From what I've seen so far, when a good deal pops out in Indy, someone closes on it within 1-2 days. As an out of state investor, looking to make my first deal, It would take me a few days to come over, see the the property and close, which is too late.
How do you do that? Closing without seeing the property? Find deals that others don't know about? Something else?
@Gil Keren @Lee Ripma is right. Understand the math behind deals that meet your criteria COLD. Once you run the numbers on enough deals you can start to weed things out super quick. That way, when a deal pops up you can confidently say that the numbers work after plugging it into your pre-made excel model. Then send your offer in ASAP! It should take no more than an afternoon (MAX) to know if a deal works. That is assuming your criteria is rock solid (location/neighborhoods, rent, expenses, etc.). Then, if the inspection uncovers an unknown, you can back out or renegotiate. Getting something under contract is basically you saying "Assuming nothing out of the ordinary is going on here, then I will pay X amount for this property." When inspection shows that roof needs replaced and the foundation is cracked (an unknown), then you either walk away or request that amount be taken off the purchase price. You don't need to see a property in person before offering on it. In the current Indy market, you will never win a deal if you have to get on a plane to come see it first.
I made the mistake of being too concerned with "perfect" offers starting out. You're not signing your life away. If the property is not at all what the seller represented it as, you'll get your EMD back and you'll be back to the drawing board. So get practice and be confident. Also, offering all cash seems to be the norm in Indy these days. Just my 2 cents.
@Gil Keren - you appear to be confusing "putting a home under contract" with "close on it". The former can take minutes, the latter is usually 7 days minimum.....realistically 2 weeks. Title and lien searches, etc need to be done. What you might do is plan a trip for a few days and schedule as many properties as you can during that time. Best of all, it gives you an idea of what the neighborhoods look like. I was in Indy this past Thu-Sat and previewed at least 16 properties. I'm slowly become familiar with the place, strongly suggest you do the same.
@Gil Keren find an awesome deal finder in that area, either wholesaler or realtor who understands what investors are looking for. Negotiate, do the best you can to see the inside of the property (my wholesaler video calls me and walks me through the property that day) and put it under contract asap, all you really need is earnest money. Now, if you're looking to close in 1 to 2 days, your best bet is private money or having a large enough line of credit (such as a HELOC). Otherwise, if you're working with a Hard Money lender, they're going to want paperwork to get you a loan and that can take a few days of going back and forth. My wife and I live in Seattle and invest our BRRRRs in Texas. We had to print, sign, and notarize a good amount of paperwork before we were able to close. I want to say it only took 5 business days, but to be fair, we also didn't have all our bank statements and paystubs prepared, so make sure you have that information ahead of time.
Remember, the benefits of a wholesaler is they tend to find off market deals that might not even be on the MLS, so you're only real competition is that wholesaler's buyers list. The downside though is the information isn't always 100% correct and sometimes numbers are estimated. Also take any sort of estimated rehab with a grain of salt. At the very least, price out your materials ahead of time. We created a mid-tier rental and a high end rental list and picked out top 3 for each of those within each category. For example, we have 3 different floor options if we're looking to rehab to our C+ to B rentals and we have 3 other floor options for anything that is B+ and higher. If you can go one step further and find out the typical install rate for those items in your market, thats even better. The more systems you have in play, the quicker you can assess and make decisions. Plus, it helps keep you accountable to your standards. Another example, a wholesaler might go for cheapest flooring possible at $.49 a square foot, but thats going to be cheap vinyl rolls. You might decide that the cheapest option you want to provide to your tenants are vinyl planks, most of which I found at about $1 a square foot on the low end and $3 a square foot on the high end. If you budget for your wholesaler's (or other deal finder) estimate in that case, you'll have to choose between lowering your standards, or going over your budget that you planned.
Use a HML / Private Money to fund your deals. Just need to trust your boots on the ground team as well to let you know if it's in a good area
I read this somewhere on the forums before and found it helpful: offering "sight unseen" is not just about physically viewing the property, you can "see" through the lens of your team and the information available. Photos and description on listing, assessor card, past listings + listing history (Hotpads, Zillow), tax bill combined can say a lot about the rehab numbers, problems with the prop, and seller motivations. Some folks will not feel comfortable offering without physically seeing the property, but they may be at a disadvantage since many OOS investors do lock up properties just based on the info they can gather.
@Gil Keren
You understand what a property that you want to buy looks like - numbers, area, condition. Once you know this you put it under contract really fast, day of. So my question to you is why are you so slow? The answer is just inexperience. You’ll get there!
@Gil Keren @Lee Ripma is right. Understand the math behind deals that meet your criteria COLD. Once you run the numbers on enough deals you can start to weed things out super quick. That way, when a deal pops up you can confidently say that the numbers work after plugging it into your pre-made excel model. Then send your offer in ASAP! It should take no more than an afternoon (MAX) to know if a deal works. That is assuming your criteria is rock solid (location/neighborhoods, rent, expenses, etc.). Then, if the inspection uncovers an unknown, you can back out or renegotiate. Getting something under contract is basically you saying "Assuming nothing out of the ordinary is going on here, then I will pay X amount for this property." When inspection shows that roof needs replaced and the foundation is cracked (an unknown), then you either walk away or request that amount be taken off the purchase price. You don't need to see a property in person before offering on it. In the current Indy market, you will never win a deal if you have to get on a plane to come see it first.
I made the mistake of being too concerned with "perfect" offers starting out. You're not signing your life away. If the property is not at all what the seller represented it as, you'll get your EMD back and you'll be back to the drawing board. So get practice and be confident. Also, offering all cash seems to be the norm in Indy these days. Just my 2 cents.
@Gil Keren ...I work with primarily out of state investors (California). As said previously in the thread, they all have a criteria. They all have a "ballpark" idea for rehabs. Its my job to get out to the property and do facetime or MarcoPolo videos for them to determine if it will stay within their budget. One of the things I caution is, I know rehab from what I can see, and often there is things that come up (behind the walls, during inspection, etc), so make sure you budget for that. An amount that you would prefer not to use, but would be ok using if need be. Once you do one, you get a lot better idea of cost and timelines.
But, you are right...the good ones come up and then pend quick. Indy is still very affordable. Having your finances ready to pull the trigger at a moments notice is half the game.
I bought my first property site unseen but that was after I'd already gone out to the market and met in person with my realtor and we'd built up a rapport. I made an offer on the property he found for me before it was even listed and I got it for under asking. I just bought my second property in a market where homes get multiple offers within the first day or so. I went there just for a little vacation and ended up deciding to buy a house within the first couple of days. I extended my trip until I found a house. In all, my total trip length was 2.5 weeks. I ended up buying a house that I viewed within hours of it listing, made an aggressive offer and had the offer accepted within 24 hours. However, I had been researching the area remotely for months so it wasn't a complete shot in the dark.