Just Bought Rental #2!
Real Estate Investor · Columbia, MD · Member since 2014 · 172 posts · 94 votes
I am fairly new to BP but just wanted to share that my offer on investment property number 2 was just accepted today! I haven't closed yet and I know I'm counting my chickens too soon, but I'm excited to have jumped off the fence and put in an offer (that was actually accepted). I offered below list price by a lot even though the house is in "retail" condition but because I didn't use a buyers agent, I was able to negotiate a good deal.
I plan on "renting" out the top two portions to mine and my husband's law firm to use as our working office and I already have a renter for the basement apartment who will pay half our mortgage. We'll still keep a traditional office to meet with clients.
My goal this year was to buy one property per year as a buy and hold, but heck, I just upped it to a whopping two per year! I know I'm just a "small fish" but this is a part-time gig for me and I'm happy with slow and steady investing.
Anyway, just wanted to share :)
@Pyrrha Rivers. Not sure I'm the right one to follow on finding a deal.
But for me, its all about having a good size market to look for houses in and then learning the markets. I'm south of Chicago and really not a suburb of it. More just like a bunch of small towns that all flow into each other.
That being said. Here is my process for finding a deal.
1) Check the listing sites daily. And I do mean daily.
Hud, realtor.com, auction.com, hubzu,com.
2) Look for my target properties:
a) 1,200 or more square feet
b) 3 bedrooms
c) 1.5 bath
3) Look for anything listed around 130k or less.
I'm looking to be all in (purchase plus rehab) at about 65% LTV. And the numbers only seem to work in that price range where the house sells for between 60k to 90k.
But I like to watch the stuff as it drops down to 130k or less because those houses at 130k can magically end up price dropping enough to where they can be had for that 60k to 90k range and I can be all in at my 65% LTV.
I won't make low ball offers on 130k listings that have been on the market for 2 weeks. Instead, I'll wait for those 130k listings to come down to say 100k and that have been sitting on MLS for 3 months. Then I'll try an 80k offer. HUD deals are the best. Just gotta be willing to sit on the sidelines until they've hit that 2 to 3 months mark. Then the discount magic can happen.
4) Go look at houses.
This is a very underappreciated step. Bottom line is that its really important to see the houses before the prices really drop. Once I've seen it and have an idea on the rehab, then when they do drop the price, I can put in an offer that day.
And believe me when I say, that ability to offer that very day they drop the price has gotten me several houses.
Not only that but sometimes you see a house sitting and the pics make it look like garbage so you assume there's just no reason to look. GO LOOK. Pics can be very deceiving and you can really steal some houses that way. There are some houses that end up being really decent and, in terms of a rental, make for some great deal because there's some feature that puts people off that can be easily addressed.
Sometimes its no garage. Sometimes its because the cabinets are missing. I got one house strictly because the bathroom vanity was missing. The realtor said an owner occupant had an offer accepted on it before for about 20k more. The thing was missing a bathroom vanity so their lender said no way. The bank that owned the property then switched the offer criteria to cash only. Out by me, not many owner occupants doing cash deals and not as many investors either.
But I told the listing broker I wanted to do a rehab loan on and would they take that and the bank said yes. Put the bid in and got the house with rehab financing.
Funny part is the house was listed as a 3/2 but it was actually a 4/2. Another reason why taking a look at houses is really key.
But thats my process for finding a deal.
1) Watch your deal sources daily.
2) Go LOOK at houses. If you don't love to look at houses, you may not really enjoy being an investor. :-)
3) Put in your offers at numbers that make sense to you and to your source.
For instance, I won't offer 50% of the list price on an REO thats been on the market for 2 weeks. Thats just wasting time. But I might put in an offer at 60% of list price on a hud deal thats been there for 3 months. Or, say, 15% off list on a homepath thats in reduced mode.
As you start putting in offer and getting counters or deals, you'll start seeing the patterns. But every once in awhile I'll throw out a flyer on something too and it gets accepted. Only with the hud deals though since thats some crazy formula and doesn't require my realtor or me to do much - just enters a number and no signing of an offer unless that number is actually accepted.
