for $125k, paid $110k.
12. Dec 2017 - Single family home - Short sale/MLS - Fire damaged house, we put in an offer the day it hit the market. Listed for $100k, paid $123k.
13. Feb 2018 - Single Family home - Sheriff Sale Auction - Home was vacant for over 3 years, bought at auction for $129k.
14. July 2018 - Vacant lot - Off Market/Word of mouth - One of my clients split a lot off their rental house, we paid $55k.
Moving forward, we plan to utilize auctions, wholesalers, and direct mail to find our deals. We now have a reputation in our small town for closing quickly on homes in any condition. We still check the MLS daily, but most fixers are priced to the point that there is little profit to make on a flip.
Awesome post!! Just curious, what are your plans with the vacant lots?
@Marcus Payne We built our personal home on the 5 acres, sold the second one to a neighbor, and we will build a spec house on the third one.
So were most of these buy and holds?
What were some of your exit strategies?
Did they all make money?
What has been the lesson you've learned over the course of your career?
Why did you decide to do real estate from the crash and on?
Most people would be cautious when a market crashes like it did... And there are others who see opportunities... What was the deciding factor that made you take that leap?
Where did you retrieve your knowledge from? Example: In the mid 90's, mine was from Barnes & Noble... True story, Lol.
What has been the hardest part about real estate?
How do you stay motivated in a tight market?
Is your market saturated with competition?
How many deals do you have to go through to find a good deal?
What has been the most gratifying thing you've have learned or experienced since jumping into real estate?
Licensed or Not Licensed? What benefits has it brought you choosing one way or the other?
What strategies in structure of a deal or creative financing if any do you prefer using? Or are you just a straight forward traditional?
I thought I would probe for dialogue...
@Henry M. Thanks for the questions, I will try to answer them all in order.
So were most of these buy and holds? - We never planned to buy and hold; we needed $30K to pay for an adoption and flipping seemed like a good route to earn a chunk of cash. We will move more into buy and hold if the market for flips cools off.
What were some of your exit strategies? - Original plan was to flip, but since these are all cheaper properties, rental was the backup plan. Every house we have done would cash flow as a rental if we kept it.
Did they all make money? - Every deal has been profitable, $25K-$50K on each one sold so far. The six properties we have in the works are projected to profit us between $50K and $140K each. We are definitely getting more efficient.
What has been the lesson you've learned over the course of your career? - If you are a real estate investor or want to be one, tell everyone you know. Someone will eventually know someone else that has a deal for you. Also, save up money; buying and renovating real estate with zero cash is nearly impossible to do.
Why did you decide to do real estate from the crash and on? - It was fortunate timing. I graduated college in 2006 and didn't have enough saved up for a down payment until 2008. Then I started shopping real estate.
Most people would be cautious when a market crashes like it did... And there are others who see opportunities... What was the deciding factor that made you take that leap? - To me, everything was on sale. I also liked the idea of fixing up the town I live in while making money.
Where did you retrieve your knowledge from? Example: In the mid 90's, mine was from Barnes & Noble... True story, Lol. - After getting my bachelor's degree in finance, I worked as a commercial loan officer for 2 years, I picked up a lot of knowledge from customers. The Bigger Pockets Podcast has been great, but I didn't start listening until about 12 months ago.
What has been the hardest part about real estate? - Finding deals for sure! I make a good income at my day job and my wife and I are frugal. We have the funds available, finding deals is getting tough. New investors are out in the market and are overpaying. I enjoy the construction aspect and have a good group of subs to work with.
How do you stay motivated in a tight market? - We have a full-time employee now, my motivation is to keep him busy. If I can't find flips, I will buy vacant lots and put up spec homes. If the market is not strong enough for either of those, we will pick up some rentals and wait for the next appreciation cycle.
Is your market saturated with competition? - It is now, in the past 6 months I have only seen 2 or 3 properties on the MLS that I would buy at asking price. Word of mouth, direct mail, and auctions are the places to find deals now.
