Looking for first deal in small town - Limited Opportunities?

Question

Hello everybody, I am trying to work up my first deal in Quincy IL, which holds about 60,000 people. I'm very new to the idea of Real Estate Investing, and am driven to make it profitable while working full time. Since I am renting a 3 bed 1 bath house for $850 a month right now, I can't see a better way to get started than to get out of this rental and into a fixer-upper.  Eventually, I would like to have enough cash to work into bigger multi-families expanding across the country and be able to hire managers. That being said, I've read that you should have a plan and process to find what you are looking for. For me, it is a single family ranch style home with 2/3 beds and 1.5/2 baths that smells funny and needs the carpet ripped out. I'm willing to live in a fixer upper, put sweat equity into it for two years, then move on to the next to start.

My problem is that most of these homes I come across are 20 min out of town, have been on the market for a while, and are $115k. These homes seem to be priced at what they are worth, but I'm concerned with owning one so far away from the large population. I'm actively searching for auctions and have been looking for more ways to find these sales before they hit Zillow or Realtor. I've only spoken with one Realtor, who gave me quite a bit of good information on how to find these homes, but I want to know more.  According to the Realtor I spoke with, there are 5 people he has on speed dial for when he comes across a deal like what I am looking for, so I need to speedy finding them.

I am as green as they come, but very driven and currently obsessed with figuring out how to work Real Estate in my local area. All ideas are welcome, I'm looking forward to tips and tricks to hack the small town Real Estate market, where everyone is trying to flip houses!

Lindel Turner · Answer

My 2 cents

1. Network make friends in real estate no better way than to get your license.

2.  Build knowledge Keep reading

3  Go ahead buy a home get a 30 yr mortgage. Stay a while rent it out get another one. Start slow. Make sure it cash flows. These will be your base. Make sure your cash flow is net cap of 10%. Min.

4. Venture out drive neighbor hoods look for for sale buy owners.

5.  Call local bank loan officers get on their list for Repos

6. Go to auctions. Don’t buy anything for a while. Go to at least 6 listen and observe.

7.  Do your home work. Know who to call check on utilities sewer etc.

You will come to the point in your life you can actually do all this in a matter of minutes. Keep contracts in car with you. There are a 100 other people wanting to do what you do. So if you don’t have warm fuzzy feeling move on there’s always another deal. But don’t wait around and loose a deal. I have lost one just down the road from me. It’s ok. I couldn’t compete. The guy paid cash and offered more than the listing. It was for his daughter. The agent got 5 offers in one day. It wasn’t meant to be. In the past two years. More people have called or come to me and I haven’t had to even look. I keep my license just because no one will look out for your well being a Si yourself.

Elizabeth Wilson · Answer

@Nick Tzenevrakis - We actually do quite a bit of wholesaling/flipping in a rural area of Tennessee similar to yours.

I'd recommend reading all you can about wholesaling and finding off market deals.  Start a direct mail campaign with the homes or areas you are interested in.  Start looking for those off-market deals!

Nick Tzenevrakis · Answer

@Chad S., I will be ready to take action early this summer. I can see how one could slip into the analysis paralysis, I am aware of it and will avoid it. Hopefully WHEN I dive into something this summer, it turns out well. I'm going to make rounds every week to look for sale by owner deals. Thanks for the reminder!

Nick Tzenevrakis · Answer

@Lindel Turner, this makes perfect sense. I have talked to the bank a couple times and have received pre-approval for more than I'm wanting to spend for my first home. There is a couple auctions coming up that are foreclosures, there is certainly is some value in observing. I am nearly ready to dive in, just need another month or so to graduate and go on my 2 week vacation! Then I will be as ready as I'll ever be. Thanks for the tip.

Chad S. · Answer

@Nick Tzenevrakis - Process is a good thing, but something I am learning fast is this:

1.  Take ACTION!!!  I am building my processes, while actively looking for leads (drive for dollars, cold calling, etc).  I think taking ACTION is the most important step you need to do.

2.  Don't overdose on what I call "education overflow addiction".  This is pretty much analysis paralysis, when you soak up so much info and keep reading and educating yourself, but NEVER take ACTION!!!  Yes, get some understanding how it all works, but, by not taking ACTION, you are doing yourself a YUGE disservice.  Best way to learn is by doing.  Yoda really said it best.  "Do or do not.  There is no try".

Nick Tzenevrakis · Answer

@Chad S., It is encouraging to hear of other people in small towns doing well. I am very eager to get into a property, but at the same time know there is a process and I cannot let my emotions make decisions. I'm actually going to look at some land for sale Tomorrow, maybe I will do a little extra driving around and find something not on the market. Thanks

Nick Tzenevrakis · Answer

@Chrissy Arnold, I like the idea of a direct mail campaign. I will do some more research this weekend to figure out the best strategy might be. Going after both absentee and Seniors with 20+year ownership could prove to be a big win. Thanks for the tip.

Chad S. · Answer

I am doing some stuff in a VERY small town (pop. 15,000) but have found 4 potential deals just this week (driving for dollars).  Seeing a property tomorrow.  The deals are out there, even in small towns.

Chrissy Parsons · Answer

This sounds like a great way to start. Depending on your marketing budget, you might consider doing a direct mail campaign. You can select your are, the house criteria and mix some different types of owners. Perhaps looking at both Absentee and Seniors with 20+ year ownership.

Nick Tzenevrakis · Answer

Thanks Elizabeth,  I have been reading hours every day on all types if real estate investing, but surprisingly have done little on wholesaling.  I need to find better ways to get the off market deals. Thanks for the tip!

Looking for first deal in small town - Limited Opportunities?

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