As a newbie, I feel like any "good deal" I see on the market must have been already passed up by someone smarter than I

[Kavi S.]

What do you guys think of that mentality? 

There's 2 places I looked at in states of disrepair that when I played with the numbers, looked good to me. One was sitting for 2 years, one was sitting for 6 years. 

There must have been investors that have already turned it down, right? There must be something I'm missing? Or should I just pony up and pick a project already?

[Ann Bellamy]

Well, Kavi, you are right, and you are wrong, both.

First of all, it's the old "if you think you can, or you think you can't, you're right.  Meaning that attitude is self defeating.  

Secondly, you can see something that someone else misses.  Or you can have an advantage that someone else doesn't have.  For example, if you have a heavy equipment company, and remove fill for a living, and someone has a lot that needs a bunch of fill, you might just have the upper hand because you get the fill for nothing, thereby reducing your costs.  Or whatever.  

Just starting out, it is harder, no question.  But you might still run the numbers and do the exercise, because the one that was sitting for 2 years:  is there something seriously wrong with it?  Probably.  Can it be fixed?  yes, just a question of how big is the check.  Would the seller be willing to come down to a price that makes it deal?  Maybe after 2 years he would.

Here's another example:  I buy income properties in a town where not very many come on the market.  So they get snapped up fairly quickly.  I saw a listing that was 2 1/2 months old, and the tenants paid all the utilities.  And the rents were significantly higher than median.  And I was told that some of the bedrooms weren't legal bedrooms so two of the units could only be rented legally as 2 bedroom units.  

I started digging:  First, the tenants paid all the utilities including water and sewer, which was quite unusual.  Second, the tenants did their own shoveling, lawn care and trash removal.  Almost no expenses except repairs.  The units were nice.  I made an offer.  No go.  I forgot about the deal.  Seller came back a few months later and reopened negotions.  I came up only 5000 to get it under contract. 

And the kicker?  The fire department has blessed the extra rooms as bedrooms, so what were "2 bedroom units with 2 bonus rooms"  became "4 bedroom units".  High demand and I was able to raise rents when I recently had a vacancy.  And got my choice of good tenants.  

Love this building!  So for me, it had value that was either not important to someone else, or was overlooked.  Do the exercise, run the numbers, you never know.