Biggest Struggles Facing Investors Right Now
For those of you still doing deals right now what are the biggest issues you are running into? How are you overcoming those? What do you need help with? Let’s start a discussion!
For me (and most investors I talk to right now) the biggest issue remains finding profitable deals (either to flip or keep as rentals). I acquire 90% of mine in pre-foreclosure and/or at auction. I also do some text blasting and have experimented with paid SEO. I like to say finding deals is like being a fisherman, you've got to have as many lines in the water as possible.
With a recession looming we may see more available distressed inventory, but then it could become more difficult to sell/lease our properties. It's like I tell my clients, there's never a wrong time to invest in real estate, only a wrong way. Know your numbers, plan for the worst and hope for the best.
That is great insight and advice Marty! How are you normally funding those types of deals? Any creative financing or strictly cash offers?
Quote from @Marty Boardman:
For me (and most investors I talk to right now) the biggest issue remains finding profitable deals (either to flip or keep as rentals). I acquire 90% of mine in pre-foreclosure and/or at auction. I also do some text blasting and have experimented with paid SEO. I like to say finding deals is like being a fisherman, you've got to have as many lines in the water as possible.
With a recession looming we may see more available distressed inventory, but then it could become more difficult to sell/lease our properties. It's like I tell my clients, there's never a wrong time to invest in real estate, only a wrong way. Know your numbers, plan for the worst and hope for the best.
@Dalton Foote, for a small-time, part-time flipper, I agree with Marty that finding deals is very challenging. For me, it is exacerbated by having to pay retail for work, which brings me to challenge number 2. Labor is growing at an exponential rate. I finished a rehab in March, and some of my quotes for work today are nearing double what I paid 4 or 5 months ago, which was effectively double what I paid for work at the beginning of COVID.
Clearly, labor costs are rising across the board, but my friends that work at a large enough scale at least have salaried tradesman on their payroll, so it is a little easier to control that cost, versus subbing everything.
Definitely! I come from construction management and I can not stress enough that pm companies switch from using all vendors to at least having some in house labor/tradesmen to maximize profits. I know where you are coming from for sure! It’s tough because the labor market is also crazy right now and companies are taking advantage of material costs. My best advice would be to buy all material yourself and only put out bids for labor when needed.
Quote from @Evan Polaski:
@Dalton Foote, for a small-time, part-time flipper, I agree with Marty that finding deals is very challenging. For me, it is exacerbated by having to pay retail for work, which brings me to challenge number 2. Labor is growing at an exponential rate. I finished a rehab in March, and some of my quotes for work today are nearing double what I paid 4 or 5 months ago, which was effectively double what I paid for work at the beginning of COVID.
Clearly, labor costs are rising across the board, but my friends that work at a large enough scale at least have salaried tradesman on their payroll, so it is a little easier to control that cost, versus subbing everything.
Biggest challenges are finding deals and keeping rehab costs under control. As Evan stated, costs for labor (AND materials) have skyrocketed and although I have my own GC company (as well as HVAC), the material costs (and availability) are well out of my control which makes managing the project much more difficult than during pre covid days.
With a recession looming (some say we are already in one) and interest rates on the rise, finding a deal that pencils out is getting even more difficult. This begs the question, is it necessary to fully switch gears and go down a different real estate strategy like buying apartments or self storage or keep trying to find deals to flip? NOt easy to answer and one answer is not right for all - only you can make that call.
Completely agree!
Quote from @Will Barnard:
Biggest challenges are finding deals and keeping rehab costs under control. As Evan stated, costs for labor (AND materials) have skyrocketed and although I have my own GC company (as well as HVAC), the material costs (and availability) are well out of my control which makes managing the project much more difficult than during pre covid days.
With a recession looming (some say we are already in one) and interest rates on the rise, finding a deal that pencils out is getting even more difficult. This begs the question, is it necessary to fully switch gears and go down a different real estate strategy like buying apartments or self storage or keep trying to find deals to flip? NOt easy to answer and one answer is not right for all - only you can make that call.
Labor cost and Material ( cost and availability). Took me 2 months to get Cabinets that I ordered which I was suppose to get in three weeks.
Naveed,
That is pretty quick in some people’s books lol. My day job is facing these issues pretty extensively with longer lead times
Quote from @Naveed Q.:
Labor cost and Material ( cost and availability). Took me 2 months to get Cabinets that I ordered which I was suppose to get in three weeks.
Quote from @Dalton Foote:Strictly cash. Sellers with real equity prefer it so if I don't offer them cash someone else will. And cash is the only option if you're buying at a sheriff's sale or trustee's sale.
That is great insight and advice Marty! How are you normally funding those types of deals? Any creative financing or strictly cash offers?
Quote from @Marty Boardman:
For me (and most investors I talk to right now) the biggest issue remains finding profitable deals (either to flip or keep as rentals). I acquire 90% of mine in pre-foreclosure and/or at auction. I also do some text blasting and have experimented with paid SEO. I like to say finding deals is like being a fisherman, you've got to have as many lines in the water as possible.
With a recession looming we may see more available distressed inventory, but then it could become more difficult to sell/lease our properties. It's like I tell my clients, there's never a wrong time to invest in real estate, only a wrong way. Know your numbers, plan for the worst and hope for the best.
Nice! That is the goal for sure!
Quote from @Marty Boardman:
Quote from @Dalton Foote:Strictly cash. Sellers with real equity prefer it so if I don't offer them cash someone else will. And cash is the only option if you're buying at a sheriff's sale or trustee's sale.
That is great insight and advice Marty! How are you normally funding those types of deals? Any creative financing or strictly cash offers?
Quote from @Marty Boardman:
For me (and most investors I talk to right now) the biggest issue remains finding profitable deals (either to flip or keep as rentals). I acquire 90% of mine in pre-foreclosure and/or at auction. I also do some text blasting and have experimented with paid SEO. I like to say finding deals is like being a fisherman, you've got to have as many lines in the water as possible.
With a recession looming we may see more available distressed inventory, but then it could become more difficult to sell/lease our properties. It's like I tell my clients, there's never a wrong time to invest in real estate, only a wrong way. Know your numbers, plan for the worst and hope for the best.