Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
I am really trying to stay positive but I feel like I have been spinning my wheels for the last 3-4 mos. I have evaluated 100s of properties , toured and budgeted well over 50 properties, put offers on on 7 or 8. Each offer was either beat out or ignored. I thought I had a house in Shaker this week and got beat out last minute by an all cash offer, even though mine was more. On the rental side finding houses that cash flow with high property taxes is next to impossible.
I am marketing to Probate cases as well. I developed a program that will pull names and addresses in my target area. I got 3 responses from my first mailing: 1 angry person, 1 nice person but wanted off my list, and 1 apartment that slipped through my screening. :( I know it takes longer, but I was hoping for at least 1 lead on a 130 letters.
I am on several buyer lists, but most of the wholesaling offers I have received are WAY high on ARV and way low on renovation.
I just feel frustrated. I have a lot of passion, I feel like I have a lot of knowledge. I have a contractor a realtor and 5 or six lenders ready to go, I just feel like I am missing something! Any thoughts or ideas?
Investor · Brooklyn, NY · Member since 2017 · 47 posts · 25 votes
9y
The missing ingredient that's never talked about in any entrepreneurial venture is "armor" and what I mean is reading Bio's, success stories which BiggerPockets has a whole forum on that.
I currently use the MLS to get my deals. Granted is a tough? yes. but who said life was easy?
I'm up at 4:30am looking at what came up on the MLS/Zillow/Trulia etc. it that extreme? maybe yes?
But how fast you want to be financial free? you must do what folks won't do.
Realtor · Cleveland, OH · Member since 2015 · 2k+ posts · 857 votes
9y
There are plenty of homes on the MLS that when I do the numbers are cash flowing. What kind of returns are you look for? Maybe you're expectations are a little too high?
Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
9y
@Federico Gutierrez For flips I am looking at 10-20% profit depending on the work. For rentals I am looking for $100 or more in pocket cash flow after refi PITI, vacancy, PM, repairs, and capex. I don't think that is unreasonable. Do you?
Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
9y
I don't want to sound like I am whining, because i am really not. I am working hard at finding deals, I guess I am just wondering where the line is between persistence/consistancy and insanity (doing the same thing over and over expecting different results)
Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
9y
@Federico Gutierrez right now I am looking in the eastern suburbs. I don't know a lot about the west side. I really don't have the appetite for the east side D or F areas. I would look East of Cleveland heights. My main areas are the Heights: Shaker, Cleveland H, University, South Euclid etc.
I invest in the same areas that you mention above, and have MLS listings coming to my inbox every morning. I see good deals on buy and holds quite often (flips not so much)- and that is on the MLS! I have been chafing all winter long because I would see good deals come up, but I was in the middle of a rehab and didn't have the cash to buy. I am hoping that prices don't go up once spring arrives....
$100 per door doesn't seem too stringent- what numbers are you using for vacancy, repairs, and capex? Maybe that's what's killing your deals.
Nothing to be done about other people offering more than you, other than go on to the next deal. :) The nice thing about Cleveland is.... There is always another deal around the corner!
Real Estate Investor · Monroe Township, NJ · Member since 2016 · 468 posts · 85 votes
9y
@Christopher Blanco - Have you tried going out of state? I am finding properties in Memphis which cashflow at the range you are looking for from the MLS.
Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
9y
@Abdul Azeez I have been leery of venturing outside of my own side of town, let alone out of state! :) This is my first deal, and while I have a decent amount of seed capital, I don't want to lose it on my first deal! I think i might want to get a couple in state done first.
Real Estate Investor · Monroe Township, NJ · Member since 2016 · 468 posts · 85 votes
9y
@Christopher Blanco To each his own. Do what you think you are comfortable with. In my case I did not have an option. Buying a cash flowing property that meets my investment criteria is difficult in NJ with the high property taxes. To clarify, this was my first deal as well. To provide you some of my percentages, this is what I use:
1. 17% vacancy - 2 months
2. 10% PM
3. 10% Repairs and CAPEX
4. 1/2 of first month rent for leasing fee
5. Insurance $50 per month
6. Rehab cost - $5000
After doing all this, I look for a 10% COC and $150 per door. It's incredibly difficult finding deals that fit the above criteria but it also helps narrow down the right properties that work (for me)
Investor · Brooklyn, NY · Member since 2017 · 47 posts · 25 votes
9y
The missing ingredient that's never talked about in any entrepreneurial venture is "armor" and what I mean is reading Bio's, success stories which BiggerPockets has a whole forum on that.
I currently use the MLS to get my deals. Granted is a tough? yes. but who said life was easy?
I'm up at 4:30am looking at what came up on the MLS/Zillow/Trulia etc. it that extreme? maybe yes?
But how fast you want to be financial free? you must do what folks won't do.
Investor · Strongsville, OH · Member since 2016 · 1 post · 1 vote
9y
I have done several flips on the westside of Cleveland. I have been seeing buy and holds but lately nothing for flips. Even going on the bank owned websites, but the banks are just pricing them way too high. Then like you said if I find one I get outbid. I only buy if I am going to make money. So I am patiently waiting for that next flip.
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
9y
I often view 1-2 properties and get into a contract quickly. If you have viewed 100s you must know what is out there and what will not work.
