Time to start looking off-market?

18 Replies

Hello BP!

So I decided to make the leap and purchase in North Jersey for a small MF (2-4 units) around Hudson, Essex or possibly Union. I've been using a realtor (finally settled on one that fits my style) and seeing all MLS houses. It seems to be the same story though; all the ones that are good are getting multiple offers day of or the rest are vastly overpriced. I'm using a VA loan (house hacking) and have seen properties and put in about 5 offers. I'm new to the NE market moving up from the south.

My question is, am I spinning my wheels just looking at MLS deals? From doing some reading on the NJ BP section and talking to people, it's obvious this is a highly competitive market. One where some people are willing to overpay. I know my first deal using a VA loan doesn't help my chances but I'm just getting slightly discouraged. Is it time to use other means like driving for dollars or even possibly direct mail down the road? I mentioned driving for dollars to a realtor I know longer use and he laughed at me, saying it was impossible. I appreciate the advice!

Edit: There was a lot more I could have written but I'll keep this short. I've purchased a home before but wasn't sure if I should wait it out until the fall/winter. Do MF sales get effected being out of season like SFR's do? I have no problem purchasing in the dead of winter. As far as my goals, I would like aquire 10 MF properties in the next 6 years. I still plan on keeping my W2 job.

Hi @Mark F. , according to Brandon Turner, 

"To put together a real estate deal, three things are required: Knowledge Hustle Money"

    https://www.biggerpockets.com/blog/buy-real-estate-investment-no-money

    Your first question is about hustle in my opinion, and here Brandon writes about ways to find deals, two of which you mentioned:

    https://www.biggerpockets.com/blog/find-real-estate-deals

    And here's a link in reference to your question about timing of buying multifamily. 

    https://www.biggerpockets.com/forums/311/topics/250619-when-to-buy-multi-family

    I hope this helps!


    Deals might be found on the MLS, but you are doing yourself a disservice if this is your only outlet for leads. It's a very reactive approach that anyone can do, hence everyone does it.

    if this is something you are serious about you need to put in the time and effort to ensure you have a lead acquisition engine.  Even if it's for one property to start off, having deal flow will stop you from forcing a mediocre deal because it's all you can find.

    @Jeff Kao Thank you. I agree and the more I read my post, the more I feel like I sound kinda whiny. Definitely a hustle game and I haven't put as much effort in as I should.

    If you are analyzing deals and making offers, you are not spinning your wheels...it's part of the process. You are learning the market and figuring out how to generate deal flow. Yes, direct marketing may be next. Real estate investing is all about generating deal flow and that's not an "easy" button exercise.

    @Mark F.

    Mark for any investor off market will always get you the best deals. If you got the liquid cash, go off market, use a title company to help target your criteria and send the owner a direct letter saying you want to buy. I know many people who include a purchase contract in their letter that has an escape clause.

    Anything on the MLS is going for retail value, as an investor you don't want to leave money on the table , so it would make sense to no look there. There's resources and vendors on places like fiverr that can help you target areas.

    Have a lawyer draft the letter for you and start direct mailing. There’s lots of services like pro mail and letter stream that can save you money on postage just give them a call see what they can do for you

    @Mark F.  You need to choose a marketing strategy which you can stick to for a long time.

    My experience with direct mail marketing shows that if you have a motivated list and do 5-6 mailings to that list, you will be able to close a couple of deals. You can try out listsouce for off-market properties.

    Originally posted by @Mike Dymski :

    If you are analyzing deals and making offers, you are not spinning your wheels...it's part of the process. You are learning the market and figuring out how to generate deal flow. Yes, direct marketing may be next. Real estate investing is all about generating deal flow and that's not an "easy" button exercise.

    Thanks Mike, very true. I'm learning so much by this. Plus I came from a different state where things flow differently. Seeing 3 properties this week and hopefully an offer on at least one. Paying retail up here definitely seems the norm, not saying I should but even this 3 family I'm checking out tomorrow would do very well after value add and market rent raises. 

     

    Originally posted by @Ehsan Rishat :

    @Mark Franks You need to choose a marketing strategy which you can stick to for a long time.

    My experience with direct mail marketing shows that if you have a motivated list and do 5-6 mailings to that list, you will be able to close a couple of deals. You can try out listsouce for off-market properties.

    Thanks Ehsan. I did a quick poke around the other day on listsource and I would need to see exactly how to sift through the filters and whatnot. 

     

    Like everyone said, running numbers is part of the process and yes, it's that competitive where people are overpaying in those markets. If your only option is a VA loan, then patience is key and you will definitely be better off in the winter (off-season) for north jersey HOWEVER you have to weight those savings against rates rising (which are incredibly low at the moment). Glad to see you found a good agent! All the best

    @Jonathan Curcio thanks, I'm hopefully for the winter months. And I appreciate the confirmation about people over paying. I had to ask myself "am I going crazy or is there something I dont see when the numbers add up?"

    @Mark F. The Northern NJ market seems to get tighter and tighter, as a result you have to be VERY patient because you're going to lose deals or find that properties sell unbelievably fast with that being said you can still find what youre looking for, if you use these tips

    1) Broaden your search: Can you live in another city or county? Can you tweak they type of multi youre in search of

    2) Increase your budget: I tell clients all of the time when helping them in an ultra competitive area that you may need to come to the table with a budget higher than what you expected to get what you want. 

    3) Change your terms loan type: Can you offer more favorable terms? Perhaps come to the table with a large earnest money deposit or a different type of loan (many sellers have a preference for conventional loans with a 20% deposit)

    If you do go off market look at tools like property shark, it proved helpful during my days as a wholesaler. If you work with a wholesaler make sure to ask all of the qualifying questions you need to in order to make sure you're getting a good deal.

    @Vaughn Smith Yes it definitely has, especially in the duplex thru quad range. I've continued my search since the original post and honestly I've seemed to have found a decent number of good deals via the MLS. They just get offered on quick.

    I've been implementing some of your advice. I've breaded my search. I'm now checking out 3 counties. This has helped tremendously in seeing more places and putting in more offers.

    I've talked to my broker. I'm now able to utilise the FHA loan as well as my VA loan. Obviously getting in with no money is preferred but like you stated, more favorable terms. I'm seriously looking at raising 20% via line of credit or family money for a conventional loan as I have excellent credit and a very solid W2 job.

    My goals have changed slightly as well since the first post. I want to house hack into a duplex or more but after I want to get into small multifamily commercial properties after. Like I mentioned I have an excellent credit score, soon-to-be high paying W2 job and I feel that space is less competitive. If I'm wrong on that last one please correct me.

    Thanks for the advice Vaughn!

    @Vaughn Smith makes some good points.  But I can't agree with point number 2.  I don't think you should be willing to pay more just because the market is hot.  As an investor, you have to define what a good deal is which will include some purchase price to income ratio.  Then you stick to that.  You don't adjust up just because the market is hot.  

    Patience will be the source of your greatest profits.  If you are excited about getting into real estate stop it.  This is no place for emotion.  That is for friends and family not financial decisions.

    @Jacob Sampson While I'm looking for other ways to raise revenue, I'm not going to fudge the numbers. If the numbers work they work. While I've upped my price point, I want the deal to work at 300k or 500k. Appreciate the advice.

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