Even then, I try not to be silly. I think I have their new discount patter figured out. We'll see. Interestingly enough, I think hud caught on too and they stopped countering so that investors would stop going fishing. :-)
Persistance is key! Good luck!
Wow! Sandra, you really inspired me today. Two of my sisters (and their spouses) own rental properties, but they don't seem to want to grow to more than the one or two that they own. On the other hand, Little Sis and Hubby over here are itching to just "get into the game" this year.
On another note, you're the second person that I heard this week say that you just targeted homeowners by sending letters to find your investment property. I thought only wholesalers that did a ton of deals were the only ones that used this method. I was wondering how to find a good deal because the MLS doesn't seem to have much down here in Houston. I think I may try this tactic this Spring.
Thanks for freely sharing so much information with us!
That's amazing, Keep it going! Great to see Newbies making it happen!
Congrats @Sandra Holt and thank you very much for sharing.
Since there was no buyer agent involved, how did you view the property? Also did you complete the offer paperwork yourself and submit it to the selling agent? Was it a cash offer or did you finance it? Thank you.
Congrats @Sandra Holt and thank you very much for sharing.
Since there was no buyer agent involved, how did you view the property? Also did you complete the offer paperwork yourself and submit it to the selling agent? Was it a cash offer or did you finance it? Thank you.
To view the properties, I simply called the listing agent and asked if they'd be willing to show it. I only had one agent give me a hard time. I saw a couple short sales and REOs and with those, I told the listing agent that if I was to put an offer on the house, I would use them to do so and they would earn both sides of the commission. My rationale for that was that they had the best relationship with the bank and could negotiate on my behalf much better than I could. With the standard retail properties, I was clear with the listing agent that I was representing myself.
In submitting my offer to the listing agent, I just submitted via email and I detailed exactly how I came up with my offer. I complimented the homeowners on the upkeep of the house and listed all the things that I liked about the property then I detailed what I thought were shortcomings that I thought justified a lower offer compared with other properties for sale in the neighborhood. I also stated that if my offer was accepted, I would follow up with a formal offer. Fortunately, I didn't have to because the listing agent offered to draft it. Because I'm an attorney, you can bet that I read over every line before signing but there was nothing that the agent tried to sneak in. Incidentally, the listing agent was been so professional and knowledgable throughout this whole process that if I ever did need an agent, I'd use him.
I am financing the property through my local credit union after putting 25% down. I hope to be able to offer all cash eventually, but I'm not there yet.
@Mike H. Thanks for listing your steps so clearly! would you mind breaking down your step1 “Finding the deal?” I’m looking to put together a process and at the moment I’m all over the place and would like to emulate those who have been doing it successfully.
Thanks!
@Jonna Weber Thank you for sharing your systematizing ideas. I only have one true rental and a house hack but never thought about logging the makes and models of my appliances which is a great tipe to build efficiency into your operation.
Do you have a system for finding properties?
Thanks!
@Pyrrha Rivers. Not sure I'm the right one to follow on finding a deal.
But for me, its all about having a good size market to look for houses in and then learning the markets. I'm south of Chicago and really not a suburb of it. More just like a bunch of small towns that all flow into each other.
That being said. Here is my process for finding a deal.
1) Check the listing sites daily. And I do mean daily.
Hud, realtor.com, auction.com, hubzu,com.
2) Look for my target properties:
a) 1,200 or more square feet
b) 3 bedrooms
c) 1.5 bath
3) Look for anything listed around 130k or less.
I'm looking to be all in (purchase plus rehab) at about 65% LTV. And the numbers only seem to work in that price range where the house sells for between 60k to 90k.
But I like to watch the stuff as it drops down to 130k or less because those houses at 130k can magically end up price dropping enough to where they can be had for that 60k to 90k range and I can be all in at my 65% LTV.
