Do you prefer on or off-market homes and why?

Question

Good morning BP,

This may be a stupid question but I am curious, do you prefer on or off-market homes when purchasing a property to flip?

The reason for this question is that after my last post asking how most investors are currently finding their deals, a majority said off of the MLS. Which kind of made my head spin a little bit, most times when a property is active on the market it is listed at the as-is value. That as-is value is typically a higher price point than what most investors are willing to pay when they are looking to flip.

As a wholesaler and agent, our off-market properties are deeper discounted and priced at a number that makes sense. So when the time comes to sell the investor already has 20% equity in the property and is able to make a greater return.

What are your thoughts?

Trevor Oldham · Answer

Whether to choose on-market or off-market properties really depends on the individual investor's strategy and goals. As you mentioned, off-market properties can often be obtained at a deeper discount, making them more attractive to investors who are looking to maximize their returns.

However, on-market properties can also be a good option, especially for investors who are just starting out or looking for a less risky investment. While the initial cost may be higher, on-market properties may be in better condition or in more desirable locations, making them easier to sell for a profit.

Best of luck with your flipping endeavors!

Bruce Woodruff · Answer

No real preference, just looking for the right property. I've always sought out the distressed fixers in neighborhoods that are just about to 'gentrify'. So those are available both on and off, and most other investors steer clear of these...

Katlynn Teague · Answer

Kyle, thank you so much!

The MLS is very straightforward. It makes the finding part a lot easier, but it reflects in the price. With that being said, there are many great deals on the MLS you just have to be on the hunt to get there first! The MLS is an excellent source.

My parents always told me growing up that when you are uncomfortable is when you are most successful and you are able to learn the most! Purchasing off-market can be very stressful if you do not have the right person on your team. If you want to acquire deals yourself there are many things you can do like direct mailers, driving for dollars, cold calls, door-knocking, etc. Most investors do not have the time to do all of these things which is where the wholesalers and agents come into play. Finding an excellent wholesaler that is knowledgeable about your market and won't bring you daisy-chained Facebook deals is like finding a needle in a haystack. It is all about asking the right questions up-front and vetting these people to see if they have the skills needed for your team and your goals. Another great option is working with a knowledgeable agent in the investment space who can bring you pocket listings in your desired area. You will have the commission involved if you would like to have them represent you on the sale but, you can always negotiate a flat fee if they are able to bring value to your team! I hope this helped if you have any more questions or need some more clarity, don't hesitate to contact me directly!

Eliott Elias · Answer

No preference, where ever the numbers work. On market has a higher tendency to be unreasonably priced.

Kyle Spearin · Answer

@Katlynn Teague that's a great question! I think it depends on the person's strategy-- it could be that a lot of house hackers or other people new to real estate use the MLS because it's more straightforward.

I've personally never purchased anything off-market, but see tremendous value in it because of everything you mentioned. I think it's just a matter of learning how to acquire off-market deals through marketing, working with wholesalers, etc. For many people, this adds a level of effort/decreases the amount of comfort. Any recommendations on getting over this hump?

Katlynn Teague · Answer

Trevor, you are absolutely right!

Katlynn Teague · Answer

Bruce, thank you for your comment!

I can understand why most investors steer clear of these neighborhoods when there is some uncertainty about who is living next to you for the safety of the rehab crews. This happens a lot in my market here in Atlanta. However, this is where the best deals can be. I have noticed it is harder to prove value in these areas as well.

Katlynn Teague · Answer

Eliott, thank you for the comment!

I completely agree!

Do you prefer on or off-market homes and why?

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