Finding deals on potential flips/rehabs

25 Replies

Hello,

Looking for my first house to rehab/flip in the central CT area. My realtor has a filter which sends me some properties once in a while, including foreclosures. I have also looked on homepath for REOs.

I'm curious to know what sources seasoned rehabbers/flippers use to find their/your deals. Are most doing foreclosures, short sales and REOs using the MLS? If so, are foreclosures favored over the REOs or vise versa? If not, what other sources are tried and true? I've heard the auctions can be very risky, so at least for now, I'd like to stay away from them.

Thanks in advance,

Konrad

I have a good friend out of New Britain he is a Realtor and his team specializes in working with Realtors. He could help you better identify potential deals.

But if you are comfortable with yours that is fine. The filter and auto email they use is standard you need a bit more. have them work for that commission and actually send you foreclosures and short sales with high comp - low comps included. This will help you since you could gather info and run your numbers on them. look at your options on paper then look at the physical pros and cons. Curb appeal, location, etc...

Originally posted by @Manny Cirino :
I have a good friend out of New Britain he is a Realtor and his team specializes in working with Realtors. He could help you better identify potential deals.
But if you are comfortable with yours that is fine. The filter and auto email they use is standard you need a bit more. have them work for that commission and actually send you foreclosures and short sales with high comp - low comps included. This will help you since you could gather info and run your numbers on them. look at your options on paper then look at the physical pros and cons. Curb appeal, location, etc...

Thanks for the quick reply Manny. Did you mean 'his team specializes in working with rehabbers or Realtors'? If you meant with Realtors, can you explain on how that could help me?

Could you elaborate on including the high comp - low comps? Do you mean the property values around the property in mind or the potential value after rehab of the property in mind? Is that something I can ask of him, to send me the foreclosures and short sales with high and low comparisons, or will he think I'm asking too much of him? Sorry, still trying to learn the lingo.

Thanks

Yes, I definetly ment Rehabbers/investors not Realtor he is a Realtor. in any area you have your low comps usually REO and Short sales sometimes wholesale deals, then you have your high comps or Retail sales other flips. You want to know what is the lowest sale in the area and the high this gives you and instant cap on top and bottom. What offers you can expected to be rejected if it is to low and what you could expect to get stuck with or be forced to reduce a price if you sell to high.

If her know you are an investor and will by time and time again. He will and should value gaining a consistant buyer such as your self we will and should do anything he could to gain that relationship. He will also have to walk you through to get repair estimates and he should be able to let you know what markets are the sweet spots.

Are you planning on Flipping in Meriden I see alot of investors chasing. Southington, Plainville, Bristol Property. But Meriden is a nice area and I know I have seen great deals in Waterbury.

@Manny Cirino thanks for the explanation of the low/high comps. I will keep that in mind. The realtor I am currently working with doesn't seem to be too interested in finding me distressed properties. He may be lacking experience in that area. Can you send me the contact info for the realtor you were speaking of in New Britain? I'll look into him.

Meriden has it's lows and highs, but is the hub of CT, so it should be a good market. Waterbury I'm not very interested in because I've heard it's tough to sell a house there. The others you have mentioned, I'd really like to buy in, but the properties there may still be out of my reach.

Thanks

Does anyone else have any other ideas or feedback as to what sources seasoned rehabber/flippers mostly use? Or do most just use the MLS?

Thanks

@Manny Cirino do you mean the Realtor will actually send comps along with the search results that come up on the daily MLS Hotsheet? I'm surprised if they do, unless there are some settings they can input that I'm not aware of.

I have a variety of MLS searches set up for myself and a couple for a fellow investor, and among those searches there are probably 20 properties that get emailed to us every day. There's no way I'm comping each of those 20 properties - I don't have the time, not to mention it would be a huge waste of time. I will gladly do a quick comp for anything that catches my friend's eye, to determine whether it's worth pursuing, and then I'll do a detailed comp if she wants to send in an offer (same method I use for my own searches). But for every single result that pops up on a daily basis? Yikes.

@Konrad L. you can also search HUD and HomePath properties yourself online (HudHomeStore.com and HomePath.com) for foreclosures. And you can check out auction.com and hubzu.com. Like anything online and on the MLS, there's a lot of competition for these properties - and prices are going up.

Otherwise, a lot of seasoned rehabbers will market for properties themselves - direct mail, postcards, bandit signs, etc - and/or they will work with a good wholesaler. There's a ton of info on BP regarding marketing.

