Do your best w/ current market conditions or wait for better?

[Chris Watkins]

I understand that finding the "perfect" buy & hold property is rare. I understand the concept of analysis paralysis. I even have a quote sitting on my desk right now that says "Every successful man I have heard of has done the best he could with conditions as he found them and not waited til next year for better." But It also makes sense to me to pass on just "okay" properties if they run the risk of becoming a long term headache. So here's my question:

How can you tell when you are being too picky? VS just being strategically selective? 

Here's more backstory:

For the past 12 months I have been actively searching for buy & hold properties to purchase here in Utah. I've found many properties that I liked on paper. I've been under contract on quite a few (probably 12 or so). But in my due diligence I find too many imperfections such as:

• Zoning issues
• No building permits pulled with city/county
• Too much rehab needed for the price
• Conventional lenders won't lend on it (non-warrantable condo, two houses on one parcel, etc...)
• The improvements I want to make aren't allowed by the city

I struggle to find anything that comes close to the 1% rule here in Utah, Wasatch, and Salt Lake counties. When I do, it has the above listed issues. 

I also, feel like (at least in Utah) we are at the peak of the market. Things still could go higher but I feel like I am buying high. So I am hesitant to tie up all my available down payment funds on properties in the peak of the market when, should things stabilize in the near future, it would be better to buy low if it did stabilize. 

I'm well aware of better buying power in the Midwest and how ROI is better there. But I'm not there and don't like the idea of owning out of state.

I know there is money to be made in real estate with any market. 

So am I being too picky? Do I need to change my strategy? What should be my mentality here?

[Becca Summers]

@Chris Watkins My advice, unless you're paying cash now is a great time to buy because your interest rate will be possible the lowest you will ever see in our lifetime. Yes your tenants are paying the interest rate for you in the long run but when rates go up your payment goes up and then rent rates have to go up and you're already having a hard time hitting the 1% rule. To be honest in the last year I've only seen one property that hits the 1% rule and it wasn't on the MLS. I don't want to say it's impossible but because of other factors I'm willing to still invest not hitting those numbers.

To answer on if you're being too picky maybe. In all the inspections I've been through the building permits to finish the basement have only been pulled once. If this is a criteria that is important to you then you'll want to stick with condo's and townhomes, single family homes with no basement so the builder has finished everything in the home. I'm sure you know the mindset of people around here, if they can save money doing renovations and repairs they will. 

Have you approached the non-warrantable condo owners to see if they'd be willing to do seller financing? I'm sure they have struggled to sell the property and might be interested in alternatives to get out. 

I agree with you, I think we are close to the peak in our market. You can see some of the signs inventory is starting to build up, a few months ago we had 1.9 months supply in Utah County and now we 3 months worth. Still a sellers market but very odd to have inventory build up in the middle of summer.  However with that said if you buy it right it shouldn't matter what the market does if it's meant to be a true buy and hold. One of the big reasons that will help the market into a buyers market is interest rates going up, which we've thought they'd be higher by now. After the election I can see rates going up. Then you have to look at affordability.