I won't make low ball offers on 130k listings that have been on the market for 2 weeks. Instead, I'll wait for those 130k listings to come down to say 100k and that have been sitting on MLS for 3 months. Then I'll try an 80k offer. HUD deals are the best. Just gotta be willing to sit on the sidelines until they've hit that 2 to 3 months mark. Then the discount magic can happen.
4) Go look at houses.
This is a very underappreciated step. Bottom line is that its really important to see the houses before the prices really drop. Once I've seen it and have an idea on the rehab, then when they do drop the price, I can put in an offer that day.
And believe me when I say, that ability to offer that very day they drop the price has gotten me several houses.
Not only that but sometimes you see a house sitting and the pics make it look like garbage so you assume there's just no reason to look. GO LOOK. Pics can be very deceiving and you can really steal some houses that way. There are some houses that end up being really decent and, in terms of a rental, make for some great deal because there's some feature that puts people off that can be easily addressed.
Sometimes its no garage. Sometimes its because the cabinets are missing. I got one house strictly because the bathroom vanity was missing. The realtor said an owner occupant had an offer accepted on it before for about 20k more. The thing was missing a bathroom vanity so their lender said no way. The bank that owned the property then switched the offer criteria to cash only. Out by me, not many owner occupants doing cash deals and not as many investors either.
But I told the listing broker I wanted to do a rehab loan on and would they take that and the bank said yes. Put the bid in and got the house with rehab financing.
Funny part is the house was listed as a 3/2 but it was actually a 4/2. Another reason why taking a look at houses is really key.
But thats my process for finding a deal.
1) Watch your deal sources daily.
2) Go LOOK at houses. If you don't love to look at houses, you may not really enjoy being an investor. :-)
3) Put in your offers at numbers that make sense to you and to your source.
For instance, I won't offer 50% of the list price on an REO thats been on the market for 2 weeks. Thats just wasting time. But I might put in an offer at 60% of list price on a hud deal thats been there for 3 months. Or, say, 15% off list on a homepath thats in reduced mode.
As you start putting in offer and getting counters or deals, you'll start seeing the patterns. But every once in awhile I'll throw out a flyer on something too and it gets accepted. Only with the hud deals though since thats some crazy formula and doesn't require my realtor or me to do much - just enters a number and no signing of an offer unless that number is actually accepted.
Even then, I try not to be silly. I think I have their new discount patter figured out. We'll see. Interestingly enough, I think hud caught on too and they stopped countering so that investors would stop going fishing. :-)
@Sandra Holt Thank you for posting this inspiring and informational tthread. I waited to reply to you until I read all of the responses that you’ve got so far to your post. I found a wealth of tips within it and have asked questions of others. Thanks for the tip on Frankly.com. I’m not investing in the areas it covers but by looking into it I hope to understand what it offers and then ask if others in my area have knowledge of a similar service. I admire and appreciate how thorough you are in answering every posters questions. It has made the thread get richer and deeper as we have been learning tips and strategies such as eliminating the buyer’s agent fee mentioned by you and @Andraise Scott . System creation tips from @Jonna Weber Not to mention the sheer positive energy rising from your post. Newbie after newby feeling encouraged and those who’ve been around the block putting their stamp of approval on your approach. Good stuff indeed. Can’t wait to see what else comes in as I don’t see this thread dying any time soon. I’m following!
@Mike H. I'm fascinated with your answer. I think you ARE the right one to follow on finding deal. I'm so glad I asked. However I don't want to highjack @Sandra Holt thread here. Would you mind me starting a new thread and quoting your entire answer? I would love to hear what others with established systems have to say but not in this space.
@Pyrrha Rivers high jack away! I've just learned a lot from @Mike H.
no reason to go slow and steady when the market says that the time to buy is now. I want to buy as many as I can this year and buy none or even sell off when the market changes the other way!
@Mike H. - excellent tips! Especially the part about watching houses as they sit on the market. Going and looking is huge too..pictures can be so deceiving. I love the thrill of finding an extra bedroom that wasn't advertised!
