Trying to Make the Numbers Work

[William Fruman]

Hi all,

My wife and I are getting started with rental property investing, we've done some research, gotten with a pretty motivated agent and looked at homes (single family/multi-family) all over metro atlanta, and we really can't seem to find much that actually works with investor math.

Most of what I see seems to have an asking price that's either too high to justify the market rents, or probably wont have positive cashflow for a couple of years with needed rennovations.

I feel like I'm either missing something or not being creative enough with our strategy in the current market.

I'm hoping to start a conversation and maybe get some advice if anyone has tips for the metro Atlanta area.

Thanks in Advance!

[Michael Dumler]

@William Fruman, to piggyback what you and others have been addressing, you need to get creative. Not only do you need to be creative with your investment strategy, but also acknowledge there is creativity behind sourcing deals, submitting offers, and negotiating while under contract. 

Souring deals: 

As noted by many, with current market conditions, 95% of MLS deals are trash. Have you explored any off-market opportunities? This is where your team comes into place. If your current agent has only been sending you automated MLS listings, they're probably not an investor-focused real estate agent. Someone who's truly in the investment space should be bringing you off-market properties to review.

Moreover, what types of deals have you been exploring? For example, many newer investors are scared to go this route, but you should consider properties that are already tenant-occupied. While it's not always the case, tenant-occupied properties are usually paying below-market rent. Once their lease expires, get them out, turn the unit over, and increase rent to market value to make the deal work. Again, your agent should be identifying these types of deals/opportunities.  

Offer submission: 

What have your offers looked like in regards to terms? If you need the property at X to make the deal work, how have you incentivized the seller to move forward with you? If you can acquire the deal for X% below market value, are you willing to waive your due diligence and contingencies? This entirely depends on your risk tolerance and how motivated you are. 

Negotiating: 

Vice versa, if you have a solid deal under contract, use your contingencies to put pressure back on the seller. We've seen many deals now where the appraisal has come in below the intended purchase price. Use this to your advantage to put pressure on the seller to reduce the acquisition price. Many sellers don't want to re-market their property to find a new buyer. 

These are just small examples that will hopefully paint a bigger picture in terms of getting creative.