Determining Pricing on Duplexes

[Daniel Howard]

I've been searching for a duplex I can house hack. I have a spreadsheet that I've been using to determine a favorable cap rate and cash flow. As I've done research to determine what kind of cash flow I want and a good cap rate (I believe the cap rate in Utah is around 5%-6%, so I'm not looking for anything much higher than that), I have found that most of the listed duplexes that I've looked at (I haven't looked for any off-market or wholesale deals yet), are listed much higher than I would be willing to offer to make the numbers work. Most of the properties I've looked at would require me to make an offer typically between 50% and 67% of the listed price. From what I've read, this seems to be a fairly common situation that real estate investors find themselves in. Also, when I hear local investors talking about a property they've bought, the purchase price was typically very low compared to the current market. I just wanted to make sure that I was on the right track and not being crazy looking for something that doesn't exist.

[Jaiden Olsen]

@Zachary Jensen, I've found great value in attending the Local REIA's. There is always someone in attendance selling something at a great price. Another way that I've been able to find off market deals is to simply TALK TO EVERYONE YOU KNOW! People at work, at church, at parties on the weekend, on the bus, post it on social media, etc. I have been super surprised with the information I've been able to gather just from the people I interact with every day. I'll give an example:

I'm working on closing on a property and getting insurance quotes. I talk to lots of insurance agents and give them a brief explanation of what I do and what kind of properties I buy. About two weeks later, one of these insurance agents calls me, out of the blue, and says "Hey last time we talked you told me you buy multi-family properties, would you be interested in looking at 10-12 properties that vary between 4-12 units each? One of my clients is planning to liquidate his rental portfolio and wanted to know if I knew any buyers." Talk about a godsend! We are putting together a portfolio transaction and hopefully we are going to acquire 5-6 of these properties. 

I've found a decent amount of success in just talking to everyone!