Should I walk through every property before making an offer?

Question

I am looking for my first investment property to purchase.  I would ideally like to find a property to BRRR, but prices right now are making it hard to find a deal that leaves enough room to afford repairs. Because of this I have mostly been finding buy and hold properties with tenants in place that need little to no work, which is fine with me, but obviously a good BRRR has a quicker path to the next property.

I'm just looking for some feedback on a good way for a new investor to handle this scenario.  A property recently came on the market in my area that has good BRRR potential.  I am waiting to hear back from the seller but the only info right now is 2 pictures of the exterior and a description that it is "dated".  Some rough estimates: Purchase for $200k-225k Rehab:$75k -$100K ARV:$350k-$400k.  I would like to get into the house to see what I am dealing with before making an offer, but at the same time if I am doing $100k rehab, should I even care what the inside looks like as long as it passes an inspection?  I'm sure that would be fine for a seasoned investor with more resources and a contractor ready to go, but as a new investor with no experience managing a rehab I feel like I could be getting too far ahead of myself.  Or do I need to be aggressive to not allow a good deal to pass?

At the same time a good buy and hold duplex came on the market today that has been fully renovated in the past 5 years and is being offered at a very good price that will lead to a healthy cash flow.  Now I've got myself thinking - if the pictures of the interior are current pictures(very little obvious work needed), both units are rented, and my offer is contingent on all inspections, how badly do I really need to see the inside before making an offer?

Anyone have any thoughts or advice?

Joe Villeneuve · Answer

I've never walked through any properties before I made an offer.  I have inspection periods built into my offers where I walk through my properties after my offer is accepted.  I make my offers based on math, and my REA's knowledge of the property.  My REA knows what I want and don't want, knows what questions to ask of the Seller's Agent, all before I make any offers.

Drew Sygit · Answer

@Michael Foleu what Joe said!

Ronald Allen Barney · Answer

Get a walk-thru of either yourself personally or an agent face-timing to you where you direct the camera as he does the physical walking (or the agent's flunky).

Theresa Harris · Answer

Walk through the property. It shouldn't take much time and you should be able to do it quickly after it is listed.

Mike Dymski · Answer

Yes, this is much harder and requires more precision than you realize.

Jesse Arriaga · Answer

I've never liked the idea of not walking a property we intend to buy, especially if it's a rehab. It's impossible to tell how bad of shape something is in without hands on inspection. If you don't have the expertise personally, bring a contractor to walk the property with you. You will learn as you go. There is no substitute for experience. I don't care how many deals you've done, there is always another lesson to learn around the corner. We don't typically buy properties that someone else rehabbed. We find that that the ROI doesn't meet our minimum threshold. We did buy a 10 unit apartment complex with the plan to turnover the leases at expiration, while making minimal changes to meet a Sec 8 requirement. That deal has been a home run. We increased one bedroom rents from $550 - 600 to $750 and 2 bedrooms from $750 - 800 to $950. We stay full. In summation, we were taught that if you're not embarrassed by your first offer, it's too high. When buying distressed RE, the key is in the follow up. Most sellers are not going to accept your first offer. The best thing you can do is make more offers and expect to have a lower closing ratio. I would also say that once you understand different exit strategies, you get better at asking questions to better understand the sellers true motivation to sell. That's the key to knowing how to style your offer.

Best,

Jesse Arriaga

Michael Foleu · Answer

Thanks for the input everyone, its always good to hear different points of view.  @Mike Dymski can you expand a little more on what you mean by precision?

Just an update, the BRRR property accepted an offer before they even called my agent back, and I am walking through the other property tomorrow afternoon.

Michael Foleu · Answer

Just an update for anyone still following this post.  The BRRR property accepted an offer before even calling my agent back.  I went to walk through the buy and hold property.  There were others there looking so there would probably have been some competition, and the condition of property was a little worse than expected so I let that one pass.  I am still on the hunt.  Thanks again for the input.

Santiago Marquez · Answer

@Michael Foleu Exactly what @Joe Villeneuve said.

Supply the seller/seller’s agent your best offer. You’ll do this by running your numbers & checking the math.

You can also use the Fix-n-Flip calculators on BP to help in your outcome.

Should I walk through every property before making an offer?

Most Popular Reply