All Forum Posts by: Dustin P.

You should call it and get the address and comp it, and then ask for the lockbox code to go take a look. Maybe it's a good deal?

@Jay Hinrichs

I know they are also running into issues with appraisers. Appraisers are asking to see their settlement statements from closing to see what fees/concessions were charged.

At least you know you're in a good market when all the iBuyers and hedge funds are trying to work it

They are definitely all over the place in Phoenix. Typically this seems like their strategy:

1) Make an artificially high initial offer

2) Lock the property up with an inspection period

3) Send out an acquisition agent with a contractor to do an inspection

4) Ask for a $20,000-$30,000 reduction at the end of their inspection period

5) Also charge the seller a 6-7% fee similar to a commission

6) These "hidden fees" don't typically show up on the tax records

7) Sell the property after a "lipstick" rehab. Sometimes seller for lower than what the tax records show what they paid for because the real money they make is on the fees/concessions

I think sellers are getting smart to them but you still see OpenDoor, OfferPad, Zillow, etc. owned houses all over the place

@Joe Splitrock Good explanation, and obviously with all the competition for deals right now people are typically either over paying for properties or just not buying at all in a lot of cases

@Joe Splitrock Yes I have 3 cash flowing properties in Phoenix currently that were purchased at enough below market to make sense, but Phoenix is not a market where you are hitting the 1% or 2% rule. But I also think that if you are buying in a market or in a Class A neighborhood where you may be put in a spot where you have no cash flow or even negative cash flow, you are not buying in an area that won't have appreciation, won't have rent growth and that will experience a lot of vacancy. 

What you are saying is contradicting what a couple others in this thread are saying that are also pretty knowledgeable and popular posters on this forum. So it's just kind of interesting that there's no consensus - Definitely makes it harder for newer investors and it's no wonder that a lot of them just eventually never buy anything

@Joe Splitrock

I'm not talking about people overpaying for a property in a particular market, more so markets that just by their nature do not cash flow. Lots of markets in California for example, where people aren't cash flowing but their properties are appreciating by hundreds of thousands of dollars. Obviously you can't do this if you can't afford to pay the extra that the tenant doesn't cover, but you don't think there is any merit in investing in Class A Properties that are going to appreciate, have great tenants, have rent growth, etc?

If you own 10 properties that you're coming out of pocket $200 a month let's just say, and you can afford to do that, but those 10 properties when are going to make you more money than 50 cash flowing Midwest properties when it's time to sell, are you saying that's a bad idea? Not exact numbers but you get what I'm saying.

Just trying to see the other side of it. No one would be investing in some of those markets if they were only concerned about cash flow. Phoenix for example you'll see no cash flow to maybe a few hundred dollars after you take out expenses, but people are buying left and right.

Buy and resell. You'll find a lot of the best deals through agents anyway, and most agents are smart enough to not have their seller accept an assignable contract

@Joe Splitrock

What would you say about the markets where investors buy with no cash flow to negative cash flow? Are those investors just throwing their money away?

Great thread and lots of information. It's nice to see something other than "cash flow, 1% rule, 2% rule, blah blah blah" over and over 

@Daniel Pitner I do more wholesale than anything else so I tend to look at everything from a flip perspective but yeah I think if you can get $1500 for a $200k property that's in a decent area it tends to be a pretty good deal in today's market.

I also think you're going to be able to raise rents fairly easily over the next few years