Struggling to Find First Deal in my Market

[Adam Michel]

As the title suggests, I've been on the market for my first property for the past month and a half, and have been searching for SF and Duplex properties in my area of interest of Northeast OH (Canton, Massillon, North Canton, Canal Fulton, Green, Uniontown). Goal in mind is to establish my (and soon to be wife's) primary residence/house hack whilst rebuilding reserves for future investment. Issue is, almost every single property I underwrite seems to have pretty mediocre projected returns: ~0-4% COC, 8-15% IRR over 10 yrs, at best. I know it is still down season, so listings are thin (especially for MF which is our preferred route), but it is starting to discourage me; like we've already missed the train of cheap debt and rapid appreciation/inflation that so many others took advantage of in recent years.

Are my expectations set too high for my target area? Am I being impatient? Am I doing something wrong in my underwriting methodology? 

Would love to hear from others in similar situations or with more experience. Open to sharing further details regarding strategy/search criteria, or hearing suggestions!

[Alecia Loveless]

@Adam Michel The inventory in your market is likely way down right now in the off season.

I’m used to seeing some inventory of MF in my area and only 1 4-plex has come on the market in the last 2 months. I did go to look at it and it had two issues. The first was the units were too small to be able to raise the rents significantly enough to cover the mortgage anywhere near the list price. And the second was that it was in a flood zone with the listing agent and seller saying it had never flooded but we were able to get confirmation that it had taken on water at least 3 times in the past year and the insurance agent for the property stated that with the flood insurance the premium would be close to $11,000 annually which meant the list price had to drop from $339,000 to less than $239,000 to make anything work.

Don’t give up. Keep looking and analyzing deals. A month and a half isn’t that long to be looking for a great deal. Also don’t settle. Know your numbers and your criteria. It’s very hard to fix a bad deal.