Investor · Greater Chicago Area and Northwest Indiana · Member since 2018 · 138 posts · 42 votes
I've been looking for a rehab property in B class neighborhoods and so far nothing has materialized. I'm using the typical general equation: ARV x .70 - repair costs = purchase price.
I understand the markets are super red hot now however. Nothing is impossible but seems like the chances of finding a deal according to my equation is .1% or less in a B class neighborhood.
I see a few C class properties that meet my equation but I do also plan on holding the property as a rental. I see a lot more issues holding on to a property as a rental in a C class neighborhood compared to a B class one.
Investor · Missoula, MT · Member since 2015 · 242 posts · 177 votes
7y
@François DesCotes
So I am a wholesaler, flipper, and rental investor in Dallas. We send out our own marketing to find deals that we either do ourselves or sell to others. We also do cold calling to reach more people.
I would not just trust a wholesalers numbers. I trust my own numbers but you need to verify it on your own to see if you agree. Finding deals takes a lot of time and the reason a lot of people can’t find good 70% deals is because they rely on guys like me to find them deals. The issue with that is that we keep the ones that are 70% or less for ourselves and sell the ones that are above 70% but below 80% to y’all. It takes a lot of time to find deals consistently and most people don’t enough time so they settle for getting deals at 80%.
One of the most productive ways that we have gotten deals is door knocking a list. It is very time intensive, but gets good leads.
Investor · Missoula, MT · Member since 2015 · 242 posts · 177 votes
8y
I disagree with Nancy, there are a number of reasons an owner would sell at a price that meets your algorithm. We find properties in B class neighborhoods that hit your criteria month in and month out in the Dallas, TX market. I don't know anything about the market that you are looking in, but keep at it. 70% is going to be a little more difficult to get and we often sell properties to people at 80%, but everyone has their own criteria they follow.
The deals are there, people that say the deals are not there are basically just saying "I don't know how to find those deals and am not willing to put in the work to get them".
Investor · Missoula, MT · Member since 2015 · 242 posts · 177 votes
7y
@François DesCotes
So I am a wholesaler, flipper, and rental investor in Dallas. We send out our own marketing to find deals that we either do ourselves or sell to others. We also do cold calling to reach more people.
I would not just trust a wholesalers numbers. I trust my own numbers but you need to verify it on your own to see if you agree. Finding deals takes a lot of time and the reason a lot of people can’t find good 70% deals is because they rely on guys like me to find them deals. The issue with that is that we keep the ones that are 70% or less for ourselves and sell the ones that are above 70% but below 80% to y’all. It takes a lot of time to find deals consistently and most people don’t enough time so they settle for getting deals at 80%.
One of the most productive ways that we have gotten deals is door knocking a list. It is very time intensive, but gets good leads.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7y
You dont "find" deals , the deals have to find you . Everyone I know is aware that I buy houses , I tell my customers , friends , etc . The deals come to me . (Most of the time when I am not ready but I make it work) I act quickly , go in all cash , as is .
You have to know the areas already . I have blank contracts in my truck . Last year I saw a FSBO while I was going to lunch from a job . I called the owner , we met an hour later , I walked the property and house ( total gut ) . i handed him a contract ON THE SPOT . We negotiated the next day , and settled in 7 days .
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7y
@Daniel Guerra Me , no I havent bought at a sheriffs sale . The competition is other cash buyers . And when I want something they always want it more . Mt deals in a class B area are deals because I dont have competition . I get there first
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@Daniel Guerra it is always tough to find good deals especially not. But I also disagree with Nancy. Lets be realistic. Rehabbers are still buying and rehabbing properties. They have to be buying them somehow.
You mentioned holding of to a property as a rental. Did you say that as plan B or are you looking for properties to rehab and rent? If you are looking for rentals the ARV X 70% rule is not at all meant for rentals. You evaluate rentals on the cash flow you will get and any potential equity you can get by buying well.
I plan on implementing the BRRRR strategy. Plan is to pull out all the cash (hopefully make a little extra cash) I initially invested buying the property and have some equity in the property. Also keep the property in a great neighborhood (low crime, great schools, low property taxes, etc.) for a rental.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@Daniel Guerra actually now that you mention it the "70% rule" could apply quite nicely tot he BRRRR strategy. If you can get 80% LTV financing then the rule would be ARV X 80%. If you can get 75% financing then the rule would be 75%, etc.