Buying in an Expensive Market
Investor · Boca Raton, FL · Member since 2020 · 103 posts · 43 votes
Buying in an Expensive Market
Most Popular Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votesFind motivated sellers that will accept less than market price and/or agree to seller-financing!
Copy & paste info below:
________________________________________________
Why does everyone want to chase strangers – and ignore their own personal network?
Which do you think will be more competitive, buying from wholesalers or your own referrals?
Per this NY Times article, the average American knows around 600 people.
Per the US Census Bureau, the average American moves 11.7 time in their life, which based upon an approximate lifespan of 84 years, works out to be about every 7 years.
So, if the average American knows 600 people and they each move about every 7 years, that means that the average American knows around 85 people that move in any given year.
How many of those moves do you want to be involved in?
To maximize the number of transactions you’re involved in you will need to:
1) Be Top of Mind when they think about moving - which requires consistent reminders.
2) Be seen as an Expert – which requires a consistent message and Evidence of Success stories
3) Gain their Trust – which requires communicating with integrity
So, start out by CONSISTENTLY posting what you are doing on whatever social media channels you currently use. Not on any? You better fix that! You may also want to figure out which channels your family & friends use the most and get on those if you’re not on them currently.
What should you post?
How excited you are about what you’re doing in real estate investing! Share stories about your successes AND challenges. Then, ask them for their help!
IMPORTANT: do NOT ask people for THEIR business, ask for referrals! Why? Because they will get defensive if they feel you are pressuring them. Remember, they can always refer themselves😊
Use one of the ideas below to trigger who they know that they could connect you with:
1) Just inherited a home
4) Had a loved one pass away
5) Is behind on their mortgage or tax payments
6) Has a relative that can’t take care of their house anymore
7) Has a house they’re having trouble selling
8) Is facing bankruptcy
9) Knows a probate attorney
10) Knows a bankruptcy attorney
11) etc
Putting this in OVERDRIVE
Create a spreadsheet (Excel or Google Sheet) listing everyone you can think of that would recognize your name or face.
Why a spreadsheet? Because later, you can easily upload to a CRM like Constant Contact to create an email list!
Create columns for Name, email, cell and even Street Address, City, State, Zip and then contact info: Last Contact, Relationship, Status.
Then start calling these people. Divide the number of people on your list by 20 - and that’s how many you want to try to target daily.
Whether you get ahold of them or leave a vm, use 1-3 of the above triggers for referrals.
Why only 1-3 off the list per contact? Because on average, we can only remember three things at a time. If you try to go over the whole list, you’ll lose the attention of the average person and they won’t remember anything!
It should only take you about a month or two to contact everyone on your list and then the tough part – you start all over again.
Be sure to also ask what social media channels they are on and connect with them there.
Why the repetition? Because it takes repetition for people to remember things and you have to be top-of-mind when they encounter a potential client for you!
Have you ever been to McDonalds? Of course you have! So, why is McDonalds still spending billions on advertising?
One more tip – people remember stories that trigger their emotions. So, tell a story of how you (or a fellow wholesaler) helped a seller out with their challenge(s). Change your story each month as different stories will resonate with different people AND use each story to emphasize one of your “who do you know…” questions.
One last thing – we recommended you create a Status column on your spreadsheet, now we’ll explain why. If you find someone that seems to know a lot of people needing your services, wouldn’t it make sense to focus more resources on them? Conversely, you will run into people on your list that just seem to be a waste of time, so you’ll want to avoid them. So, create status codes for both of these and a few in-between codes to help you work smarter, not harder.
Logical Property Management4.9451 Reviews
11 Replies
- 1dArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 911 votes
Quote from @Michelle Dong:
HI All,
My name is Michelle and I have a couple LTR in South Florida.
As many of you know this market is getting more and more experience.
What are some creative ways to invest in a market that is "expensive"?
In an expensive market, I’d look at ways to lower your basis rather than forcing a deal that doesn’t cash flow. House hacking, small multifamily, value-add, or even investing out of state can open up a lot more options. Sometimes the best move is simply putting your money where the numbers make more sense.
- Investor · Boca Raton, FL · Member since 2020 · 103 posts · 43 votes4h
Currently my 2 investments I have now is through the house hacking strategy. Many of the numbers do not make sense down here for cash flow and that is primarily what I am looking for.
- 1hV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Michelle Dong:
Currently my 2 investments I have now is through the house hacking strategy. Many of the numbers do not make sense down here for cash flow and that is primarily what I am looking for.
If you're looking for cash flow then don't look at physical real estate. Go buy treasury notes or bills, or dividend funds. Better yet, get a(ntoher) job.
- 1dGregory AcsPro MemberLender · MD · Member since 2025 · 149 posts · 54 votes
Michelle, that's a challenge a lot of investors are facing in higher-priced markets. I've seen investors take a few different approaches depending on their goals. Some expand into nearby markets where the numbers work better, others look at value-add opportunities like BRRRRs or properties with ADU potential, and some use creative financing or leverage existing equity to improve returns.
Whatever strategy you choose, I think it’s important to underwrite conservatively and make sure the deal works based on today’s numbers rather than hoping rates or prices move in your favor. If you’re exploring financing options or looking at different ways to structure your next purchase, I’d be happy to compare scenarios and help you evaluate what makes the most sense.
- Investor · Boca Raton, FL · Member since 2020 · 103 posts · 43 votes4h
HI Greg, thank you for your response. Since I live in South Florida I have been looking closer to central FL for deals. Ideally I am looking for a small fix to rent project or a property where I can add a ADU or even a property with some sort of land and put a trailer in the back and rent it out along with the unit in front.