Suggest MLS listings and get serious what does it take to get the property. Why bother to be on Wholesaler list? You are not buying buying a block of homes.
Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes
9y
@Marlon Fong I hear that. I am still working on that armor. When my first offer fell through, I was mad and upset for a day, now its "on to the next". I just want to make sure I am doing what I can do. I won't stop, I want this too badly to stop!
@Sam Shueh I am using the MLS (well as much as I can, I can use my realtor's portal, but I don't have full information. I put an offer on a property the day I see it and like it. The issue is I have my schedule (full time job) and my realtor's schedule to contend with.
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
9y
Maybe the market is what it is and you are under estimating the strength, thus missing out on deals. Remember, for buy and hold, that a 10% return on paper (assuming that 10% has vacancy and maintenance allowance) can easily turn into 13% to 15% with a long term tenant and good rehab. If you are only off a few thousand from getting a home, I would take it. Then focus on doing a rehab that will minimize maintenance and provide demand for tenants to want to live in your home. Then once the tenant is there, I would give them excellent customer service so that they will not move. Top 2 reasons tenants move is bad customer service/pm/landlord and dissatisfaction with the unit. You have a big say so in those 2 reasons. Take advantage of the bad property managers and landlords that exist in each market--most are terrible. That has been the whole key to my success as a landlord, PM and TK provider.
Flipper/Rehabber · Cleveland, OH · Member since 2016 · 133 posts · 69 votes
9y
@Christopher Blanco I can assure you that there are many deals on the eastside on the MLS (especially at only a 10-20% profit on a flip). If you have evaluated 100 potential investment properties and have not found something. I believe there is something that is broken. PM me, I can help you out.
@Account Closed well if you ever see a good deal that you don't want or cant do, send it my way. I am sure we could work out a finders fee if I close!
Just to evaluate, I use:
8% Vacancy
10% PM
3% Repair
8% CapEx
The thing that kills the deal most for me is property taxes in these areas.
I'd be happy to point out deals to you that I can't pursue.
I agree that taxes are a killer in the suburbs. That's usually what sinks a deal for me, too. But there are still a few that work despite the taxes. And remember that you can always appeal the taxes if they are high and you buy for lower than the appraised value. I am getting ready to file an appeal on my latest property.
I share in your frustration based on my experiences looking for MLS deals on the East side. These more desirable areas (Heights-area) are killer on taxes and inspections. If you're adding in Prop Mgmt, that also can make it much more difficult to find a deal that works since you'll need to budget in another 12% of gross rents typically (re-lease fees and such). I will say that if you're looking for off market deals, from everything I've heard or read here, 130 letters is a little light to expect a good lead. It sounds like the key to that game is large numbers and repetition/consistency with the same group. I wish you best of luck. I've heard some have had more success in the areas that are more C or D, but I'm with you in that I would prefer to stay in the more desirable areas for my investments.
Investor · San Francisco, CA · Member since 2015 · 306 posts · 211 votes
9y
I can completely relate to this post.
It takes time and energy. It could be your location (I mean, Ohio I always hear is "so great" for investors..) . My market is a lot steeper than before and rent prices no longer support the cap rates I'm looking for.
My recommendation:
Just use the MLS. As @Christopher Blanco mentioned and the others. - If you were an owner what would you do? Wait for a bird dog to penny pinch you? Probably not, you'd probably just slap it on the MLS.
Make a ton of offers on everything. With a 1 - 2 day expiration on the contract.
Try something completely different - Everyone and their mom is looking for wholesale deal
Make sure you have realistic expectations - The others already covered this. I'm sure you already know that.
Lower your expectations - Many on BP brag about their epic returns and many fail to mention the time and energy.
Take a break / check out other areas - The Buddhist approach. (haha)
@Christopher Blanco To each his own. Do what you think you are comfortable with. In my case I did not have an option. Buying a cash flowing property that meets my investment criteria is difficult in NJ with the high property taxes. To clarify, this was my first deal as well. To provide you some of my percentages, this is what I use:
1. 17% vacancy - 2 months
2. 10% PM
3. 10% Repairs and CAPEX
4. 1/2 of first month rent for leasing fee
5. Insurance $50 per month
6. Rehab cost - $5000
After doing all this, I look for a 10% COC and $150 per door. It's incredibly difficult finding deals that fit the above criteria but it also helps narrow down the right properties that work (for me)
I love how you were generous with the vacancy rate and kept these numbers real. Compared to some others I see. What rehab was 5k for this example? The rehabs I pass in my areas are more like... 20k /+.
Real Estate Investor · Monroe Township, NJ · Member since 2016 · 468 posts · 85 votes
9y
Hi Alice - since I buy from MLS I try to look for houses in decent shape and budget a $5k estimate for any getting ready to rent work. For instance the property that I just closed on needed around $3k worth of work to get it rent ready. I do not buy properties in dilapidated condition that requires a significant rehab as I can't get financing on them.
Maybe we could connect as I have 2 in the OH region. One in Martins Ferry and the other in Toledo. Looking to unload them. Please contact me, lets cat maybe other states peak your interest idk.
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
9y
@Christopher Blanco I see tons of deals on the MLS that are in Cleveland Heights, Euclid and other areas over there that should cash flow. Better get out of the analysis paralysis mode soon as prices have been steadily rising and it looks as though that trend will continue throughout the rest of the year.