How do you find the good deals, only got 20k Cash.

Question

Good Morning BP!

I am a new and very eager soon to be investor in Lancaster, PA. Ive been on the analysis paralysis train lately. I currently have 20k to start with my first investment property. I have a family of 5 so rehabbing project myself is limited at the moment. Price rang is under 95k single family or multifamily. I had a few questions for the community this morning.

1st : What is the best way of going about REO properties? I have emailed banks and got nothing back. Can i find all the properties they own on zillow, realtor and the MLS? I currently have a realtor agent and she is not familiar with REO properties.

2nd : Once I give a offer to the  bank and lets say its excepted, Do i contact a construction company? or should i contact a bank for a loan first? or should this be all done before the offer? I am currently in the middle of a REFI and i cannot get pre-approved for a construction loan yet until my single family REFI is complete.I have spoken to a bank that does portfolio loans and construction loans for investment properties already.

3rd : Should i be concerned about the upcoming election? or covid related issues after the new year with tenants being able to delay/ not pay rent? I am not going to wait for a market crash because I am always looking for the deals below market value.

Maybe what I am trying to say here is, Please guide me in the right directions. I am ready to rock n roll with investing with using the BRRRR method, even if i can only get out what I put in to move to the next house. I need

Any insight would be greatly appreciated.

Dustin Morris · Answer

@Steven Hershey probably time to get a new agent if they can’t help you with what you want to focus on

Steven Hershey · Answer

@Jordan Mummau Ive been looking outside lancaster city. York city's surrounding areas and also harrisburg's surrounding areas. I have a buddy that has been pretty successful more north in shamokin area. If you dont mind me asking, who do you use for your wholesale deals?

I think for now were going to invest in a property with a down payment with little to no rehab and then save up to start BRRRR's, we need to get our feet wet first.

thanks for the input

Jordan Mummau · Answer

@Steven Hershey I live and invest in this area. Finding REO's right now is going to be a significant challenge with the moratorium through the rest of 2020. I do believe there will be opportunities in 2021 for REO's but it's going to be tough sledding until the foreclosure restrictions are lifted. Additionally, Lancaster is one of the hottest cities for real estate investing and appreciation in the recent years, with 2020 being no different. With the amount of money you've been discussing investing, it may be wise to look just outside Lancaster into some of the more rural areas that are starting to come alive as well.

Lastly, I've found more deals networking with wholesalers in the area and direct contact with homeowners than REO's. There are deals to be had in various communities in Central PA, you just have to put some extra effort into discovering them. Chances of a deal coming to market, in any form is slim in the current climate.

Steven Hershey · Answer

Thanks for the info! I also thought my agent should know how to send me REO's through these banks... My plan is to use the money for a down payment and then get loans for the rehab costs. I did sign an agent agreement... how legally bound am i to that? The agent never asked for a pre-approval letter or proof of funds. Ive been to several of properties and the agent is very knowledgeable about investment properties because they have several of their own, but they buy and rent and thats it. They have never rehab before. I think my plan is to build more equity in my home while i buy and rent a property. I need to build funds of my own so im not at the mercy of a bank.

Im also looking out of State/County to buy and rent. I can find deals but they are over hours away. In your experiences is this a bad idea? I dont mind paying a PM company as long as the numbers work.

thanks for the input

Dustin Morris · Answer

@Steven Hershey banks will likely not speak with investors directly. I would recommend networking with real estate agents who work with the certain banks in your area. Typically there’s a handful of these agents that do all the REOs. Agents can keep you posted when these new ones come out. You can also get an agent that sends you daily REOs even if they aren’t the one who has the actual listing. In my area REOs have dropped off and may for a while into 2021 but we’ll see when banks start foreclosing more.

Nicholas L. · Answer

@Steven Hershey it's tough to BRRRR when you're financing all or some of the purchase and rehab.  Is $20K all the cash you have access to?  And do you have savings and reserves in addition to that?  To answer one of your questions, yes, you need your financing as lined up as you can get it in advance.  Your agent should be advising you on this.

How do you find the good deals, only got 20k Cash.

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