New & Discouraged - Austin, Texas

30 Replies

Hello BP family, I reached out to a local realtor, a friend of a co-worker, to see if he could help me find some properties to flip. Although I greatly appreciate his honesty, his response below has really discouraged me with being new REI. Can anyone tell me how I could go about breaking into the market in my area?

Hey Bobby

You are on the right track with investing in Austin Real Estate. However, the market you are interested in with foreclosures and distressed properties is tough to break into.

There are not a lot of foreclosures in Austin because the market is rather hot and sellers can sell their homes and make a profit or break even rather than let their home go into foreclosure and destroy their credit for many years.

There are so many buyers and investors looking for distressed properties and you have to be willing to make an almost immediate decision. Unfortunately, there is no time to think about such an investment.

If you find a a foreclosure property and especially a distressed property you are almost guaranteed there will be multiple offers and the offers will be above full price. You are also guaranteed to be up against cash offers.

I just sold a home east of IH35 and north of 51st Street. This home needed work and was a great flip. I had 8 offers, 3 cash offers and the highest offer was $35,000 over the asking price. Needless to say the seller accepted a cash offer from a flipper that was well over full price but was not the highest offer. Seller felt more comfortable with a cash flipper.

All this to say the Austin Real Estate market is really crazy and hot with 130 people moving in daily they have to live somewhere. I do not focus on foreclosures or distressed properties so I am probable not a good fit for what you are looking for.

I so appreciate the opportunity. All the best on your real estate ventures!!

Any help would be greatly appreciated.

Robert-

Unfortunately, I believe he is telling you the truth. Austin is an incredibly difficult market for  flips, because of everything he said. It doesn't mean it can't be done, but because of low inventory and high prices the competition is fierce, especially if you don't have cash. 

There are other places in Texas where you could fare better than Austin (San Antonio, Houston, and Dallas are all hot markets but have lots of opportunity) 

Also, the MLS will be the most difficult place to find deals, so you might consider looking into and studying other strategies (wholesale leads, FSBO, probate, etc)

@Robert Hidrogo

 All I see in that message is you have not found your niche. Keep on educating yourself, keep evaluating deals, look for a agent that will work with you. Persistence is everything. 

There are opportunities to invest in. You may need to look in the surrounding areas but don't get discouraged. 

I agree, I believe he is being truthful and up front with you, he told you that isn't his specialty, and told you it would be difficult.  That doesn't mean that you should quit, but rather find an agent who does specialize in what you are wanting to do and/or find alternative ways to invest outside of what you asked him about.  

It comes down to how badly do you want it?  Are you willing to work to get the deals or do you want to sit back and wait till the deal of a lifetime falls in your lap (which may never happen).  If you want something bad enough then you will find a way.

@Robert Hidrogo

As a younger guy, I get the frustration. Especially when you are looking to do flip deals in a scorching hot market like Austin, the details in the above e-mail are accurate. It is extremely tough to compete in that market as a new investor at the moment. That being said--I wouldn't let that discourage your passion for getting involved in real estate investing.

Have you considered getting your feet wet in another area of the game that has smaller barriers to entry? Wholesaling? Maybe even some buy and holds? Working with a seasoned investor like your friend above and putting your nose to the grindstone to FIND good deals will not only teach you a large sum, but show others in the area that you are serious and should be taken very seriously. Working for free like this has been the most lucrative work that I have ever done (it pays deferred dividends, trust me)!

If I'm you, I am still staying passionate about being in the flipping game. Maybe even still in Austin. But I am working as a wholesaling agent or a bird-dogger right now for a seasoned investor, and getting my capital (and knowledge) acquired now, so that when the Austin market goes into a correctional downturn, you are ready to pounce on it.

Best of luck.

You should be frustrated with the person that told you that all you need was a desire and to email a realtor and the opportunities would flow in.  Flipping is a tough business and hard to break into regardless of the market. Have you talked to any successful flippers in Austin?  Maybe there is an opportunity to work for or partner with them so you can learn as much as possible.  I know that road blocks are frustrating. We looked at deals for over a year before we found one that the numbers worked AND we won the bid.  We put in A LOT of time analyzing and submitting bids.  Its all part of the process.  Hang in there and stay persistent because if you move forward, this email will end up being one of the least frustrating things you encounter in flipping! 

