How did you find your first property?

[Ronald Perich]

A new colleague of mine just asked me the following. I've put my response down in the spirit of sharing and the hope that other experienced investors might share their best ways.

My response:

To be honest, I just put it out there. I had been working on my most important investment, education, for over a year. BP, podcasts, that kind of thing. I finally made the decision to act in June of 2015.

That's when I started a mailing campaign. Sent out one batch of 100 letters. Received two calls that didn't pan out. But it was a start. I also reached out to anyone I knew in real estate.

The agent that sold me my personal residence (and sold my old one), told me about an opportunity that just came across her desk. It was going to be listed very soon. The seller was about to go into foreclosure and really needed out. It also had three years of back taxes and she would end up losing the property within the next six months anyway.

When I saw the numbers, most would run away from it. The potential income was great, but the economic income stunk. She had 75% occupancy with 50% paying. And the place was really beat up.

I did my own calculations (using BP calculator and a spreadsheet I had developed from various resources) and figured I could make it work if I put the cash flow back into it for the first two years.

We just refinanced and received every penny of our original (and subsequent) investment out of the property. So we're in for $0. We should make at least $12K on it this year. That's after 16 months of ownership.

So my advice is to put your desires out into the universe and see what comes back at you. Bookmark 10 of your favorite real estate listing sites including Craigslist and review the listings each and every day. Run the numbers of the five properties that make the most send to you each and every day. Choose one of those properties to go and look at.

And don't rely on the asking price as a starting point for what you'll offer. That's the thing that will make a difference. Some people have a motivation that's not known. I offered around 20% below the asking price and settled at I think 15% below.

By the way, is the spirit of sharing, I'm putting this out there as a post as well. Perhaps someone else will be able to give you some ideas as well.

My best to you in your search! And congrats of having the gravitas to reach out to someone you don't know. That's a huge step!

One thing I should have added is why I asked for so much below asking. Some may think I was taking advantage of the situation. I disagree. 

The offer I made was fair considering how much work this took. For the last 16 months, I have taken zero out of this investment. Each and every penny received has gone right back into it. And I expect the $12K I'll make this year is half of what it should make five years from now. It's taken a lot of time and energy to get the property functioning correctly. So no, I don't consider it taking advantage of the situation. Had I felt it fair, I would have offered 50% below listing price. It's all about what will work for both the seller and for me. Remember, the seller does not have to accept your offer.