How do you figure out what's a good deal in your market?

[Wayne Snyder]

I am finally in the position to be able to purchase my first property, I am pre-approved, have the capital to spend, and am running the numbers for every property on the MLS in a 40-mile radius. The problem is after running through 80+ properties I have realized two things.

#1 The Bigger Pockets deal analyzer video numbers don't work out for my immediate area, having 5% for a vacancy, 5% for repairs, 10% for capital, and 10% for property management leaves you with 0 properties that cashflow in my area. 

#2 I remember that all of the properties I have looked in the past 6 months have not cashed flowed but I am not picking up on what is the norm.

To figure out what a good deal looks like in my market, I have turned to the spreadsheets and I have started to record all the numbers for each property that I analyze and the data is now telling me what the market looks like.

For example:
 The 1% rule doesn't work for the purchase price -> rent income I now know anything that is higher than 0.68% is above average in my area.

 The 50% rule for expenses doesn't work but around 70% does.

This has also given me a good range of expected expenses based and allowed me to see a large range for how much each unit can rent given for in my area.  The more numbers I collect the better the picture of the market I get.

So BiggerPockets what rules of thumb are you creating for your area?

[Cooper Marcus]

@Wayne Snyder I'm guessing you are underwriting at the asking price - correct? If so, how about picking out the properties you like the best and start sending Letters of Intent (LOI) at purchase price and terms that do make the deals work for you? You won't know if you can get them under asking price unless you try!