14 Properties purchased in 10 years - how we found each one...

[Joshua Top]

With deals getting harder and harder to find, I always like to hear how everyone is finding properties these days.  My wife and I have made 14 purchases since July 2008.  Here is the list, hopefully there is an idea in here that someone can use.

1. July 2008 - 5 Acres Vacant Land - MLS - Property was in pre-foreclosure, builder was about to go under. Listed for $115k, paid $110k.

2. July 2011 - Bank owned home - MLS - Easy to find, bank owned homes were on every street, listed for $65k, paid $66k.

3. Sep 2012 - Bank owned home - MLS - House was a tear down on a rough street, no one wanted it, listed for $50k, paid $35k.

4. Nov 2012 - Bank owned home - MLS - Tried to buy as a short sale, that didn't work. Kept an eye on it and put in an offer the first day it hit the market. Listed for $89k, paid $89k.

5. Sep 2013 - Single Family home - Short sale/MLS - Short sales with other buyers fell through multiple times, we came in with a cash offer and got the deal. Listed for $112k, paid $112k.

6.  Sep 2015 - Single Family home - Off Market/Word of mouth - As we remodeled project #5, the neighbors tipped me off about a meth house in the neighborhood that was going to be for sale soon.  I spoke with the listing agent before it hit the market; we talked with the out of state sellers and got the deal.  Listed for $145k, paid $115k after they agreed to pay $10k toward meth cleanup.

7.  Oct 2015 - Vacant Lot - Off market/Direct mail - Just down the street from #5 and #6 there was a lot where the home had burned down.  I checked and it was in pre-foreclosure for unpaid property tax.  I mailed a letter to the seller and they called me.  Paid $50k.

8. July 2016 - Single family home - MLS - This was an estate sale, got our offer in on day 1. Listed for $149k, paid $138k cash.

9.  Mar 2017 - Single family home - Wholesale - Our first exposure to a wholesale deal, made an offer on day 1, paid $105k cash.

10. May 2017 - Single family home - Wholesale - Same wholesaler, another deal that made sense.  Paid $138k cash.

11. Nov 2017 - Single family home - MLS - Distressed seller, home in rough shape. We went direct to the selling agent and got a good price. Listed for $125k, paid $110k.

12. Dec 2017 - Single family home - Short sale/MLS - Fire damaged house, we put in an offer the day it hit the market. Listed for $100k, paid $123k.

13.  Feb 2018 - Single Family home - Sheriff Sale Auction - Home was vacant for over 3 years, bought at auction for $129k.

14. July 2018 - Vacant lot - Off Market/Word of mouth - One of my clients split a lot off their rental house, we paid $55k.

Moving forward, we plan to utilize auctions, wholesalers, and direct mail to find our deals. We now have a reputation in our small town for closing quickly on homes in any condition. We still check the MLS daily, but most fixers are priced to the point that there is little profit to make on a flip.

[Joshua Top]

@Henry M.  Thanks for the questions, I will try to answer them all in order.  

So were most of these buy and holds? - We never planned to buy and hold; we needed $30K to pay for an adoption and flipping seemed like a good route to earn a chunk of cash.  We will move more into buy and hold if the market for flips cools off.  

What were some of your exit strategies? - Original plan was to flip, but since these are all cheaper properties, rental was the backup plan.  Every house we have done would cash flow as a rental if we kept it.

Did they all make money? - Every deal has been profitable, $25K-$50K on each one sold so far.  The six properties we have in the works are projected to profit us between $50K and $140K each.  We are definitely getting more efficient.

What has been the lesson you've learned over the course of your career? - If you are a real estate investor or want to be one, tell everyone you know.  Someone will eventually know someone else that has a deal for you.  Also, save up money; buying and renovating real estate with zero cash is nearly impossible to do. 

Why did you decide to do real estate from the crash and on? - It was fortunate timing.  I graduated college in 2006 and didn't have enough saved up for a down payment until 2008.  Then I started shopping real estate.

Most people would be cautious when a market crashes like it did... And there are others who see opportunities... What was the deciding factor that made you take that leap? - To me, everything was on sale.  I also liked the idea of fixing up the town I live in while making money.

Where did you retrieve your knowledge from? Example: In the mid 90's, mine was from Barnes & Noble... True story, Lol. - After getting my bachelor's degree in finance, I worked as a commercial loan officer for 2 years, I picked up a lot of knowledge from customers.  The Bigger Pockets Podcast has been great, but I didn't start listening until about 12 months ago.

What has been the hardest part about real estate? - Finding deals for sure!  I make a good income at my day job and my wife and I are frugal.  We have the funds available, finding deals is getting tough.  New investors are out in the market and are overpaying.  I enjoy the construction aspect and have a good group of subs to work with.

How do you stay motivated in a tight market? - We have a full-time employee now, my motivation is to keep him busy.  If I can't find flips, I will buy vacant lots and put up spec homes.  If the market is not strong enough for either of those, we will pick up some rentals and wait for the next appreciation cycle.

Is your market saturated with competition? - It is now, in the past 6 months I have only seen 2 or 3 properties on the MLS that I would buy at asking price.  Word of mouth, direct mail, and auctions are the places to find deals now.

How many deals do you have to go through to find a good deal? - I check the MLS and Craiglist daily.  There are probably 10 properties newly listed each day.  I look quickly at each one and run the numbers on any that are under $300k and need renovation work.

What has been the most gratifying thing you've have learned or experienced since jumping into real estate? - Taking the worst house on the block and cleaning it up has been very satisfying.  Neighboring homes of our properties have been very appreciative of our work.  I drive by many of these houses daily and I am proud of the work we did.  And, we get to make money doing it!

Licensed or Not Licensed? What benefits has it brought you choosing one way or the other? - Not licensed, not planning to be.  As we buy more directly from homeowners, I don't want to deal with all the disclosure and compliance rules that realtors have.  I will go to the selling agent if I see a house on the MLS that I want and I have someone that will list homes for me for a 1% commission.

What strategies in structure of a deal or creative financing if any do you prefer using? Or are you just a straight forward traditional? - We used traditional 20% down financing on the first purchase.  After that, we have used HELOCs or private money and always made cash offers on all our flips.  We just bought a new personal residence and got a traditional 20% down mortgage for 30 years.