And the best method of all, though it takes some time: networking. As you proceed, you'll meet a ton of people in the business and will figure out who's the real deal and who's not. And eventually, you'll have people bringing you deals. But again, that takes time.

Good luck!

Karin,

No, the listing alerts do not provide any automatic comps. And yes that would definetly be a waste of time. I recieve those alerts her in my area and the majority are preice reductions, new listings, and status changes. So it is a lot to track.

What I am referring to is getting the alerts doing his own self analysis then having the Realtor pull comps for the properties he is most interested in. And that all is made easier starting with the criteria he request be sent to him.

This is also why I have expressed the importance of both buying and selling with the same Realtor. It's important to conpensate them for the efforts especially to have them pulling comps and putting in low offers.

Just curious what is your preferred criteria? east lyme is a very nice area?

@Karin DiMauro Hi Karin - thank you for chiming in. Can you explain what you mean by 'comping'? I keep hearing it. Do you mean comparing the property to other properties? On the street? Area?

I have been looking on Homepath some and I'll take a look at HUDHomestore. I agree that networking is great, but it does take time to develop.

Thanks for the explainer, @Manny Cirino - that makes a lot more sense! And absolutely, it is more than reasonable to ask the Realtor to pull comps after doing your own self-analysis and whittling the list ... and I think that's a great point you make. I know some folks who don't do much self-analysis and want to go out and see anything that arbitrarily strikes them as interesting. You want a Realtor who works hard for you, but you need to bring something to the table for them as well!

I live in East Lyme but I haven't yet found any rehabs in this overpriced town! My search includes all of New London county - I search actives, expireds, 160+ Days on Market, REOs, Estate/Probate sales, keywords for as-is, fixer-upper, etc. And I have a search for all Closed properties that fit my criteria, so I get a list each day and scan through those to keep track of sold prices, not to mention anything I might have lost out on during bidding - I want to know what those sold for. I have a file of properties I was interested in, in which I jot down what my ARV is, and then I'll make note of what the actual sold price was to see how I'm doing in my analysis.

@Konrad L. - yes, "comps" are comparable properties. There are some very good blog posts here that explain it far better than I could. But yes, you compare property size, style, year, # of beds and baths, acreage. You want to determine what price properties that are similar to yours sell for to get a sense of what your property will go for. You definitely stay w/in your town (surrounding towns are worth squat), and then it takes some knowledge and feel to determine how to comp w/in the town - whether to stay on the same street (I find this difficult in CT, as I don't generally find enough comps in my smaller towns), how far out you can go, which neighborhoods are similar to yours, that kind of thing.

@Konrad L. - "comps" are comparables. In this sub-culture of investing, we kind of have our own unique vocabulary.

Rehabber

Wholesaler

All-in price.

ARV

etc.

Anyway, I always advise newbies to become Realtors themselves so that they can have their own MLS access (and for many other reasons as well).

I'm in FL and comping is fairly easy. but in CT certain areas seem like a nightmare to comp. It is one of the biggest differences I see state to state. And yes I could see that area being over priced, easily! How is the bidding I am hearing of a lot f bidding wars. I hear under pricing to drive traffic is a big issue?

@Karin DiMauro Thanks for the advice and for the explanations. It all makes sense after I read it, but since I'm a novice, some of the things I wouldn't know until I try myself. I have been comparing properties myself in the surrounding neighborhoods for properties that interest me, so you can say that I'm doing some analysis. Some things will just come with experience and trial and error.

You make very valid points about keeping track of the properties that interest you, but you didn't buy, just to see how your analysis is doing. I'll have to utilize that as well.

The issue with sourcing deals from MLS, or even Homepath/HUD, is those "deals" are available to open market, which is great for the seller as they will hopefully see the price of their properties bid up to near-retail levels even for properties that are in less-than-retail condition.

If you're an investor tho, you don't want that level of "efficiency" in the market. You want to find deals that no one or very few other people know about, so you can get a deep enough discount that you or someone else can rehab the house and make a decent ROI.

In other words, as an investor, you need to go direct to the motivated sellers via marketing/advertising. Yes, you can occasionally find a "deal" (i.e., a DISCOUNTED property) on the MLS but you can also expect a lot of frustration as non-investors continue to outbid you on those opportunities.

@Bryan L. Thanks Bryan. I have actually taken the course about three years ago, just for my own knowledge, but have never become affiliated with a broker. That was before I realized how lucrative and possible REI is.

