Do You Buy off the MLS in this Economy?

[Jordan L.]

I'm a newer investor looking to build passive income through buy-and-hold rental properties. I've set a goal to purchase at least 3 more SFR rentals in 2018 (I already own 3 rentals and one primary, purchased from 2014-2017). Yes, I realize this volume isn't impressive. I'd love to do more. Much more. I suppose you could say I'm setting a realistic goal for myself based on past experience.

Though I've just recently started putting in offers, I spend hours a week analyzing properties for sale in my target market.  Currently I'm looking in the Charlotte, NC area.  This is a hot, competitive market and I'm struggling to find anything that meets my criteria:  decent enough neighborhood that I would live in it, move-in ready or close to it, projected cap rate above 6.5% after expenses (including PM).

I don't mind making tons of offers and getting rejected over and over.  I don't want to frustrate my agent, however.

With what seems like sellers' markets left and right, is it moot to spend hours a day scouring the MLS and crunching numbers?

I should add to this that I live in California, and I work a 60+ hour workweek here with the goal of building capital so I don't really have the time, connections, or knowledge to look for off-market properties or remotely manage major rehabs.  I admittedly also suck at networking.  Introvert problems.

I'm thinking of shifting my target market to a less competitive area where I can get closer to the 1% rule in decent areas with a move-in-ready or very light rehab property.

Do you find what you're looking for on the MLS these days in your target market? If so, what are your criteria? I'm interested in hearing some more experienced stories.

Love BP and its wealth of knowledge!  You guys are all awesome!

[Jeff Copeland]

95% of the deals on the MLS do not make sense, numbers-wise. Which is awesome. Because I just checked, and in my county alone, there are currently 2,754 single family homes, and 96 2-4 unit multifamily property listings. Using that 95% rule, that means there are over 142 deals out there today I might want to analyze further!

I get dozens of "wholesale" deals pitched to me every week as well. Guess what? 95% of them are ridiculously overpriced as well. 

That being said, while I'll look at any deal (regardless of sourse), I usually greatly prefer MLS listings to wholesale properties.

Wholesale deals usually look something like this: "$200k, no inspections, no due diligence, cash only, close next Friday, take it or leave it.". There are so many things not to like about that...

On the other hand, literally everything in an MLS listing is negotiable. Price, closing date, financing, inspections, contract contingencies. You name it, it can all be negotiated. For example, I last year I purchased a home off the MLS. It was overpriced at the list price of $120k, so many of my competitors probably ignored it. I bought it for $96k, rehabbed, and sold for $179k.

All that to say: Don't give up on the MLS as a valid source of deals. Keep grinding, and the deals will come (often when you least expect them!)