Gaining leads as a new investor

[Toby S.]

I attended a real estate investors meeting for rehabbers last night.  The leader lead a presentation on how to determine an offer amount on distressed properties.  While the information seemed very useful for the many seasoned investors in the room, he mentioned several things that concerned me.  Namely, that when evaluating leads, he only takes properties that meet a certain criteria and essentially passes the "junk" along to newbies.  He later mentioned that when evaluating a property on his own, through his experience, he is able to estimate costs fairly accurately by doing a brief walk-through.  He then suggested that by the time a new investor might arrange to walk-through a property with a contractor, that he or another seasoned investor will have already bought it.  

This may all be reality, and I understand there's competition. But my question is how does a new investor without a builder/contractor background identify potential properties? Are people still finding good leads on the MLS? I am aware of other means such direct mail, etc. I would love to find out what others did to get started or what's working for other new investors. It's otherwise a bit discouraging that think that any moderately good deal will be gone before I can find or analyze it. I greatly appreciate any feedback. Thanks everyone!

[Ryan Blake]

@Toby S. In Texas, the MLS is not a great way of picking up deals. The good ones are gone in a day or less even by investors with licenses making offers immediately. If the immediate offer isn't accepted, then it will get bid up to the point where there is now margin or a razor thin margin because of people who don't analyze the costs correctly. The off market deals have much more room because you potentially are the only one getting to go and look at that property. Still, you need to be able to get a good ballpark number.

To get good at estimating, I suggest you start with J Scott's book he wrote for BP a few years ago. Still very relevant and helped me get started. Next I would suggest you invest the $50 and buy the Contractor's Pricing Guide 2018. This is the book insurance adjusters use to figure out how much to pay on a claim. It breaks the jobs down well and gives you a multiplier to use for your area in the country. It will let you know what is a fair price per item. Finally, you need to set up a spreadsheet of some sort that you can use to put in the sq ft and major fix items to get a good quick estimate. You need to be able to estimate costs in 2 hours or less to be competitive.

I hope this helps. Let me know of any follow up questions