@Robert Hidrogo , that's a very accurate summary of the current state of the Austin market. At some point the music will stop so getting in at this point seems risky unless it's a very short term flip. 

Here's a photo

of when I went to look at a property offered by a local wholesaler. Mind, you, these are just the people who wanted to buy it, not ALL of the people who walked the property. The property was assigned to the person who drew the highest card out of a deck of cards. 

Sign of a top? You'll be the judge! :-)

Wow, thanks everyone for the overwhelming support of telling me to stick with it. I am not going to quit. I am going to keep educating myself and try to find someway of learning the business until my time comes. 

Maybe what the realtor says is true, but I think that ttalking to an RE Investment Agent (RE Investment Firm), might yield different results. Although realtors are great for the average buyer and seller, I think that investors need to seek out other resources. A realtor that understands how an investor thinks and operates is a great start. If you find one who is also an investor, that is a definite win. Every time I have spoken to a realtor, I get the same negative feedback you expect to get from friends and family.

@Robert Hidrogo

The agent is being very upfront and honest with you. I am a realtor in Pearland, TX. Our current inventory is down to 1.9 months. We like to see 4 months. What does this mean for a buyer? It means there are very few homes available to purchase. It also means bidding wars on most properties. 

Does this mean you can't find a deal? ABSOLUTELY NOT!!!

FSBO's, driving for dollars, wholesalers, etc. are viable opportunities to find deals.

i would also suggest you find a local realtor that works with foreclosures and short sales.

Don't get discouraged!

You have to DO the things that others will not, To BE the person that others can't be, to HAVE what most people only dream of!

@Robert Hidrogo ,

I would not be discouraged by this response at all.  It is difficult to get agents in my area to even respond to me.  I have had several who just hang up the phone when they find out I am an investor.  It is absolutely amazing that this agent took the time to reply to you and to explain some of the ins and outs of the market you are in. Take this in stride.  This is a tough business and you have to find your niche, as others have mentioned.  I believe you will have a hard time finding agents that will find foreclosures and distressed properties.  There are many other ways that you can find these properties yourself.  Do the leg work and opportunities will come knocking on your door.  You have to have thick skin and be ready to hear "NO" a lot!  Keep your head up and keep working to find your niche.  

@Robert Hidrogo

Forget about flipping if your not cashed up and ready to roll your wasting your very precious time.

let me offer some other thoughts for you to contemplate

 get a Real Estate license  work on a Big team they will help you get started Make MONEY why you learn the industry.  A great realtor will make more money in a year than most people that try to flip and succeed in flipping one maybe two houses in a year. Plus its not a career builder.

Once you have some real life education  and by being in the RE business you will start to meet those wealthy no time on the hands professionals that would love a smart agent to help them invest.. you now are working from a power position.

@Gunnar Teltow

  in the day in PDX I was one of the top 3 foreclosure steps buyers... and the picture you post above was how crazy it was at the court house.. when I started buying foreclosures in the late 70s and early 80's I was generally the only one there.. never had to bid against anyone.

Fast forward to the internet and how to fix and flip guru's  and even a Bp Educating folks on how to do our industry that had no experience.. led to what you have today.. mass's thinking this is a get rich business quickly with no money no credit etc.

Anyway I am bidding on this little rancher... starting bid was 80k ARV 200k this brought out every buddy and their brother.. 34 people qualified funds to bid... so right there that was at least 3.4 million in cash chasing one deal.. it bid up to a point that the winning bidder would be lucky to make 10k.. and if there was issues could loose 10k

I want back to my office and told my staff.... WE are out of the auction business we are going to take this 10 million in cash and credit we have and we are going to Loan it to all those people let them do all the work... within 5 years I had that rolled up to almost 50 million ... and we made more money than any flipper or court house step buyers by far. And with a lot less stress and work on our part.. when you have the money people find you!!