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes1d
In an expensive market, the trick is to buy 3 or 4 unit buildings. A single family will never make sense here. Then do cosmetic rehabs to maximize rents and take advantage of the fact tenants in area can afford to pay very high rents. On my own deals and my clients we regularly bring arv rents to 50% to 100% over what they were when a mom and pop type owner sold the building and this is with multiple over 700 credit tenants applying so the buildings operate very smoothly. You also need to look at total returns over time with rent growth factored in. Jumping into the first deal is hard but once see the long term results, it's easy to want to repeat.
- Investor · Boca Raton, FL · Member since 2020 · 103 posts · 43 votes4h
Hi Henry, thank you for the input.
- 15hAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Michelle, in an expensive market I usually think the answer is less about “finding a cheap property” and more about finding a structure where the numbers still work.
That can mean looking at small multifamily instead of a single-family rental, buying something with an obvious value-add component, improving rents or operations after purchase, or finding a financing structure that reduces how much capital gets tied up in the deal. Sometimes the better opportunity is also a property where the current owner is under-managing it rather than a property that is simply priced low.
I’d also be very careful not to stretch the underwriting just because South Florida is expensive. If the deal only works with aggressive rent growth, very low maintenance, or appreciation assumptions, that can become a problem quickly. I’d rather see slightly lower returns with conservative assumptions than a deal that only works on paper.
From the tax side, depreciation, cost segregation where appropriate, financing structure, and the way renovations are classified can improve the after-tax return, but those should enhance a good deal rather than rescue a weak one.
I’m from Florida as well, so I definitely understand how challenging the acquisition side can be here.
Feel free to DM me, I’d be happy to send over our Turn Key Rental Analyzer and a few real-estate tax resources that may help you compare different ways to make the numbers work.
INVESTOR FRIENDLY CPA®5241 Reviews- Investor · Boca Raton, FL · Member since 2020 · 103 posts · 43 votes4h
HI Ashish, thank you for this. I would love to connect and get some more resources.
- 9hDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Find motivated sellers that will accept less than market price and/or agree to seller-financing!
Copy & paste info below:
________________________________________________
Why does everyone want to chase strangers – and ignore their own personal network?
Which do you think will be more competitive, buying from wholesalers or your own referrals?
Per this NY Times article, the average American knows around 600 people.
Per the US Census Bureau, the average American moves 11.7 time in their life, which based upon an approximate lifespan of 84 years, works out to be about every 7 years.
So, if the average American knows 600 people and they each move about every 7 years, that means that the average American knows around 85 people that move in any given year.
How many of those moves do you want to be involved in?
To maximize the number of transactions you’re involved in you will need to:
1) Be Top of Mind when they think about moving - which requires consistent reminders.
2) Be seen as an Expert – which requires a consistent message and Evidence of Success stories
3) Gain their Trust – which requires communicating with integrity
So, start out by CONSISTENTLY posting what you are doing on whatever social media channels you currently use. Not on any? You better fix that! You may also want to figure out which channels your family & friends use the most and get on those if you’re not on them currently.
What should you post?
How excited you are about what you’re doing in real estate investing! Share stories about your successes AND challenges. Then, ask them for their help!
IMPORTANT: do NOT ask people for THEIR business, ask for referrals! Why? Because they will get defensive if they feel you are pressuring them. Remember, they can always refer themselves😊
Use one of the ideas below to trigger who they know that they could connect you with:
1) Just inherited a home
4) Had a loved one pass away
5) Is behind on their mortgage or tax payments
6) Has a relative that can’t take care of their house anymore
7) Has a house they’re having trouble selling
8) Is facing bankruptcy
9) Knows a probate attorney
10) Knows a bankruptcy attorney
11) etc
Putting this in OVERDRIVE
Create a spreadsheet (Excel or Google Sheet) listing everyone you can think of that would recognize your name or face.
Why a spreadsheet? Because later, you can easily upload to a CRM like Constant Contact to create an email list!
Create columns for Name, email, cell and even Street Address, City, State, Zip and then contact info: Last Contact, Relationship, Status.
Then start calling these people. Divide the number of people on your list by 20 - and that’s how many you want to try to target daily.
Whether you get ahold of them or leave a vm, use 1-3 of the above triggers for referrals.
Why only 1-3 off the list per contact? Because on average, we can only remember three things at a time. If you try to go over the whole list, you’ll lose the attention of the average person and they won’t remember anything!
It should only take you about a month or two to contact everyone on your list and then the tough part – you start all over again.
Be sure to also ask what social media channels they are on and connect with them there.
Why the repetition? Because it takes repetition for people to remember things and you have to be top-of-mind when they encounter a potential client for you!
Have you ever been to McDonalds? Of course you have! So, why is McDonalds still spending billions on advertising?
One more tip – people remember stories that trigger their emotions. So, tell a story of how you (or a fellow wholesaler) helped a seller out with their challenge(s). Change your story each month as different stories will resonate with different people AND use each story to emphasize one of your “who do you know…” questions.
One last thing – we recommended you create a Status column on your spreadsheet, now we’ll explain why. If you find someone that seems to know a lot of people needing your services, wouldn’t it make sense to focus more resources on them? Conversely, you will run into people on your list that just seem to be a waste of time, so you’ll want to avoid them. So, create status codes for both of these and a few in-between codes to help you work smarter, not harder.
Logical Property Management4.9451 Reviews- Investor · Boca Raton, FL · Member since 2020 · 103 posts · 43 votes3h
Hi Drew, wow this was amazing and full of gems. Sometimes I overthink of the basics but thank you for breaking everything done to actionable steps.
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