How many deals do you have to go through to find a good deal? - I check the MLS and Craiglist daily. There are probably 10 properties newly listed each day. I look quickly at each one and run the numbers on any that are under $300k and need renovation work.
What has been the most gratifying thing you've have learned or experienced since jumping into real estate? - Taking the worst house on the block and cleaning it up has been very satisfying. Neighboring homes of our properties have been very appreciative of our work. I drive by many of these houses daily and I am proud of the work we did. And, we get to make money doing it!
Licensed or Not Licensed? What benefits has it brought you choosing one way or the other? - Not licensed, not planning to be. As we buy more directly from homeowners, I don't want to deal with all the disclosure and compliance rules that realtors have. I will go to the selling agent if I see a house on the MLS that I want and I have someone that will list homes for me for a 1% commission.
What strategies in structure of a deal or creative financing if any do you prefer using? Or are you just a straight forward traditional? - We used traditional 20% down financing on the first purchase. After that, we have used HELOCs or private money and always made cash offers on all our flips. We just bought a new personal residence and got a traditional 20% down mortgage for 30 years.
@Joshua Top congrats!
Great breakdown Joshua and well done!
@Joshua Top , I have a question about your reply quoted below:
"Licensed or Not Licensed? What benefits has it brought you choosing one way or the other? - Not licensed, not planning to be. As we buy more directly from homeowners, I don't want to deal with all the disclosure and compliance rules that realtors have. I will go to the selling agent if I see a house on the MLS that I want and I have someone that will list homes for me for a 1% commission."
There are a couple of fixer homes of interest to us on the MLS, and I wanted to go straight to the seller's agent to potentially save on a double commission. But how do you present this to them? Wouldn't they just automatically charge their seller their 6% for both sides of the transaction since you don't have your own realtor? How do you approach this, and what specifically do you ask for in this regard? Thanks in advance!
@Kathryn Bowden I have not brought up commission amounts to the seller's agent at all. If I want to purchase a home, I just call the listing agent and let them know that I am looking to buy and that I am not working with an agent. If they negotiate a slightly smaller commission with the seller to get the deal, that is up to them. I would not go to the seller's agent and expect them to do both sides of a deal for only one side of the commission.
Our market is very competitive right now; if I come to the selling agent with a full price offer, they are going to be motivated have us get the deal and they will maybe get 4%-5% instead of the standard 3%.
All this being said, if an agent brings me a deal, I will use them for the offer and they will get the commission. I only go to the selling agent if I find the deal on my own. Using agents and then cutting them out of a deal is bad business.
Completely to the contrary, @Joshua Top . My point is that if you are going straight to the seller's agent and they wlil charge a full two-sided commission, why not use your own realtor who will always fairly represent you? The one you're familiar with and you would want to pass on as much business to as possible. However, if you feel you have a chance to get it at a price that works, by going straight to the listing agent, that agent would be in the position to charge less of a commission, for example 4%. I then don't understand why you go straight to the agent in that case. But maybe you feel you can get a better scoop on the place, and don't have a huge loyalty to any one realtor. That just wasn't my point at all or why I was asking.
@Kathryn Bowden If a selling agent has a full price offer from another buyer/agent and I come in with a full price offer as well, they will make sure I get the house. Whether they get 4% or 6% doesn't matter to me, I just want to buy the house.
I have done enough deals to where I don't get much value out having a buyers agent; I am fine to essentially be on my own.
Yes, that makes total sense. Thanks @Joshua Top
@Joshua Top To do that many flips in our pricey state without having to use hard money is pretty impressive! Equally impressive is that you haven't lost any money on them. Kudos to you.
@Nghi Le Thanks! We tend to focus on homes that need a lot of work, that way there are less surprises that can blow up the budget.
We just closed on our 15th property, I think it is better than all the prior ones combined! I will put up a post soon.
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