So this is where I see the industry again today... too much money chasing too few deals. Not the best way to make a buck by a long shot.. Many top realtors in our market are making 250 to over 1 million a year in commission with no risk  just hard work and putting time into their business that will be here for their entire career.. flippers come and go like the wind of West Texas

@Jay Hinrichs

thank you for sharing your view and that anecdote. I don't have nearly your experience, particularly in real estate, but I couldn't agree more.

I'm not pessimistic and don't think we're about to go down again in a wall of flames but I just can't bring myself to be aggressive pursuing opportunities I see from wholesalers. Seems late in the game (in Austin) to jump in with both feet. Then again, the party may still continue to go on for a few years.

Originally posted by @Jay Hinrichs :

@Robert Hidrogo

Forget about flipping if your not cashed up and ready to roll your wasting your very precious time.

let me offer some other thoughts for you to contemplate

 get a Real Estate license  work on a Big team they will help you get started Make MONEY why you learn the industry.  A great realtor will make more money in a year than most people that try to flip and succeed in flipping one maybe two houses in a year. Plus its not a career builder.

Once you have some real life education  and by being in the RE business you will start to meet those wealthy no time on the hands professionals that would love a smart agent to help them invest.. you now are working from a power position.

@Gunnar Teltow

  in the day in PDX I was one of the top 3 foreclosure steps buyers... and the picture you post above was how crazy it was at the court house.. when I started buying foreclosures in the late 70s and early 80's I was generally the only one there.. never had to bid against anyone.

Fast forward to the internet and how to fix and flip guru's  and even a Bp Educating folks on how to do our industry that had no experience.. led to what you have today.. mass's thinking this is a get rich business quickly with no money no credit etc.

Anyway I am bidding on this little rancher... starting bid was 80k ARV 200k this brought out every buddy and their brother.. 34 people qualified funds to bid... so right there that was at least 3.4 million in cash chasing one deal.. it bid up to a point that the winning bidder would be lucky to make 10k.. and if there was issues could loose 10k

I want back to my office and told my staff.... WE are out of the auction business we are going to take this 10 million in cash and credit we have and we are going to Loan it to all those people let them do all the work... within 5 years I had that rolled up to almost 50 million ... and we made more money than any flipper or court house step buyers by far. And with a lot less stress and work on our part.. when you have the money people find you!!

So this is where I see the industry again today... too much money chasing too few deals. Not the best way to make a buck by a long shot.. Many top realtors in our market are making 250 to over 1 million a year in commission with no risk  just hard work and putting time into their business that will be here for their entire career.. flippers come and go like the wind of West Texas

 Great example of taking what the market gives you. I need to remember this. Looking to buy in Austin myself, but not a lot available for what I'm looking for.

I'm a lender in the area and his response is right in that the market there is very strong which makes is very difficult to find a good deal before someone else snatches it up. I'd recommend finding a good system to quickly value your properties and a fast money source so you can close fast and in "cash" (or near cash if it's a hard money loan). I've also seen a lot of of market deals coming in lately but this requires a lot of work. Some even go door to door asking to buy houses.

Focus on the 35 corridor between Austin and San Antonio.  I think that area is going to go crazy over the next ten years as the two areas start to merge into one another.  

@Robert Hidrogo

Yes...the Austin market is very competitive right now. Your friend is right in saying that there are very few deals on the MLS and you need to be ready to jump on them immediately when they do come up. There are investors here that are buying properties off the MLS, but the majority of them are running their own marketing campaigns to find leads.

You should start going to the local meetups and networking with other investors in the area. This will give you a good idea of what people are doing to get their deals. 

This is a tough market, but there are deals to be had. My husband and I have purchased two properties this year, and that is small time compared to what some other investors in the area are doing. So it can be done. 

Hey Robert , I am also a newbie looking for deals in Houston. I don't currently live there, but when I move over, I want to buy a small multifamily (2/3/4 plex) and live in one unit and rent out the others. I am most likely moving next year, as soon as my visa is accepted!

My tip to you would be to read the Ultimate Beginners Guide here on BP, it gives you a pretty good understanding of real estate investing, and will help you to determine your niche.

