Viability of Zillow/Redfin For Full Multifamily Deals?

Question

Hi All,

As I begin my real-estate investing journey, I am primarily interested in house-hacking within Kansas City, MO. How did some of you guys find multifamily properties? Were you guys able to transform Zillow/Redfin hits into pursuits on deals, or successful deals?  It seems like that's what most people would do -- expect a couple keystrokes to yield a good deal.

And it feels like that's what I'm doing: expecting third party results to be some kind of magic trick. My instinct is telling me I'm doing things wrong: that third party sites offer neither unique data, nor fresh data, and that I'm wasting my time browsing them. I've got a part of my brain telling me that this is the easy thing to do, and that real deals probably take a bit more digging. Am I totally incorrect? Have some of you used these third party sites to great effect? If a third party site wasn't the impetus for your first house hack, what was? Eager to hear stories!

Tyler Cote · Answer

Agree with Bjorn. MLS can be a viable source. I think if you're browsing the new-to-market listings, it could well be a waste of time. I'd a) partner with a realtor who understands investments,  b) eye properties that have been sitting on the market for 60+ days. c) run the numbers and make offers on a bunch. You'll run into some who are motivated to sell at a discount. The alternative -- setting up a system for finding off-market deals -- is riskier if you're just starting out and less likely to produce results without infrastructure and significant capital to feed it.

Evan Polaski · Answer

@Joey Gorombey, what type of multifamily property are you looking for?  As noted, the broader you can cast your net, the more likely you will catch something.  I am not a "full time" investor, so I don't want to be spending a lot of money on direct mail marketing campaigns, or spending hours on courthouse steps, or walking down the street knocking on doors.

The MLS is great, and therefore Zillow/Redfin, because you know that generally speaking all properties listed are truly for sale.  And from there, at least in my market of Cincinnati OH, I would say 99% of everything 4 units and under is listed on the MLS.  Occasionally, I will happen to drive past a FSBO that is not on MLS (and my MLS I mean the true MLS and include Zillow and Redfin), or on Loopnet but not MLS.  As you get over 4 units, you start to see more divergence away from MLS.  When you get over 30 units, you rarely see that on the MLS and those are with brokers that specialize with commercial properties.

So beyond what size of asset you are looking for, the other question is how much time/money do you have to dedicate to hunt down deals?  Anything not listed, either MLS, Loopnet, or broker website is off market.  For these, you need to actively hunting.  To actively hunt for assets, you are spending money either directly or through opportunity cost.  All in the chance that you can uncover a deal to make some money.

Jonathan Greene · Answer

The MLS is fine for multis even though the market across the country is hot, but what most people forget or don't realize is that sites like Zillow and Redfin and several others mischaracterize a ton of multi-families as apartments or commercial and then they are not searchable in your parameters. So, you also need an investor-friendly agent who knows where to find them on-market, as well as off-market, which Zillow will never have unless it's a FSBO and there aren't deals there until they sit a long time.

Jon Kelly · Answer

@Joey Gorombey 3rd party sites are the easiest sources for deals. There is no barrier to entry. You can spend 30 minutes and scour your area(s) for deals.

What are your other options? You can network with agents, brokers, investors, wholesalers, etc. This will take time to build relationships and find the right deals.

I would recommend doing both. Continue to look on 3rd party sites and build your network. Sooner or later the right property will come across your lap and you will take action.

Bjorn Ahlblad · Answer

The MLS can produce good deals and brokers can produce bad ones. Knowing how to tell the difference is what counts. Usually the numbers from brokers and listings are hopeful, misleading or just plain wrong and you need the ability to find the right numbers and underwrite from those.

If you are new hang out here, read books, attend podcasts, join a local LL Association and network. Do it all; in this market and most places cash flowing deals are in short supply. So be prepared to dig. All the best.

Drew Cheezum · Answer

@Joey Gorombey not to beat a dead horse but I agree with all that's been said above. The MLS is your best best for small MFHs since that will have the most accurate and up-to-date information. However, the best way to buy properties at a discount is through off-market deals. Networking with people in your market that have close ties to sellers is your best way to find off-market deals (REALTORs, wholesalers, fellow investors). A lot of off-market deals are sold under market value due because they aren't bid up by bueyrs and often times the sellers have extrinsic motivation for selling outside of price.

Joey Gorombey · Answer

Thanks all, for the replies! @Evan Polaski -- I'm looking for a duplex, triplex, quadplex, or townhome-- anything that has 2-4 units. Small multifamily for at or under about 300k. Full units, too.

Bjorn Ahlblad · Answer

Land Lord Association, or Real Estate Investment Group. Easy to find local groups on google.

What every investor needs to know about cash flow by Frank Gallinelli

Managing Rental Properties by Brandon Turner

Joey Gorombey · Answer

What is an LL Association? And, what books would you recommend?

Viability of Zillow/Redfin For Full Multifamily Deals?

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