First Time Home Buyer

[Cory Yoviene]

Hey Everyone! I'm looking to buy my first home in the Annapolis, MD area. I am looking for a bit of a fixer upper or something to add value to. Market is hot and I'd love to find some distressed properties that are 'off market' any suggestions as to best practices for doing so? 

Thanks!

[Sam Lewis]

Originally posted by @Cory Yoviene:

Hey Everyone! I'm looking to buy my first home in the Annapolis, MD area. I am looking for a bit of a fixer upper or something to add value to. Market is hot and I'd love to find some distressed properties that are 'off market' any suggestions as to best practices for doing so? 

Thanks!

Hey Cory,

Welcome to BP and wishing you the best on your journey. 

The most deals I've purchased have been from wholesalers who specialize in finding off market deals. I met a lot of wholesalers early on through in-person networking events (Baltimore REIA), FB groups (Maryland Investors Network, among others), and in person real estate meet ups (a weekly meeting I joined with a friend of a friend in Northern Maryland).

The way I got started however was by purchasing a househack and renting out rooms. This was the safest option for me to get started because I learned how to screen and place tenants, write leases, manage maintenance requests, and analyze my rental cash flow while living for free.

I think if I started by jumping into a rehab on my first deal, I could have either been taken advantage of, or taken too much risk that would have slowed down my progress long-term. That being said, I like househacking because the properties are typically turnkey, meaning they require little (if any) work, and a mortgage company will provide up to 97% of the financing (assuming a 3% down conventional loan). 

My first purchase allowed me to cash flow more than $500 a month and eliminated by previous landlord's monthly bill of $1000 a month, plus utilities. I was then saving about $1500/month right off the bat to buy my 2nd property. I then took that dual income stream and bought my 3rd, 4th, 5th etc. 

As I continued to grow, my confidence with those initial purchases did too (many in the beginning were off the MLS btw) - I was then able to slowly but successfully analyze and buy off market deals.

If you want to jump in straight for an off market deal - nothing is holding you back. If you decide to do this, I would network with wholesalers, become familiar with a pocket of the market you want to invest in (5 or 6 zip codes), and pull the trigger when the deal makes sense. 

That being said, you will likely need hard money financing, reputable contractors, and an "out" - aka a way to either refinance the property (assuming you keep it as a rental), or sell the property if you decided to offload and reap a profit.

I hope this helps and wish you the best,

Sam