where are you finding your deals right now?

Question

HI All, I am curious where you are finding your best deals right now. I am in the Richmond, Va, and surrounding counties area, and even the foreclosures are priced at near full market value and still need pretty complete rehabs. Most everything I am seeing is priced so that there is just nothing left over. I see multiple foreclosures needing rehab priced at their assessed values.

When I do see a real deal, there are 20+ contracts on it. When I look later to see what it sold for, IMO, it was above what my assessment showed would turn a decent profit. I suppose a buy and hold person would still be okay at those prices, though.

Are you guys just taking what is there and making less per deal or skimping on the finishes? Are you finding deals outside the normal MLS route, e.g. local bank foreclosures, driving for dollars, wholesalers, etc?

Laura R. · Answer

Thanks Patricia! I have been looking all over and following things through the initial selling process and through the rehab and then back on the market price - things that I evaluated and know what the reno costs were, at least ballpark. Either people are working on very thin margins or they have very cheap labor or product costs. My husband is a contractor, and even when we factor in doing most of the work, there is not enough there to account for the "what ifs."

Our plan is to do some buy and holds as well, so this may be the time to explore that. We are also going much farther outside of the immediate area to evaluate deals and looking at ways beyond MLS to find things. Something will break, I hope...

Laura R. · Answer

Kevin,

We looked for about a year and made 8 offers before finally closing on a deal when we first started out. We weren't willing to take something that didn't have a decent margin because we didn't know what we didn't know and wanted plenty of room for error. We found a great deal and resold it on the 1st day on the market, so keep looking and don't compromise just to get something. If the numbers aren't there, they aren't there. I had those $$$ burning a hole in the pocket as well, so I totally understand your position.

I think the difference between then and now is that we made 8 offers to get 1. So far, in the last 2 months, I haven't see 8 things I would make offers on. Someone is buying them, though, so I don't expect to see the situation/inventory getting much better any time soon

:(

Laura R. · Answer

John, I've been looking more at estate sales in my area as well. I think our markets sound similar insofar as the foreclosures and short sales, they are at near market prices. Add in the rehab, and there is almost zero margin, and I am not seeing the resale going so much higher as to compensate for that.

Laura R. · Answer

Hi Ryan,

I have been following several areas in and out of the city undergoing gentrification and am mostly aware of where I would want to pick up something, but as soon as one is available, I can hardly get in to see it for all the contractors' trucks lined up, lol! Seriously, went to look at a house in Chesterfield over the weekend and had to wait for 2 groups to go through, then us, then people were waiting behind us. It is crazy. Riding around town, all I see are tacky "we buy houses cash" signs. Maybe it works, but I don't think that is my style.

I just became a realtor in order to get the MLS and access to homes, which is helping tremendously with speeding up our process, so I am sure the right deal is just around the corner.

I am with you in believing that it is a seller's market right now. I just saw on the news this morning that RVA is the 4th hottest real estate market in the country on Zillow's hottest housing markets - 1) Seattle, 2) DFW, 3) Denver, 4) RVA

Patricia Bowler · Answer

hi! My deals are coming from off-market sources, like wholesalers, bird dogs. But I do a lot of buy and hold too so I can pay a little more - but I don't pay ridiculous prices either.

Happy hunting!

Kevin Mcnair · Answer

I am having the same issue. I have been looking since last January and still have yet to find a deal. Its hard to be patient when you have money to spend. :(

John Weidner · Answer

MLS and mostly estate sales.  They tend not to be updated.

Most of short sales and foreclosures are priced above retail

Ryan K. · Answer

Laura, I'm in the Richmond area as well and have been seeing the same, the deals are scarce and I believe some are over paying and have no room for profit. There are a couple areas in the city where gentrification is taking place but you really need to know it block by block to get an idea of potential resale. A little too risky for me right now. Even buy and hold property deals are drying up. Basically it's a sellers market. If you keep looking I'm sure something will pop up for you, or if you haven't done it yet look for off market deals.