How long did it take you to find your first rental property deal?

Question

I guess I am starting to loose my patience,I educated myself, read books, listened to podcasts, I know everything about analyzing, I dedicate hours to search every day, I have a great RE Agent also trying to find something in the Minneapolis market but I just can't find the right deal, I've been searching 5 weeks. Would I be doing something wrong? How long did it take for you to find your first one? Any recommendations?

Bruce Runn · Answer

@Andy Diaz

One of the first things I tell people looking to invest, is you can't actually figure out if a property is a good deal without going in and seeing for yourself.  How do you know if the rent is correct, how do you know whether you can add a bedroom or 2, how do you know if the agent even wrote up the listing correctly?  You have to get to know an area to understand how to maximize the income in order to see if it's worthwhile and be willing to put the effort/time in.

I've bought duplexes where the rents were $200-$400/unit too low without even doing anything to the property.  That changes the cash flow from a dog to a star.  You have to ask yourself how are you going to find those gems?  We literally go into a property that looks like a deal on the 1st day and are ready with an offer within an hour.  You need to be able to move quick. As @Alyssa Strom said, patience is needed as 5 weeks is hardly any time at all- one phrase we live by is- patience,then pounce.  I've actually bought more properties in the winter versus any other time.   I've had years, I could only find 1 deal worth buying in the whole 12 months and this year, I bought 2 properties in January.

I just bought a duplex where each unit was a 2 bed/1 bath and the sq footage was over 1250/unit.  I converted the 4 season porches that already had heat into a bedrooms for very little.  I painted, redid the floor and put a couple updates in as well. Rent went from $1100 to $1650 - I also fixed the garage a I now get $100/month for that.  Revenue went from $2200 to $3400/month.  Suddenly paying $275,000 looks like a steal but running the numbers off the MLS would have given you analysis paralysis and it would have been labeled a dud.

Good luck in your journey!!!

Alyssa Strom · Answer

@Andy Diaz 5 weeks is a pretty short period of time, especially in the Minneapolis market, where patience is key. What exactly are you looking for in terms of cash flow? Depending on that answer you may need to expand beyond the metro. Many of the best deals right now are off-market and/or require some creativity to make them work.

A few ideas for you: Join some wholesaler lists, starting mailing to a few neighborhoods you'd like to buy in and attend local meet-ups/networking events and start letting people know what you are looking for. Good luck to you!

Amber Gonion · Answer

@Andy Diaz we find most investors on the first deal over analyze.  There is a difference between a good deal, a bad deal and a home run.   If you are waiting on a home run, it can take quite a long time.

A good deal is pretty common and it depends on your idea of what a good deal is.  Think about buying car, if you find a great deal you might wonder what is wrong with it.  A good deal is one that 3-5 years down the road you are happy with and has worked out.  That deal that a ton of cash flow initially may end up with much higher repair costs.

It’s not just appreciation that makes a property a good buy 3-5 years down the road it is a strong rental area, mechanicals, and rental friendly flooring, yard, etc.

I have a client that has bought 14 units in 6 months he was not waiting for a home run, just good fundamentals and good rental attributes.

Account Closed · Answer

5 weeks is a blink of an eye. I searched for 5 years before closing on my first property.

Practice searching, them practice running numbers, then practice walking thru the properties, next practice making offers, after that practice being rejected for said offers, and once you get thru all that you may be able to land a deal.

It takes time to get into it.  Heck 5 weeks was shorter then my time from offer accepted to closing date since it was a commercial property.

Justin V. · Answer

@Andy Diaz

Hang in there. A bad deal at this stage of the game could be a killer. Hard to want to keep going if the first buy is a flop with mean tenants and garbage cashflow. As someone losing patience, how many deals have you analyzed online and how many have you seen in person? What does a deal you would pounce on look like? My funnel has typically been 30 online postings analyzed, 8 houses looked at, 1 offer made/negotiated/agreed, but I’ve heard many people’s funnels are much larger and not working as well these days (requiring a higher starting point). My last mls deal was winter 2017. Networked an off market deal in January.-Justin

John Woodrich · Answer

I agree with everything @Bruce Runn mentioned.  In this market I like to remind people that no deal is better than a bad deal but you have to get out and look at the properties, sitting on a computer won't cut it.

Also make sure you are with a realtor who KNOWs investment properties and not someone who primarily sells SF homes.  There is a difference.

Joe Villeneuve · Answer

I don't remember...mainly because it doesn't, and shouldn't, matter.  Don't focus on how long it takes to find a deal or you'll end up accepting a property that you shouldn't...just because you can.

My concern is three statements you made:

1 - "I know everything about analyzing".  Uh,...no way.  Any time you use those words, you stop learning...and you should never stop learning.

2 - "I've been searching 5 weeks".  Wow!.  A whole 5 weeks.

3 - "...trying to find something in the Minneapolis market but I just can't find the right deal,...".  Stop looking for properties.  Start looking for markets instead.

If you can't find what you're looking for in a particular market (Minneapolis), then you're in the wrong market.  My recommendation is for you to start looking for a different market.

Dan Bryskin · Answer

@Andy Diaz, what are you talking about??? Let me share my recent experience. I started looking on 8/1/2019 after being absent from the market for 6 months.  Spend 20-30 hours in front of the computer, looked at about 1000 - 1500 properties. On 8/6/2019 I went and looked at 7 houses in 3 hours. On 8/7/2019 I wrote one offer. On 8/9/2019 I have my offer accepted & working through my inspection contingency. I have run out of money a few times in my life, but i have never run out of the good deals ....

Armin Nazarinia · Answer

@Andy Diaz- I think it varies greatly, I would suggest not to don't bend on your criteria. Find the right property for your first one. Do you live in a home now or is this going to be a house hack? I think another big thing is networking with others and telling them what you're looking for. Right now it's just you and your agent looking for a property, but if you tell 20 people (Realtors, investors, friends, family, etc) about what you want that's another set of people helping you out. It doesn't mean they're all going to analyze deals for you but they will potentially open your eyes to other properties that are off market or that they know of.

Preston Quinn · Answer

I’ve been looking for the perfect brrr deal for 14 months. It took about 15 offers. I have 3 under contract. 2 of the 3 I have under contract fell in my lap. The other came from mls with title issues and I was willing to offer and wait for them to sort out the issues.  One of which isn’t a homerun. But it’ll give me $150 positive CF with no money in the deal. The other two are solid doubles and triples. Giving me 5-10k cash out and 200-250 CF/door

Can I ask what your buying criteria is?

How long did it take you to find your first rental property deal?

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