@Dev Horn That is exactly what I had in mind with my initial post. Everyone gets to see these properties and keep the price from being where it should be, or where it would benefit a rehabber. However, because I lack experience as a novice, I think that my best bet for the first 1 or 2 would be to seek the help of a realtor. Then as I gain some experience, I can try to deal directly with sellers and advertise. Networking is also key.

@Manny Cirino , interesting that you mention under-pricing to drive traffic, as I just came across one this weekend that I suspected was underpriced so as to start a bidding war. I put in an offer for a contractor friend, and lo and behold, there were 5 offers submitted by Monday and the bank was asking for highest and best. Still, there was room in the deal and if he gets it, he should do well. I was involved in another one in the fall for which there were 11 offers; but again, judging by the purchase price and then the resale, I think the guy who won the bidding did make a good profit.

In my area of the state, I'm mostly seeing stuff that's way overpriced to begin with - a lot of banged-up REOs close to retail - then the price drops for awhile until someone finally buys it for what I consider to still be 10k-30k too much. I've been scratching my head a lot in the past 4-5 months, wondering who's paying those prices.

Karin, yes I have been watching the market up there for exampe I seen one property that jumped out at me. It was a fully rennovated property in an area with comps at about $250k listed at $169K this made no sense to me. Then of coarse I looked at it a month later and it was bid up to $225k. This is similar to what you see on ebay(yes that the best comparasin I could think of).

I found that there are only a few people who over bid, Newbie investors who under estimate and over expect(will lose there shirt), Retail homeowners who follow what there Realtor says(advise to pay more for a higher commission) and those investors who can cut cost because they are truly capable of doing the majority of the rehab themselves.

for this last one a $30k rehab is cut by 50%-60% becuase they don't pay labor just materials and maybe have a partner to help who is splitting the deal. I worked with a contractor up there who also invested/developed and he was quick and detailed on his projects. It was a sight to see a good learning experience. but this was in 2006 he speculated and lost like others during the crash.

Originally posted by @Konrad L. :
@Dev Horn That is exactly what I had in mind with my initial post. Everyone gets to see these properties and keep the price from being where it should be, or where it would benefit a rehabber. However, because I lack experience as a novice, I think that my best bet for the first 1 or 2 would be to seek the help of a realtor. Then as I gain some experience, I can try to deal directly with sellers and advertise. Networking is also key.

There's nothing wrong with that strategy. I have a licensed agent on my team. Experienced agents have market knowledge that can help you make much better decisions in these early stages...

I recently lost a HUD home that was listed on the MLS. I bid over asking but someone beat me. We stopped by the house, which has had a "rental rehab" and is being offered for lease now, and I talked to the guy that beat me on that deal. He said "Yeah, I really paid more than I should have for this one, but there just aren't many deals to be found right now...". I understand the dilemma. I stuck to my formula and lost the deal, he tossed his formula and won the deal, but may not see a good ROI from it.

In real estate investing, we say "You make your money on the PURCHASE." Meaning, if you don't get it at the right price, it's hard to make that up on the back side of the deal. In the heat of the battle for a deal on the MLS, you might be encouraged to over-bid and make a profit-limiting mistake. But if you can make some $ and get some great experience, it's probably worth it.

Wish you the best!

“Don’t judge each day by the harvest you reap, but by the seeds you plant.” ~ Robert Louis Stevenson

@Konrad L. - There really are good deals on the MLS. At least there are on my MLS. I've bought 30+ properties with most all of them being MLS-listed. Haven't been able to find my first one yet this year, but I bought 4 last year. Rehabbed them and sold three of them for a total profit of over $50,000. Not too bad for something that I do less than half-time (and one of those 3 was a very, very light rehab). Number 4 is now a good rental for me.

The deals are probably there in your market too. You just have to know where and how to look for them. I smile every time that Dev tells people that there are no deals on the MLS, cause that just means that there's less competition for me (and even more deals).

Thank you all for chiming in. Lots of great points made and I'm taking in as much as I can. Best teacher is experience, so I'll just have to wait and see, but take in what I can in the meantime. Sounds like I'm sticking to the MLS and the REO sites for now while building a relationship with a good realtor.

I am also looking for my first rehab/flip. I live in Monmouth County, NJ. Does anyone know of a good realtor in the area or have any suggestions on how to find a good property?

Thanks

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