What am I doing wrong?

Question

I am curious as to what everyone is doing different than me. It seems like everyone is always finding these amazing deal that are under $xx and after fixing its value was $yy.

Just curious what do you guys use or how do you guys get those? I spend hours a day looking through Zillow and other websites trying to find good deals.

Any advice?

Thank you

Joe Villeneuve · Answer

What you're doing wrong is trying to find your deals using the "needle in the haystack" method.  You're looking for individual properties.  What you should be doing is looking for markets...specifically micro markets.  You should be looking for a stack of needles.

Don Konipol · Answer

@Allan Calderon

Chances of finding a great deal on Zillow, MLS, or any listed exchange is very small,  The best deals aren’t advertised on exchanges.  You have to find them before they’re “listed”, or sometimes after.

Even if you can find one listed, it won’t look like a great deal at the listed price.  You usually have to make a number low offers on many properties to get one accepted.  Then you have to do your due diligence to make sure it really is a deal, obtain financing, make arrangements for contractor bids, etc.

When you become well established in your real estate niche, people approach you with deals.  While 90% are probably not worth pursuing, long established players often get more deals than they can handle.  However this only happens after many years of success in real estate.

Another fact is that people tend to only talk about their successes, few like to mention the deals they lost money on.  For example I’ve probably mentioned the auto repair facility I purchased for $125k and sold 4 months later for $300k at least a dozen times.  The deal I bought for $280,000 and held for three years and finally sold for a $82,000 LOSS I’ve only mentioned once.

I don’t know your age or background, so this may not apply to you; However I noticed than people under 30 believe everything can be done on line while sitting on their lounge chair.  While the internet has certainly changed the amount of information available on real properties, making real deals requires quite more of an active participation for like the first 10 years of your career.  If you don’t have a lot of deal flow, you have to work extra hard pursuing any deal that has possibilities.

Now, if your trying to buy a property way under market to flip, or fix and flip, you have to work much harder than if your trying to buy a property to hold as a rental.  In fact if you invest in a rental in an area you believe will appreciate significantly faster than the national average, then you really only need to buy the property at market value.

Joe Villeneuve · Answer

That's not quite what I mean though..and there' no reason why you can't find your deals off of the MLS.

Driving for dollars works, as long as you are driving distance from your markets.  What if you're a couple hours or more away from them?

When I say "find the micro-markets", I'm referring to using financial analysis to find markets where the property profiles, based on the criteria generated by your plan at that time) can be found in quantity.  There doesn't need to be any properties available at the time of the analysis...yet.  What you're doing is establishing the area...the very specific area...and the very specific property profile, that matches the criteria for properties you need...at that time.

Then, just like "whack a mole", you wait until a property pops up that matches that profile (and it will since you've established that micro=market  as one where many exist), and "nail it".  This also should keep you from rationalizing bad deals into good ones, since you are focused on the "deal", and not the "property".  If your offer isn't accepted, you don't "compromise" to get the property...you just move onto the next one.  There will be another one just like the one you didn't get, right around the corner (literally)...it will just have a different address.

Jim Goebel · Answer

@Allan Calderon

I'd tend to agree that picking your macro market is the first step.  Not everyone is geographically mobile but you need to nail that.

Other than that - it will depend on where you're at in your journey -

There's always good deals for folks with extremely unique and capable backgrounds, ready to work.

It takes some base hits and patience often to get that experience that allows you to succeed in any market conditions, in my opinion.

Mary M. · Answer

I think what is most important is resetting your expectations on return.

We are in a sellers market and the amazing, easy money is long gone.

Be realistic about what the market is like. Adjust  your methods.

There is nothing wrong with waiting for the right deal  the big guys do it and it is a lot safer that trying to “find a deal” just to find a deal

Be patient

Kevin Dean · Answer

Hey @Allan Calderon, I would look at this a bit differently. While "times may be changing", that doesn't mean that deals can't be found and money cannot be made. We just have to adjust our expectations and account for those expected changes in our projections and our underwriting.

Rather than relying on highly viewed websites (AKA more competition), maybe try and develop relationships with agents in the market you are targeting. I'm not in the single family world, but I believe this strategy can apply to all asset classes. This has been fruitful and led to more opportunities for my partners and I.

Tim Johnson · Answer

Change your method up, try a different approach for a week and see if you can find some deals.

Remember a lot of base hits still win ball games

Account Closed · Answer

Like @Joe Villeneuve said, narrow down a specific area. If you haven't heard the term "driving for dollars" you should look it up and give that a try. Drive around the neighborhoods and look for crappy houses, that's how I find at least half  of my deals (rarely do I find deals on the MLS). Then find out who the owner is and get in touch with them. Either find their phone number in the phone book, write them a letter, find them on social media, heck, knock on their door  (be careful with that method though, I can tell ya some stories, lol).. and be direct about what you're looking to do. You may get hung up on or get the door slammed in your face 99 times out of 100, but that 100th one might be a great deal.

Lynnette E. · Answer

I look at the auction sites, its a higher risk because normally you can only see the outside of the house.

I also found a realtor that is very connected to the foreclosure process who lets me look at houses that are not quite ready to be listed on the MLS, so I can make a premarket offer if I like it.

I look at homepath and homestep, and have an apartment 4 plex in escrow now from that process.  I do have to wait until after the owner occupied period is over with these websites.  That means that I am not likely to get the best offerings, but ones with more issues.

Mainly I get what I do because I will take the problem houses and deal with the issues. … and I keep looking.  Don't give up.

Arlan Potter · Answer

If you are in the REI business, the best deals come to you.  You don't find them, people bring them to you.

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