How to find my first deal???

Question

Hi everyone! I am brand new to the world of REI, but I am devouring BP podcasts, and reading everything I can get my hands on to get started. I am currently working with an agent to find a duplex, or other small multi-family up in Bellingham, WA. The issue is that the listed MF's are way overpriced, and as such there is no way I can rent at even a modest profit. These are the only ones my agent has brought me. Is it better to start canvassing neighborhoods on my own, and direct mailing, and forget about the agent? My original thought was that it would be best to go through this process with a knowledgable agent by my side for my first deal. However, everything she has shown me has been so out-priced that I can't even consider... not due to a high price, but the fact there is no profit to be found in those numbers. Any advice for the new guy?? Thank you in advance!

Patrick Britton · Answer

@Clayton Swansen Is the agent you're working with doing any due diligence on the investment prior to sending to you?  It sounds like he or she is just sending listings as the hit the market.  95% of agents do this...

Also, keep in mind the vast majority of agents don't look at investment properties as investments first.  They view them as homes first then investments.  This line of thinking isn't what a true real estate investor needs.

As well, 90% of the time the information about the financials is either missing, incorrect, or exaggerated.  It's been my experience that when an agent claims the property cashflows @ 6%, it's closer to 5%.

I find stuff all the time in Bellingham and the surrounding towns that are worth a second look, but it all depends on what sort of return you need to see.

I don't think direct mailers, driving for dollars, door knocking, etc., will be effective with MFR.  In fact, i think it will be a waste of time.  I did it for a while and got some calls, but found little return on investment.

Tony Gallina · Answer

Hey Guys!

IF you use the Commercial Brokers Association (CBA) for listings you may find different listings then on the MLS, as that is what your agent is probably using. Commercial Firms will use CBA and have access to more information and networking than residential agents for this type of transaction.

From my experience I can tell you that many MF homes in Bellingham sell for $100K less then what they are listed for.

Granted I have also thought about investing in other areas due to property value being so high right now in Bellingham, nevertheless I have come to believe that their is real opportunity for cash flow here in our small town.

That is why I was so surprised to your comments about not finding any properties. I can think of one now that I would buy if I had the money...

For me what it has come down is access to the funds to achieve it. I have being doing a lot of research into USDA loans, FHA loans, HELOCS, and down payment assistance. I am not concerned with the amount of debt as I consider cash flow as my primary goal.

Maybe try logging on to CBA.com or contacting a commercial broker.

I would love to connect I sent both your fellas invites for coffee...its so funny as I was just talking to a friend and coworker about connecting more with Bellingham people from BP.

Aron Vesper · Answer

Hey Clayton,

I am in the same situation as you. I thinking finding something with good returns in Bellingham is tough. It seems as though most people are relying on appreciation. It's probably worth considering other markets (Blaine, Ferndale, Mount Vernon).

Julie Marquez · Answer

@Clayton Swansen Welcome to Bigger Pockets! I know that Skagit County has been a great place for my investments. Most of the deals I run across come from knowing my neighbors and farming the area. BP is a great way to connect with folks and I hear there are some good meet-ups in Bellingham. All the best to you!

Joe Zabawa · Answer

Welcome to BP Clayton Swansen,

If you need another option about the area you might want to look up @Patrick Britton he is a investor friendly Real Estate Agent serving the "N" Whatcom area, and is also the organizer of the Bellingham (BP) Meetup.

Best of Luck and see you around the site

How to find my first deal???

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