Hard to find a deal in my area!

Rehabbing & House Flipping
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Hard to find a deal in my area!

Nick Stango
Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes

I've been looking for a deal on a fix and flip in my area, but it seems like everything I look at either costs too much or needs too much work, or both. Should I be doing something other than searching Zillow for deals?

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Katie Neason
Flipper/Rehabber · Bryan, TX · Member since 2014 · 258 posts · 170 votes
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@Nick Stango

I am a long way from you, but my market is scary hot right now. Great on the selling side, but tough on the buying side. In my market MLS is really not a viable option in such a hot market. You may be lucky and get one but it won't feed the family. We are seeing the best results with direct mail. We have 3 different campaigns going. We send out our own letters after driving for dollars. We are also targeting infill lots to build on (sending our own letters out) and we have hired a company to send out letters to absentee owners. We have gotten a property under contract with each of these methods this month. However, in my opinion knowing your numbers, having money ready to go and being able to move lightening fast on them are critical. If it is a really good deal it will be gone while you decide if the numbers work or if you have money to do the deal. However, the bigger risk is moving fast and getting a deal a without knowing your numbers. You can end up upside down in a hurry! We always makes sure plan B works on the property (for us that is breakeven as a rental with fully loaded costs) and that there is viable plan C.

Waiting on the right deal can be so frustrating. I wish you patience and luck!

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  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    I'm in a  northern suburb of Phila. PA (Lower Bucks County) Looking in Levittown, PA, Morrisville, PA and other local areas.

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  • Lisa Kohl
    REI Pro · Boise, ID · Member since 2014 · 380 posts · 93 votes
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    The market is hot in a lot of areas right now. Are you working with an agent to help find deals on the MLS? The best way to score deals in a hot market is to market directly to sellers via yellow letters, postcards etc

    1Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
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    Get an investor friendly agent in your area. Zillow has its benefits, but agents with MLS access have way more information.

    Have you tried Driving for Dollars? I live in a really hot market right now, and have had success with letters sent to homeowners. I walk the streets with my family, take note of what houses look outdated, and do research on the MLS to see when the property last sold. I send letters stating I would like to buy their property, will pay a fair price plus closing costs, and if they are interested in selling, please contact me. I am in negotiations to purchase a 4-plex from a letter I sent.

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  • James Scholz
    Investor · Auckland, Auckland · Member since 2015 · 35 posts · 9 votes
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    Hi @Nick Stango, I'm in a similar situation. Auckland prices are some of the least affordable in the world right now. Stick to your plan and keep your eyes open and something will pop up.

    I've started looking about an hours drive away from where I live to find an area that actually makes sense for me. So 'Drive for Dollars' seems to be a good next step!

    What sort of properties are you looking for? 

    0Reply
  • Kevin Delaney
    Investor · Feasterville Trevose, PA · Member since 2015 · 107 posts · 31 votes
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    I can help you with the MLS. The best deals are usually found through direct marketing though.

    1Reply
  • Kevin Delaney
    Investor · Feasterville Trevose, PA · Member since 2015 · 107 posts · 31 votes
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    I can help you with the MLS if you'd like.

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  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    I've been thinking about sending out letters to pre foreclosure properties. I have an agent I'm using but I'm also still getting my funding in order (almost ready to go) I don't want to keep bugging her to show me houses until I can make an offer. I'm borrowing from my brother and he is in the process of getting me a proof of funds letter and a statement from his self directed IRA. It just seems like the banks want too much for these foreclosures or too many investors are willing to overpay for them.

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  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    By the way, Thank you all for the feedback, It is very much appreciated.

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  • Greg Behan
    Contractor · Skippack, PA · Member since 2014 · 228 posts · 39 votes
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    @Nick Stango

    I can say that the MLS in Bucks and Montgomery County is watched by a ton eyes and the second an actual deal goes on it there are plenty of people ready to take action on it within minutes. These are some really competitive areas and to be honest lower bucks all around Levittown is one of the most popular and competitive markets right now since there seems to be a good amount of flips down there.

    That being said you can totally still find and get deals. Banks list REO's at whatever they want and in my opinion if you run your numbers and submit a cash offer without contingencies it's totally worth a shot regardless of their listing price. I looked at an REO a few weeks ago that needed over a 70k rehab I'm sure the bank didn't calculate for. I've submitted a few REO offers and am waiting to hear back on one still but I haven't had any accepted as of yet. It might be because my number is low but that's alright it's the number that I'd be willing to pay I don't wanna over pay just to have a house to work on.

          I have mainly done direct marketing and it has worked for a few houses so far.  Down there you are going to have competition even with direct marketing I'm sure but find your criteria and just generate as many leads as you can.  From there just be the best investor help these people solve whatever they're looking to solve and you should get a nice deal on a house for it.

    1Reply
  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    Thanks @Greg Behan great advise, I will stick with it and hope for the best, I do not want to over bid just to have a headache to work on that makes no money that's for sure.

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  • David Mitro
    Investor · Langhorne, PA · Member since 2012 · 58 posts · 1 vote
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    @Greg Behan

    It seems like 60-70k is the norm for these Levittown homes if you want them to sell for top dollar (220k). Where were the properties located that you just submitted offers on? Levittown or closer to where you live?

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  • Greg Behan
    Contractor · Skippack, PA · Member since 2014 · 228 posts · 39 votes
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    @David Mitro

    I tend to stick to central and upper Bucks and montgomery. 60/70k on a rehab isn't uncommon but it isn't always necessary. As we all know it totally depends on the house. The REO I saw that needed 70k was in the horsham area. I was more or less using the 70k rehab as an example of a cost we see on our end that most of these banks aren't going to discount up front on their listing price. I basically stick between Feasterville and Souderton on the Bucks side and from upper/lower moreland to Harleysville on the montgomery side without going to far west. Decent size area but fairly strict criteria.

