Time to start looking off-market?

Question

Hello BP!

So I decided to make the leap and purchase in North Jersey for a small MF (2-4 units) around Hudson, Essex or possibly Union. I've been using a realtor (finally settled on one that fits my style) and seeing all MLS houses. It seems to be the same story though; all the ones that are good are getting multiple offers day of or the rest are vastly overpriced. I'm using a VA loan (house hacking) and have seen properties and put in about 5 offers. I'm new to the NE market moving up from the south.

My question is, am I spinning my wheels just looking at MLS deals? From doing some reading on the NJ BP section and talking to people, it's obvious this is a highly competitive market. One where some people are willing to overpay. I know my first deal using a VA loan doesn't help my chances but I'm just getting slightly discouraged. Is it time to use other means like driving for dollars or even possibly direct mail down the road? I mentioned driving for dollars to a realtor I know longer use and he laughed at me, saying it was impossible. I appreciate the advice!

Edit: There was a lot more I could have written but I'll keep this short. I've purchased a home before but wasn't sure if I should wait it out until the fall/winter. Do MF sales get effected being out of season like SFR's do? I have no problem purchasing in the dead of winter. As far as my goals, I would like aquire 10 MF properties in the next 6 years. I still plan on keeping my W2 job.

Karl B. · Answer

It's ALWAYS time to be looking off-market....

Jeff Kao · Answer

Hi @Mark Franks, according to Brandon Turner,

"To put together a real estate deal, three things are required: Knowledge Hustle Money"

https://www.biggerpockets.com/blog/buy-real-estate-investment-no-money

Your first question is about hustle in my opinion, and here Brandon writes about ways to find deals, two of which you mentioned:

https://www.biggerpockets.com/blog/find-real-estate-deals

And here's a link in reference to your question about timing of buying multifamily.

https://www.biggerpockets.com/forums/311/topics/250619-when-to-buy-multi-family

I hope this helps!

Tom Shallcross · Answer

Deals might be found on the MLS, but you are doing yourself a disservice if this is your only outlet for leads.   It's a very reactive approach that anyone can do, hence everyone does it.

if this is something you are serious about you need to put in the time and effort to ensure you have a lead acquisition engine.  Even if it's for one property to start off, having deal flow will stop you from forcing a mediocre deal because it's all you can find.

Jacob Sampson · Answer

@Vaughn Smith makes some good points.  But I can't agree with point number 2.  I don't think you should be willing to pay more just because the market is hot.  As an investor, you have to define what a good deal is which will include some purchase price to income ratio.  Then you stick to that.  You don't adjust up just because the market is hot.

Patience will be the source of your greatest profits.  If you are excited about getting into real estate stop it.  This is no place for emotion.  That is for friends and family not financial decisions.

Vaughn Smith · Answer

@Mark Franks The Northern NJ market seems to get tighter and tighter, as a result you have to be VERY patient because you're going to lose deals or find that properties sell unbelievably fast with that being said you can still find what youre looking for, if you use these tips

1) Broaden your search: Can you live in another city or county? Can you tweak they type of multi youre in search of

2) Increase your budget: I tell clients all of the time when helping them in an ultra competitive area that you may need to come to the table with a budget higher than what you expected to get what you want.

3) Change your terms loan type: Can you offer more favorable terms? Perhaps come to the table with a large earnest money deposit or a different type of loan (many sellers have a preference for conventional loans with a 20% deposit)

If you do go off market look at tools like property shark, it proved helpful during my days as a wholesaler. If you work with a wholesaler make sure to ask all of the qualifying questions you need to in order to make sure you're getting a good deal.

Ehsan Rishat · Answer

@Mark Franks I have messaged you a link to a blog. It has a video which will show you how to work with the filters.

Mark F. · Answer

Thanks Mike, very true. I'm learning so much by this. Plus I came from a different state where things flow differently. Seeing 3 properties this week and hopefully an offer on at least one. Paying retail up here definitely seems the norm, not saying I should but even this 3 family I'm checking out tomorrow would do very well after value add and market rent raises.

Mike Dymski · Answer

If you are analyzing deals and making offers, you are not spinning your wheels...it's part of the process. You are learning the market and figuring out how to generate deal flow. Yes, direct marketing may be next. Real estate investing is all about generating deal flow and that's not an "easy" button exercise.

Sean Ybarra · Answer

@Mark Franks

Mark for any investor off market will always get you the best deals. If you got the liquid cash, go off market, use a title company to help target your criteria and send the owner a direct letter saying you want to buy. I know many people who include a purchase contract in their letter that has an escape clause.

Anything on the MLS is going for retail value, as an investor you don’t want to leave money on the table , so it would make sense to no look there. There’s resources and vendors on places like fiverr that can help you target areas.

Have a lawyer draft the letter for you and start direct mailing. There’s lots of services like pro mail and letter stream that can save you money on postage just give them a call see what they can do for you

Mark F. · Answer

@Jacob Sampson While I'm looking for other ways to raise revenue, I'm not going to fudge the numbers. If the numbers work they work. While I've upped my price point, I want the deal to work at 300k or 500k. Appreciate the advice.

Time to start looking off-market?

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