I wish you all the best!

Late jumping in but just wanted to add my $0.02 (as I was looking at Austin as well, as I have a few good friends/colleagues there and so on) -

Firstly - kudos to the realtor for being honest, IMO. I can relate to the experience another poster put in this thread about how some realtors just hang up, or won't respond, and so on when they know you're an investor; at least this one was totally up front with you in disclosing that it's not their focus/expertise - that's exactly what you want to hear / need from your partners in this business! The alternative could have been much worse - he could've taken you on, sent you some junk now and then, and it could've taken weeks or months to realize he's not doing what you need which would've been time wasted! Time is money! 

Secondly - hang in there! I know it can be tough to find a deal, especially in a hot market! Coming from Vancouver BC Canada, I know first hand what insanely hot looks like (see articles recently about folks lining up for DAYS to buy pre-sale condos!) But, eventually you'll be able to find something - whether it's in Austin, or after broadening your search to other cities (both approaches have their pros and cons!)

I feel the frustration at having everything ready to go but not being able to find a deal; he's not a Real Estate investor but Warren Buffett has great advice on investing in general and it's applicable: patience is key, don't overpay, and it's better to buy a wonderful asset at a fair price, rather than a fair asset at a wonderful price! Of course in RE you have an advantage: you can buy a fair asset at a fair price, and make it into a wonderful asset! Win! 

Anyway - all my rambling aside - hang in there, keep everyone posted with your progress, and most of all, don't give in to impulse to just do *something*; keep searching, hunting, and looking - and you'll find what you are looking for that meets your criteria.

I was an agent and Broker for many years.  I can't tell you how many times people told me, "If you find a smoking deal, please let me know."  To which I said, UNDER MY BREATH, "hey buddy, if I find a smoking deal, I AM GOING TO BUY IT."  Why do you think I am in the real estate game any way?  Agents should be your LAST resort in trying to find good deals.  You are not jumping into a "new idea," you are jumping into a pond full of piranha's and sharks, and you are a minnow.  (Don't feel bad, we were all minnows at one time)  Most minnows get eaten up but a few find some well hidden deals on which to become sharks.  But you are going to have to dig and dig deep.  You need to find deals that are NOT ON THE MARKET.  This requires a LOT of work.  Checking estates properties.  Checking houses that are for rent (not via a PM).  Checking small, 2-4 units, that have a vacancy.  If you read Rich Weese' book, "From Janitor to Millionaire," his first purchase was a duplex, where he lived in one and rented the other.  He did some light fix up while he lived there and turned a nice profit in less than a year (READ that book).  Just remember, no matter what you do, there are THOUSANDS of other people doing the same thing.  You just need to find a good "honey hole" in which to drop your line.  You may have to wonder up and down that stream to find it, but if you work hard, you will make it happen.

@Robert Hidrogo

If you think you can or you think you can't, you're right. -Henry Ford

Anything worth accomplishing is competitive and not easy to achieve.

Here are some tips:

  • Market consistently - If you are always marketing, you will get leads. 
  • Be aggressive - Don't wait for deals to come to you. Find and create your own deals
  • If you want to do something, DO IT! - Block out comments that don't align with your goals - If you do this discouragement will be something you never encounter
  • Don't give up - Winner's find a way to make it happen

I recommend you read the book Relentless by Tim Grover.

Don't be discouraged. Take action & Kill it!

Originally posted by @Lamar Cannon :

@Robert Hidrogo

If you think you can or you think you can't, you're right. -Henry Ford

Anything worth accomplishing is competitive and not easy to achieve.

Here are some tips:

  • Market consistently - If you are always marketing, you will get leads. 
  • Be aggressive - Don't wait for deals to come to you. Find and create your own deals
  • If you want to do something, DO IT! - Block out comments that don't align with your goals - If you do this discouragement will be something you never encounter
  • Don't give up - Winner's find a way to make it happen

I recommend you read the book Relentless by Tim Grover.

Don't be discouraged. Take action & Kill it!

 Thank you for the encouraging words. I won't give up!