Very high competition!!

[John Gonzalez]

Hi Guys, 

Relatively new member here. I am getting into Real Estate Investing in the South Florida area but focusing more on the Miami area. My current plan is to do a little house hacking and buy a duplex to reduce my monthly expense of $1700 on rent while renting out the other side of the duplex. I earn a decent amount at my job (I am a corporate lawyer) but since the recession, permanent legal jobs have been hard to come by so I have been doing higher paying contract work--I've been at my last gig for 10 months but you usually change jobs every month. 

My concerns are 2: 

1. I want to get into a duplex sooner rather than later because this job may end at any moment which may make me harder to qualify for a loan (I am prequalified now for up to $360k) since my job history will look less stable. Would they be aware of this change in jobs or do they focus more on just providing the last 2 paystubs to verify income?

2. I am coming across a lot of competition here. Seems like house prices are inflated. By the time I make an offer, there is someone else offering 50k+ a reasonable price under a Cap Rate or Cash on Cash return analysis (Rental analysis). I am thinking this can be one of two things going on: Either people are looking at these duplexes and thinking of turning them into a single family home to live in so they offer more because they fall in love with the property or I am falling prey to flippers that are willing to turn it into a single family home and fix it up and get 100k more than what they paid. I think I fell victim to the former on my last offer because it was a HUD property going for an asking price of $300k and the realtor told me it went for $360k (It was owner occupant bid period so presumably investors couldn't bid, and it went for a price that doesn't justify a rental- someone probably fell in love with it and wanted to live in it and pay 60k over the asking price although Idk why bc the property needed around 35k in repairs). I think I also fell prey to the latter on another property because I offered $315 for a property with an asking price of $335k where the CMA pointed to a range of $275k-$330k and the rental analysis held me at $315k max (with 5% for vacancy, 5% for repairs, 3% for CAPEX and a 7% for management- it had a 9 yr old roof and all new AC and appliances so I reduced the CapEx).

I am wondering what I should do about this crazy competition. I have been doing things the traditional way by finding a property, going to look at it 3 days later when I get off work, and then putting in an offer a day latter. I am thinking of just going to look at it asap and if it meets a preliminary overview putting in an offer asap and using the inspection period to see if I get out of the offer--this market is pretty big so I don't think backing out will hurt my reputation. Maybe I shouldn't even look at the property if it meets the numbers and just put in an offer and use the inspection period to decide because the competition is crazy. To avoid investor competition, should I look more on HUD and Homepath properties since they give preference to owner occupants?

I want to get this $1700 rental expense out of my way and then keep saving and refinance the property to get into another one. 

I appreciate any advice you can give me along this journey. 

Thanks a lot! 

John

[John Thedford]

There is nothing wrong with putting in offers subject to inspection IF you don't tie it up for a long time with no intention of closing (only assigning the contract). With competition as stiff as it is, this may be your best solution of acquiring more properties. Some people love me on BP and others hate me for making the case to operate honest and fairly. The dishonorable people that tie up properties with promises and no intention of closing give a lot of investors a bad name AND bad reputation. I recently queried a poster in another thread whether they intend to walk away if they cannot assign the contract. They did not respond so it appears they are another game player. Honesty will take you a long way in this business! Best of luck.