What to do next, hit a wall...

[John Romero]

I'm trying to buy a cash-flow property that I can hold for a few years, while a tenant pays the mortgage and a few dollars profit every month.

Recently, i've hit a road block in my search for the first investment property. Conflicting information of where to find deals. I've been using realtors to see homes on the MLS, but i've heard people saying that:

MLS listings aren't good deals, or there's too much competition
Sheriff's sales are bad for the novice buyer
Pocket Sales/Exclusive sales are hard to find
Local connections...I've been to a local RE meeting, and all the wholesalers seemed like sharks, and you need to buy cash.

I have enough money for a down payment, and IMMACULATE credit. I want a cash flow property, where should I look to find deals? MLS, craiglist, sheriff sales? I've hit a roadblock!

[Brian Levredge]

A few other things to consider. Since you are looking to finance your purchase, you want to check with a lender before proceeding too much further. While having good credit is important, it is far from the most important part of the equation. As Will said, you not only need a down payment, but you also need 6 months cash reserves for everyone property you own (or rent) including the property you want to buy.

In addition, the lender is going to want to see that you have enough income to cover both your primary residence and the rental you want to buy. Assuming you are in shape to do both, we can look at a couple different ways.

You could find a partner and pay all cash. This of course lessens your return, but you don't have to deal with financing.

Another option is to buy a fixer from a wholesaler that will be worth significantly more when fixed up. You can use a hard money loan (HML) which generally counts as a cash offer. When finished with the repairs, you can refinance into long term financing. A word of note on this: Depending on the foreclosure rate in your market, it may be difficult to refi as appraisers are using comps from other foreclosures often times. It is very important to make sure you are buying not only well below market but that there are recent comps (last few months/within a mile) that support your valuation.

If you have a retirement account, you can often times convert it to a SDIRA (self directed) and use this to purchase real estate although you can't touch the proceeds until retirement age.

You can also look into taking over properties Sub2 or buy doing short sales. You have A LOT of options. Don't get discouraged.