How are you deal sourcing?

Question

Hi Bigger Pockets, I am a recent college graduate getting ready for my first house hack just trying to figure out a few things with the new job and I am already looking forward towards the future in how to save for my next deal. I have an agent where I am and so I am trying to figure out how to plan for my next property after my first household. I am hourly and think I am on track to make around 70k this year in California, I know that doesn't seem like all that much but most homes where I am are selling for around 300k so I feel like I am in a good spot to do a house hack. I wonder how many of you are sourcing deals out there today and where I should look to find those. Also, how are you all picking markets, what criteria are you looking for and where are you pulling this data? Also, do you all have any recommendations on how to make some extra cash, I work 6 days a week and they are long labor-intensive days so time is not on my side to earn some extra income just thought I would ask. to see what others are doing. I know this is all over the place but I look forward to reading the responses, thanks biggerpockets!

Jonathan Klemm · Answer

Hey @Jason R. Besanceney - Just graduating and on BP....that's amazing!  You have a bright future no matter what.

70k straight out of college is great too!  Have you considered getting your real estate license on the side so you could put your commission toward the purchase?

For market data check out propstream, niche, zillow, MLS, etc.

I used your extra time going to networking events and finding people who are doing what you want to do.  I wish you were in Chicago so I could provide some more on-the-ground help!

Jason R. Besanceney · Answer

Thank you Brian for this information, it has helped me greatly, best of luck to your investing endeavors!

Brian Wilson · Answer

Congrats on getting started so young! The average male in their entire life doesn't make 70k a year, it's like 63k or something. You're on your path to higher income soon enough!

As for RE, I'd spend 2-3 months really figuring out what you want to do, if you believe in your local market and the areas you want to buy in that local market. Make sure there is data to support this opinion. Speaking from experience here, but I probably wouldn't house hack again despite it being such an awesome investing method. This reflection I have from my own experiences is why I recommend you spend the time to figure out where you want to invest, and more importantly how (type of RE investing: commercial, self storage, multifamily (small, medium, large), Single family, STR, etc.

I like CA but would never own rentals there. Just a difficult landscape to navigate from my understanding. Instead I would do a live in flip if I wanted to put money to work locally. That's what I'm doing in CO (where I live). But I invest in the Midwest. I'm from the Midwest and have a business partner who is my BOG in the territories we target.

As for finding deals, you can use batch leads and cold call/text in your target markets or use a wholesaler, or just buy something off MLS. The more work you put into finding a good deal, the better your ROI should be. MLS can still be profitable just depending on the model and duration of the investment.

Dan Guenther · Answer

Hey @Jason R. Besanceney!Congratulations on your recent college graduation and getting ready for your first house hack! House hacking can be a great way to start your real estate journey, especially in an expensive market like California. Here are a few of my thoughts/suggestions. Sourcing Deals: Consider networking with other investors and real estate professionals in your area. Attend local real estate meetups and events, join online forums, and explore social media groups related to real estate investing. Additionally, you can work closely with your real estate agent to keep an eye on the market and be notified of potential deals.If you can get good at finding off-market deals, you can use this skill to not only find good deals for yourself but also have the potential for extra income via wholesaling. Popular strategies for finding off-market deals include sending out mailers, driving for dollars (look for beat-up houses and then skip trace the number or door knock), and using sites like Propstream.com to get lists of properties that you can cold call.Picking Markets: When selecting a market for your next property, look for areas with potential for growth and strong rental demand. Factors to consider include job opportunities, population growth, local amenities, school ratings (if targeting families), crime rates, and overall economic stability. You can gather data from websites like Zillow, Trulia, Redfin, and local government sources.Making Extra Cash: Since you work long hours, finding additional sources of income might be challenging. If you do have spare time on the weekend though, you might consider some of the strategies I mentioned above for finding off-market deals. If you can find off-market deals you will have no shortage of investors that would be willing to pay you a "finders fee" for a great deal. This can be anywhere from a few $1000 up to $40K+ for a great deal.Best of luck on your journey, and I hope you find success in your first house hack and future investment endeavors!

Jason R. Besanceney · Answer

Thank you all for the replies, looking forward to putting your recommendations into action, take care

Peter Mckernan · Answer

That is a great income for the property amount that you lined out. That is not everywhere in California, so I would jump on that price point and purchase a home to house hack. Your affordability is significantly higher than about 90% of other areas in CA.

The source could be on market or off market... there are deals on market and off.. On your first deal unless you have someone experienced working with wholesalers I would not do that on your first and do the agent/buyer's agent route first.

Eudith Vacio · Answer

Hey @Jason R. Besanceney👋🏽

I definitely would recommend house-hacking if it's you're first investment. You can use the FHA loan to purchase a multi-unit for as low as 3.5% and because you make $70k a year, you might even be eligible for a 3% downpayment. As far as extra income, maybe Uber? or any type of freelancing?

I'm in Chicago, so I'm not sure how the CA market is, but I would definitely start initiating conversations with an agent / lender to understand what your options are!

Best of luck 😃

Eliott Elias · Answer

Your questions are all over the place. Let’s start with sourcing your deal. Get good Wholesaler and Realtor contacts and let them send you deals. Be specific with your criteria so that you know what you’re looking for.

You pick the market that is closest to you that is a drives distance.

Alecia Loveless · Answer

@Jason R. Besanceney I see no reason not to house hack to play devils advocate. I house hacked 2 B&Bs for 24 years living among the guests and lived 99% of that time. I now house hack a duplex living on one side and renting out the other. If my partner was more agreeable I would also rent one of the bedrooms. It’s a great way to make extra money. As long as your personality is ok with it.

If you want to invest in the CA market spend some time figuring out what area is right for you and that you can afford. And that you think will be a good area to be in. Save up your money, and you’ll need to be at your job at least one year, probably two to qualify for a mortgage which will give you time to save up some money for your down payment and other costs like renovations or whatever.

If you decide to rent and invest elsewhere begin looking at markets and when you settle on one start building your team. You’ll still need to have time on the job to get a mortgage and your down payment saved.

There’s great books on house hacking and OOS investing. Read up on it, listen to some podcasts.

How are you deal sourcing?

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