We get out bid every flip house we try to buy, any suggestions?

Question

Me and my husband flipped our first house, sold It in April. Everything was awesome but now we can’t land our next one. The market is so good we get out bid every time we try to buy. We haven’t made a huge network yet. Any suggestions on how to get the next flip house?

Chris Seveney · Answer

@Annie Ramirez

Besides the sarcastic answer of bid more, I would also proceed with caution at this time as I see people near me overpaying significantly on flips and there have been articles written regarding past few years that flippers profits are at all time lows due to over bidding and higher renovation costs

Evan Polaski · Answer

@Annie Ramirez note that my wife and I are part time flippers who neither have the need or desire to build out marketing efforts.  We look on the MLS and are on a few wholesaler lists (but in our current market, wholesale deals are overpriced garbage that the wholesaler will make a lot more than the investor will).

We focus on stale listing.  Properties that have been on the market 60+ days.  Beyond that, it comes down to terms.  Price is obviously important, but we always offer no inspections, no contingency, cash offers, 10 day close, and no buyer side commission.  I used to call listing agent to show, and let them know right away I plan to represent myself, or a wholesaler that we have bought a few houses from to get us in for a couple hundred dollars.  Or now, I am an agent, so waive my commissions.

Greg Dickerson · Answer

You need to put a marketing program in place to generate motivated seller leads consistently and on autopilot. Then you need a system to follow up and follow on all the leads. Inventory levels are at all time lows in most markets so you need to really ramp up the marketing efforts.

Option two - build new construction infill and create your own inventory.

Corey Shimmel · Answer

@Annie Ramirez have you ever thought of doing an escalation clause

Pat L. · Answer

We have held back on some that we watched go for way above asking. For a flip or buy & hold the margins are just not there at those prices. BUT for an amateur or someone who is going to live in it they don't seem to care. I have a couple of investor friends that will spend 7-8 months on a flip & be happy with an avg of $10k NET per flip, but that's way to close to the bone for us.

The only great deals lately for us have been going to another area completely or from networking & knowing a couple of tired retiring landlords who just want out. But again cash, no conditions is the norm.

Jonathan Greene · Answer

Where are you getting your deals to look at? All on the MLS or do you have relationships with local wholesalers? In my area, both on-market and off-market are getting multi-bids on everything and as many said, selling for more than they should, but there are still deals. On the MLS, you start by looking for Back on Market properties every morning. Investment properties where their deal fell apart and it just came back on the market. Oftentimes, you can slip right into their deal as all parties don't want to do multi-bids again just to experience the same thing. To do this and to be more competitive, you should have a  one-sheet on your investment team and strategy, even if it's your second deal and just you and your husband. Talk about why you are flipping, that you understand that inspections are not a way to get back money, but a way to protect yourself, and why you like their home to flip (I know you put a lot of love into it over the years, we are just looking to take your foundation and build on it).

Annie Ramirez · Answer

We do have a hard money lender and have used this on a couple offers.  Do you see realtors who price the home lower than they should to get buyers offering way more?

Annie Ramirez · Answer

Thank you, I will look into this.  We just made an offer tonight, crossing our fingers!

Darius Ogloza · Answer

We are having the same experience in our market.  Flip candidates are few and far between in hot real estate markets.  We have developed a relationship with a hard money lender that allows us to offer all cash, no contingencies and a fast close.  Sometimes, we let the tenant stay longer after closing.  Sometimes we agree to pay the all the closing costs - including those that traditionally are paid by sellers.  Making the deal as easy as possible has worked for us on a few occasions.  We tend to win 1 out of 10 deals, which in our market is pretty good.  Keep plugging away.

Jonathan Barr · Answer

I would suggest probates.   Sometimes for whatever reason they don't marketed on MLS and you can go bid at court with less competition.  It takes more work going through court records trying figure it out. Most info is now available online. The other thing I like about probates usually the bones are good they just major cosmetic updates. I also think the probate can be intimidating if you don't understand it.  Its quite a simple process that you shouldn't be scared of.

We get out bid every flip house we try to buy, any suggestions?

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