Making Your First Deal Count

[Lucas Knowles]

Hello Everyone! After Four years of interest, two years of reading and podcasts, and multiple years of saving I've finally saved enough to purchase my first property! I've been attending REIA meetings for months now (8 or 9 probably?) and have made friends with a few people in the industry. I've found an awesome broker to work with who understands what I'm looking for and lends advise, and have been slowly building my understanding of what a good property looks like in my market.

The issue I have is finding a property that will cashflow!  I know that this is an issue that everyone has and is a staple of where the market is at, but I need a sounding board and possibly some advise.

I'll give an example of where I am at:

Over the last few months I've analyzed most properties available on the market, I have developed to a point where I have a rough idea if the numbers will come even close to working at a glance, and have been refining my understanding. Each property I look at (in person, on the MLS, Zillow wherever) I form my opinion on and look at the numbers. Unsurprisingly I've had trouble finding anything I think would Cashflow! Recently I came the decision that I needed to start offering on properties below the value they are listed at to try and find what I'm looking for at a price that makes sense (once again I know not a novel idea). I found a property that won't Cashflow at its listed price, but is in a location I'm interested in and let my broker know I'd like to look at making an offer at a lower price. He got me the necessary information and I put the numbers together to see what it looked like. I had not been accounting for, however, the cost of gas per year which unfortunately comes to a few thousand. With the numbers put in I wasn't surprised to see the property wouldn't cashflow, I was however surprised to see it would be a -$450/mo in cash-flow.  Dismayed I looked into what my breakeven number would need to be and found it around $70K less than the asking price of roughly $275K, obviously not happening...  

This is a duplex and I'd be happy to share the particulars, but my greater question is how to proceed.  Clearly my struggle is not unique, but nevertheless I'd like to hear what people have to say.  My early instinct is to bite the bullet and pay for a list source list and start with some direct mail.  The answer may be as simple as that, and if it is I think I just need to hear it.  This is a multi year effort for me, and nothing will keep me from starting, but feedback is difficult to come by at this stage and I want to toss out my struggles to get peoples input.

Thanks