Can’t find a good deal on Rental property

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Can’t find a good deal on Rental property

Hayden Haddad
Developer · Dallas, TX · Member since 2019 · 5 posts · 0 votes

I’m new to Realestate business. After reading several books about rental properties I got motivated to buy my first rental property. It looks like the reality is more challenging than the books. I’ve been searching and calculating numbers on several condos and being realistic by looking for an average $100+ cash flow after subtracting the expensive, such as taxes, insurance, Maintainance (%10). I live in Dallas and looking for one or two bedroom condo or Townhome. I found a lot with my price range ($125k) but ending up loosing cash flow for most of the properties I found. What I’m doing wrong?

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Tyler GibsonBusiness Member
Real Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
7y

@Hayden Haddad You are probably in a hot market. The guys that are finding good deals in your area are probably not finding them on the MLS. They are likely doing direct mailing/driving for dollars/ Wholesale purchases. In a hot market the chances of finding a great deal on the MLS are low. That is not to say you won't find one but it will not be as easy as searching realtor.com. I have been fortunate to find a great rental in the Hot market of Orlando off of the MLS but I had a realtor that had set up some automatic searches. I received new properties in my email almost every day. I looked at them every day and quickly qualified them. Once I saw something that met my criteria I got in the property and made an offer with proof of funds. I had it under contract within a day or 2. I am by no means a volume investor and do not have a bunch of capitol but the guys that do are snatching up the goos stuff fast so that is the second peice of advice be fast and desicive. If you get caught in analysis paralysis then you will miss out on the good deals. I have also found a decent deal from a wholesaler but don't trust the numbers they give you about the property they make them up and say as much in their disclaimer legal language in any communication they send. Hope this helps.

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  • Tyler GibsonBusiness Member
    Real Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
    7y

    @Hayden Haddad You are probably in a hot market. The guys that are finding good deals in your area are probably not finding them on the MLS. They are likely doing direct mailing/driving for dollars/ Wholesale purchases. In a hot market the chances of finding a great deal on the MLS are low. That is not to say you won't find one but it will not be as easy as searching realtor.com. I have been fortunate to find a great rental in the Hot market of Orlando off of the MLS but I had a realtor that had set up some automatic searches. I received new properties in my email almost every day. I looked at them every day and quickly qualified them. Once I saw something that met my criteria I got in the property and made an offer with proof of funds. I had it under contract within a day or 2. I am by no means a volume investor and do not have a bunch of capitol but the guys that do are snatching up the goos stuff fast so that is the second peice of advice be fast and desicive. If you get caught in analysis paralysis then you will miss out on the good deals. I have also found a decent deal from a wholesaler but don't trust the numbers they give you about the property they make them up and say as much in their disclaimer legal language in any communication they send. Hope this helps.

    [email protected]407-590-9858
    GPG Team 596 Reviews
    WebsiteView Page
    3Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    True cash flow is not easy to find.  Plus, we are likely nearer the top of a market than the middle.  That being said, look outside of your local market, but not hear in Topeka.

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  • Braden Smith
    Investor · New Orleans, LA · Member since 2012 · 969 posts · 747 votes
    7y

    Agree with both statements above. That is just the nature of the market right now. Just about everywhere in the US it is like this. Too many buyers and not enough properties for sale. Simple laws of supply and demand. Demand is high and supply is low. This drives prices up.

    You can go back and look at the records for 100+ years and you will find that real estate is cyclical. It follows the same 4 phase cycle over and over again.

    Phase 1 - "Peak" - - Unit sales increasing, Prices increasing, Inventory decreasing

    Phase 2 - "Correction" - - Unit sales decreasing, Prices increasing, Inventory increasing

    Phase 3 - "Trough" - - Unit sales decreasing, Prices decreasing, Inventory increasing

    Phase 4 - "Recovery" - - Unit sales increasing, Prices decreasing, Inventory decreasing

    The market will shift again, as it always does. We are way past due for this shift...

    2Reply
  • Hayden Haddad
    OP
    Developer · Dallas, TX · Member since 2019 · 5 posts · 0 votes
    7y

    @Tyler Gibson thank you for the advice. We are definitely in a hot market here in Dallas. I'm receiving an automated emails from the MLS for new listings and I've been moving fast when I see good deal but there is always this cash buyer who is ready to snatch the deal. Is the 20% rule real? I've been reading on some books that investors should offer 20% less than the original property price but I don't see this happening in reality.

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  • Hayden Haddad
    OP
    Developer · Dallas, TX · Member since 2019 · 5 posts · 0 votes
    7y

    @Jacob Sampson true, thank you.

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  • Hayden Haddad
    OP
    Developer · Dallas, TX · Member since 2019 · 5 posts · 0 votes
    7y

    @Braden Smith this is great to know. Thank you for taking the time to explain the market phases. I’m still learning and it will be a long journey for me.

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  • Mario Am
    Specialist · Nashville, TN · Member since 2019 · 187 posts · 83 votes
    7y

    @Hayden Haddad I live in California searched hardto invest in the area where I’m from and guess how many good deals I found - 0.

    Hot markets have high demand so house owners usually raise the prices.

    Try going outside of dallas (Dental, Sherman etc..)

    Trust me there are people everywhere and EVERYONE NEEDS A PLACE TO LIVE.

    First time I looked out of the market of CA, I was shocked because of the differences, however, there are great properties out there, for lower price and better rental yield.

    As long you dont buy rental in a high crime area and normal employment rate, you are good.

    Best luck!

    0Reply
  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    7y

    @Hayden Haddad. The 20% sadly does not apply in our market today. You have to be very specific in what you are willing to do - buy turn key or fixer ? Do you have your funds ready? Be ready to aim and fire when you see one you want. Justify your offer if it’s below ask. Be flexible on alternate negotiations.

    I notice you are a developer - what is your specialty ?

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  • Hayden Haddad
    Rental Property Investor · Dallas, TX · Member since 2019 · 14 posts · 3 votes
    7y

    @Lucia Rushton just looking for my first rental property. I have everything ready to pull the trigger. Made two offers with no luck. I’m a Software Developer.

    1Reply
  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    7y

    @Hayden Haddad. You got this! Keep us posted when you close on your first one!! If I can help in any way- reach out anytime

    1Reply
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