Updated 10 days ago on . Most recent reply
What I’m hearing from investors right now
I’ve been connecting with a lot of investors recently, and one thing that keeps coming up is how different everyone’s buy box looks right now.
Some investors are only looking for clean cosmetic flips because they want fewer surprises.
Others are still comfortable taking on heavier rehabs, but only if there’s enough spread to justify the extra risk.
The biggest thing I’m noticing is that the investors who seem most confident are not just asking, “Is this a good deal?”
They’re asking better questions:
- What's the realistic ARV, not the best-case ARV?
- What could go wrong with the rehab?
- How long will I actually hold this?
- Does the exit strategy still work if the market softens?
- Is the margin big enough for surprises?
That last one feels especially important right now.
A deal can look solid on paper, but if it only works when everything goes perfectly, it may not be as strong as it looks.
Curious how others are thinking about this:
Are you being more conservative with your buy box right now, or are you still comfortable taking on bigger projects if the upside is there?
Most Popular Reply
Jacari,
What I have done to help eliminate the majority of the "what if's" is teamed up with several "Seasoned Real Estate Agents and Brokers" through out the US to offer the investor a "One Stop Shop". Anyone can do this it involves getting more involved in the entire REI process from start to finish. In most cases have the inventory or off market properties already ran through software and market specs.
What we found out is by finding the inventory in advance even knowing the offmarket deals I utilize my Agents, GC's and even PM's to run a full cash flow/ARV analysis. This comes with a breakdown of current home - market value based on now and 90 days numbers as is, then run an ARV report and generate a "Rent ready" or Max ARV approach.
It offers the buyers the ability to see REI in all 50 states and run the current rents, proposed rents based on LTR, STR, MTR or even Co-living. Renovation increases rents and curb appeal and if you focus on value add its hard to not come out on the positive for the main goal 6-12 month true BRRR to pull cash out and utilize equity to buy more REI.
You have to hold hands and really push the "Narrative" of maximizing funds for building the clients REI/Cash flow/ARV not just cosmetic repairs which offers zero value. Appraisers do not care about cosmetic, or lipstick on a pig! They want to see added sqft, sometimes converting a garage into a bed/bath, adding in an ADU, Carriage Home or someting that now transitions it into an income generating property beyond the current sqft or unit(s).
There are hundreds of thousands of deals out there each one is different and in multiple states. Networking with a strong team eliminates the confusion and as a rule I never put people into a REI that has zero ARV unless its a high cash flow. The REI game is a lot easier when the customer/buyer can actually BRRR the property in 6-12 months unless they have a ton of liquid reserves and do not need to pull cash out.
In this market coming up in the next 6 months you will see mortgage rates drop and home prices continue to rebound. Problem is most investors are waiting or kicking tires because they are not fully educated on the current market. When the numbers are shown to them broken down from a fool proof perspective it tends to help them put in confident offers!