@Pyrrha Rivers - I'm an agent, so I am scouring the MLS everyday. As your agent the best source for looking at the status of properties in real time. In addition - network, network, network. In Boise, we have a monthly investors group where we can share deals. I encourage clients to drive the areas they want to invest in all the time. Signs pop up, foreclosure notices pop up, signs of neighborhood improvements appear, as do legal notices about zoning changes, etc. As agents, we set up searches to find about things as they come available, but sometimes searches miss a house because it doesn't fall quite into the specific criteria we've set up to search for.
@Sandra Holt Thank you for your help. I will use your strategy for my next purchase.
@John Truong I hope it works for you. Good luck!
@Sandra Holt Isn't @Mike H. one to follow? I certainly think so.
If he agrees I want to start a new thread with his step bu step process. That is the type of thing I need and perhaps others also in their infancy as investors can use as many "How To" guides as possible.
@Jonna Weber Some more excellent advice! Unfortunately I'm in Japan, so the driving for dollars strategy is not possible for me at this time. Will be implementing it when I'm in the US for the summer, though! For now all has to be done virtually. I found a good realtor but I want to be as self-sufficient as I can manage. I don't want to abuse my Realtor's time asking for information I can manage to find, at least the preliminary stuff as much of it will eliminate many. I just want her to deal with good prospects after I've sifted through the ones that are no go.
@Sandra Holt, Way to go! I would be just as excited. Like you my goals are two this year as well, however I have not found any deals yet in the NJ/NY area. Thanks for sharing you accomplishments. Stay motivated.
Thats really Great!! You are an inspiration for others.. :)
I'd say definitely feel free to use that and start another thread. Would be good to see all the other ways people find deals. Thats the beauty of BP. We contribute a little and we get a lot.... :-)
Please BP.At me so I catch the new thread.
Upthread the discussion focused on how to jump on a deal the day it comes on the market, before anyone else realizes it's available. I have snapped up two properties this way. If you are looking at a specific area or watching a certain property for the price to drop, you can put an email alert on estately.com. You get an email if anything changes on the listing, or if anything comes available near whatever street address you give them. And for whatever reason, the alert sometimes comes up on estately before it shows on Reator.com!
I got my current flip using this strategy. Not sure if this is nationwide, but in my area a bank will put a house on the market before they actually have title, just to test the waters. If you look in the tax records, it still shows as the previous owner, even though the foreclosure is in process. They try to get market value, and frequently the property has serious issues so it sits there and no one buys it. Eventually they pull if off the market, go ahead with the foreclosure, and six months later it appears again on the MLS. (Now it will show in the tax records as belonging to the bank.) If you already looked at the place when it was listed the first time, you know what kind of shape it's in. You've already called the county to see if there are any outstanding permits, septic issues, etc. You've done whatever due diligence was necessary. You took your contractor to look for any major issues visible from the outside. You set an alert with estately.com. When it comes on the MLS the second time, you can snap it up immediately while everyone else has to schedule an appointment to go see it.
As I said, this has worked twice for me, and both times I got the property for a good discount because my offer came in the first day and the bank jumped on it. By day two there were 4 or 5 offers on the table and we would have had a bidding war.
Wow, my first post and I talk my head off. I'll try to be more succinct in future.
Congratulations Sandra! That's action at its best!
@Sandra Holt Congrats!!
Thanks again for all the congratulations everyone! I really appreciate it!
@Judi Drummond , I've never heard of estately.com but will definitely check it out. I love your system for finding deals and snatching them up before the competition. If you ever have more tips like that, don't be feel like you have to be succinct! Detailed information is what us newbies need. Thanks!
I just created an off shoot topic to this thread and tried tagging @Sandra Holt who inspired such deep sharing, @Mike H. who so generously shared his process and allowed me to repost it, @Jonna Weber who has been contributing great systemization ideas and @Judi Drummond who has another great method to be the early bird and get that worm! I didn't see the @ working, perhaps because there is not conversation yet, so please go over to my thread "What systems, processes or tricks do you use to acquire properties?" and work your magic. I'm sure that others I did not tag also have some process, tip or trick to share, I just didn't know about it but please share it on that thread. I can't wait to see the magic of BP at work once again. :)