Ready to Invest but...

6 Replies

Hi BP Community! I am a licensed contractor on Long Island and want to start flipping. I have a decent savings along with a HELOC thats open and ready, both combined giving me $150k, the remainder of funds needed would come from HML. I am working with one very experienced friend/RE Agent that is guiding me and helping look for the right property. Problem I am having is that the market on Long Island is so expensive and even when a good opportunity does come along I can't seem to compete with other bidders who are truly all cash. There's actually a seemingly good property I'm currently after and I can't even get the agent to call or text me back.

I am reaching out to more agents and going to a business networking breakfast next week to try and meet some people that might be able to help find a project. I am also looking in other markets where I have more buying power (Pittsburgh for example). I've been looking for my first deal for months and clearly need to try a different approach, any tips would be appreciated. 

The vast majority of people use agents to find properties through the mls. Try other avenues like driving neighborhoods, checking with local banks and credit unions, probate ads, etc. You might even check the for rent section of your local paper and call them to see if they would consider selling. If the court house that does evictions is nearby, you could go and meet some discouraged landlords on eviction day. Some may be open to sell. Also approach some of the bigger portfolio owners in your area to see if they have anything to unload. Most of my purchases don't come from the mls.

@Philip Coiro if you have an agent why are you reaching out to the listing agents? Your agent should do that. 

Also, flipping from long distance is tough. When someone lives in a good market for flipping I always say that the optimum use of funds is to do deals where you can make the most money (your own expensive market) and then invest that money in rentals in a better rental market (Pittsburgh). 

As a local you can probably get a better ROI in Pittsburgh, but you won't make nearly as much cash. And since you are a contractor you can take advantage of your skills most in your home market .

Sounds like you need to start driving for dollars, engaging some wholesalers, networking, etc. in your market. Someone is flipping houses there. Perhaps do some work for them and see how they are finding their deals. You're a contractor so if you offer to work for them for a reduced rate and you do good work I'm sure they will help you find a deal of your own :)

If you have an agent, the listing agent needs to talk to them, not you. That;s just the way it is. 

The MLS is the easiest way to find properties, so you are competing with everyone out there for those. The other ways (listed above) take more time, but will lead to the better deals - Keep plugging away.

Make a deal with your agent for deals you find yourself that are not on the MLS- The seller may not agree to pay for you to use an agent, so be aware of that.

Thank you @Ed Emmons for the ideas! And also, @Anthony Angotti and @Christine Kankowski for taking the time to reply. My local agent and friend who works with a number of investors taught me that it's important for me to build relationships with a number of agents to find deals like the one I'm after. If he brings me something or I have found something to check on then everything obviously goes through him. 

If I did find something that works out of state I would be staying out of state with the property throughout the construction, I would be there everyday managing the job or physically doing it. If I do find something here for $350k, put $100k into it and sell it for $550,000, after closing cost, carrying costs, selling costs and the high interest of a HML there's probably only $30-50k in profits left. If I can find an out of market home for $80k and put $50k into it, sell for $200k ...on paper it seems gives me the same profit with much less stress.

I've been after a few houses in my local market and both, within 48 hours of hitting the MLS had 12-15 over asking and all cash offers pushing both to around $400,000. I walked though one and it needed $125,000 worth of work. I'm actively looking but it's very tough for me to compete here starting out.

I'm headed to Pittsburgh next week to look at some neighborhoods and properties to see what's out there! I am going to take all the above advice about other ways to find deals and see what I can find. 

@Philip Coiro Hi Philip, glad to see you will be coming to my hometown of Pittsburgh. Many investors find Pittsburgh offers a much better buy-in than other more saturated markets. The tech boom combined with many upcoming projects and initiatives have also really caught the eyes of many investors to the Pittsburgh area. Many are also finding profit in flipping depending on how it's done and where it is. Areas in Pittsburgh can be a bit tricky. While there are the "tried and true" neighborhoods that cash flow or have strong ROI, not all properties do even within those prosperous areas. It's not always that the worst house in the best neighborhood is the ideal choice.

As you mentioned about your market, multiple offers exist above asking within 48 hours of hitting the MLS. It's no different here, so I always stress if you are interested in something, be proactive the day it comes out by first touring, if possible, and if not possible then toured by a reliable source you trust. Then analyzing for feasibility, consulting with knowledgeable locals, to making a sound offer. I'm glad to see that whatever market you choose, if out of state, you will spend your time there during construction. That's very important, as well as having a good team set up in that market, especially in times where you cannot be there.

I have lived in Pittsburgh my whole life and have really seen this city turnaround to become the most reinvented and reinvested markets. If you want to talk more about the Pittsburgh market, feel free to reach out to me. And welcome to Pittsburgh in advance, safe travels. Gary

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