I think I missed the boat on my first property :(

[Duane Gunkler]

So I've been doing lots of reading, watching lots of webinars, listening to blogs and I found a property I was really interested in purchasing. It is a 4-unit property that I could either purchase and rent (all four units have tenants currently in place), or house hack once one of the current tenants moves out. If I were to pay full asking price, keep the rents the same, and put no money in to rehab -- the Cash Flow would be $620/mo and a CoC return of 13% after figuring in vacancy, repairs, capex, and management.

For me, this is a no-brainer that I wanted the property, but I don't have the funds to get it.  I've been trying to figure out my options, but don't really know where to begin to find either the money to do it myself, or a partner to do it with.  I have read the posts and info on doing it with low/no money down, but I just couldn't get my ducks in a row fast enough this week since finding the property.  My realtor said that they updated the notes on the listing to say that they've been getting lots of offers and that they were going to take the highest offer as of 9/1 at 5pm, but it is still showing available, so not sure if they actually accepted an offer or not.  

I know there will be plenty of other deals that come along, but I am frustrated that I wasn't fully prepared yet.  My original goal when I came to BP was to begin my real estate investing when my lease is over in February, but I don't want to keep sitting on the sidelines.  I'm eager to get in the game and learn through experience.  Back to the books I go...for now!

[Nicole Dunbar]

Hey there Duane,

I feel your pain...shopping for my 1st deal in a hot market right now, and every second that you delay due to financing, knowledge gaps, or not having the right realtor could mean a deal lost.  (and I've lost a few myself already).  But, honestly, even though it hasn't been fun - it's been an incredible learning opportunity.  And I can guarantee I won't make the same mistakes twice! 

Do you have any sort of funding in hand at all?  Mortgage Pre-qual/pre-approval? Proof of Funds letter?  Line of Credit? etc? You don't mention it...

Here's what's helping me now; I'm sure other BP members will give more tips:

1. Figure out your financing *first* (and consider having a plan B funding source as well).  If you're doing a mortgage, get at least pre-qualified and work to get pre-approved asap. That way, you're $ is in order, the seller takes you seriously, and you have a fighting chance. If you're doing private $/hard $, contact the lenders, and get a proof of funds.  When the market is hot, and you're looking at 2-4 units, you could be going up against more seasoned investors ready to do all cash, with more experience, and better market knowledge than you.  Get the $ together ASAP and have the letter to show it if you want a fighting chance.

2. Figure out if there's any 'seasonal patterns' that you can work in your favor.  In my particular market, I'm realizing that this particular summer may have been the absolute worst time for me to look using the MLS only.  *EVERYONE* was doing the same thing = bidding wars. You may see a shift in the market after the Fall officially sets in.

3. Consider trying to find off MLS deals. I've started doing that now, and it's been promising so far...there was *way* too much frenzy in my market, and 90% of what what on the MLS was trash, overpriced trash, and overpriced awesome properties that won't cash flow if you pay anywhere near the asking price. Even when it hasn't worked, for me, dealing with the owner directly (at least to start) has actually been pretty refreshing. And usually, they're just talking to me - not me and 20 other investors.

Each one of these topics is covered pretty extensively all over BP (and more), but these are the ones that I wish I really understood earlier.  Good luck!  :)