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  • Katie Neason
    Flipper/Rehabber · Bryan, TX · Member since 2014 · 258 posts · 170 votes
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    @Nick Stango

    I am a long way from you, but my market is scary hot right now. Great on the selling side, but tough on the buying side. In my market MLS is really not a viable option in such a hot market. You may be lucky and get one but it won't feed the family. We are seeing the best results with direct mail. We have 3 different campaigns going. We send out our own letters after driving for dollars. We are also targeting infill lots to build on (sending our own letters out) and we have hired a company to send out letters to absentee owners. We have gotten a property under contract with each of these methods this month. However, in my opinion knowing your numbers, having money ready to go and being able to move lightening fast on them are critical. If it is a really good deal it will be gone while you decide if the numbers work or if you have money to do the deal. However, the bigger risk is moving fast and getting a deal a without knowing your numbers. You can end up upside down in a hurry! We always makes sure plan B works on the property (for us that is breakeven as a rental with fully loaded costs) and that there is viable plan C.

    Waiting on the right deal can be so frustrating. I wish you patience and luck!

    2Reply
  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    Thank you @Katie Neason for that great info! I do need to get together a plan C, I figured on a similar plan B "renting" if I can't flip fast enough. Where I'm looking renting would be easier than flipping and a better tax incentive if held for at least year or more. I guess selling a turn key rental could be a good Plan C option. One issue would be the high interest rate on the loan and trying to refinance out of it. Not sure how easy that would be on my first rental property. Thanks again

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  • Devan Mcclish
    Investor · Nashville, TN · Member since 2015 · 688 posts · 607 votes
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    Nick Stango one thing I heard and I just started doing, drive for dollars, write down every piece of crap house that you see, and that's a mailing list that you can mail to. Most of them from what I'm seeing actually live in the property, but it's obviously run down and they can't pay for it. If the people live there, it's more than likely not on everyone's radar
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  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    @Devan Mcclish okay so drive around, look for crappy houses, write down the address, mail them a letter saying: I would like to buy your house? And then if they respond, then I go over and talk about how much they are willing to sell for and how much they owe, and all the details, and see if I can somehow get a good deal, maybe give them some cash, take over the payments, have them sign the deed over to me, then rent it or flip it or wholesale it or whatever I could do to make something work in my favor? 

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  • Jeremiah Perry
    Tucson, AZ · Member since 2015 · 68 posts · 8 votes
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    @Nick Stango

     I am curious how that works.  Are you doing research into the house prior to sending the letters?  Are you typically paying cash for these houses?  I have been trying to do it the hard way for a few years waiting for it to come up for sale and its very competitive here in Tucson now.  Are the letters youre sending as simple as let me buy your house?  As other people have mentioned the mls is going to be much more accurate.  I was trying to use Zillow and Trulia and 90% of the time they had not been updated as to sales and what not. 

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  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    @Jeremiah Perry these were my questions to @Devan Mcclish I'm not sure myself, he seems to be the man who knows.

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  • Mike Osterman
    Specialist · Novato, CA · Member since 2012 · 190 posts · 57 votes
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    The problem is your efforts . Not your market. 

    I live in a crazy hot area with limited inventory.  Found 30k( sans rehab) Have three offers out and more calls and offers.  Blown out, 40 year old house with no updating.  

    I used to think like that too, stop, and get to work. 

    Believe it. 

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  • Devan Mcclish
    Investor · Nashville, TN · Member since 2015 · 688 posts · 607 votes
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    @Nick Stango @Jeremiah Perry

     Yeah it is that simple. Although you need to stay consistent with the mailing. If they don't call you after the first mailing, KEEP mailing them!!! That is where most people fail is after the first mailing. One seller I dealt with told me that she wasn't interested until she got a fifth letter from me. 

    after they contact you, discuss numbers, look up the properties tax card comparables etc. You have already driven by the property so you know it needs work. From there get it under contract, wholesale it, flip it yourself, or hold it

    1Reply
  • Christopher S.
    Brooklyn, NY · Member since 2015 · 2 posts · 1 vote
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    What sort of properties are you looking for?

    0Reply
  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    Hey @Mindy Jensen how would I make money on a fix and flip if I'm buying at fair market value?

    @Mike Osterman I'm ready to start making offers now that my funding is ready to go. There are lots of foreclosures available that are priced too high to make money on a flip, but I'm just going to do the math and start making offers regardless of what they're asking. I'm supper busy with my home improvements business right now but I still have time on nights and weekends to look at properties with my agent. I like your honesty, you're right, I need to just get to work and believe it! Thanks

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  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    Thank you everyone for all the great advise!

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  • Nick Stango
    OP
    Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
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    @Christopher S. I'm looking for anything I can fix and flip for under 150k including rehab and all other costs. So ARV 200k with a 50k repair budget with a 90k or better purchase price. Basically a 70% rule or better.

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  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
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    @Nick Stango I live in an ultra-super red-hot market, and there just aren't many deals to be had. I am not doing a whole lot of flipping right now because I can't figure out a way to make money on it. The 4-plex is owned by an older woman who had a different 4-plex I was interested in. She called me up and asked if I would be interested in the other one, instead. She has owned it since the 70s, so it is more than paid for.

    There is a guy in my city who is flipping houses left and right. He buys them, paying full price because if he didn't, another buyer would. He flips them into enormous houses with high end finishes. He has to be making $50k on each flip, after expenses. So there is money to be made, I just don't have the sort of financial backing right now to jump into a flip like that. That isn't my game plan.

    Good luck!

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