Cash flowing from MLS deals?

[Adam Rudolph]

I've listened to every BP podcast and they always ask the same question, "How to you get deals?" And most guests say they get them from outside sources or direct mail. I'm starting to understand that these deals are the best since there are many RE investing strategies that comes from these deals--renting, wholesaling, etc. 

But I'm wondering if anyone is cash flowing from deals they have found on the MLS? Or has anyone successfully flipped a house found on the MLS?

I'm investing in the Midwest so I'm assuming each market in different. But I appreciate any input. 

Thanks for reading. 

Best of luck to you. 

[Don Konipol]

@Adam Rudolph

2010-2012 were boom years for finding properties that cash flowed, even with 100% financing. Most were listed MLS. Prices in Arizona, Florida and Nevada were 60% below peaks reached in 2008.

Now, the Pickens is much slimmer. However, it is possible, you have to negotiate. Hard. The act of placing a for sale property on MLS means (1) the property will get maximum exposure and (2) the seller is probably aware of comparable sale prices. All leading to the sale at market price, not under market.

I’m sure that the buyers of real property and notes who engage in this activity on a full time basis are able to develop deal flow that is unavailable to most investors. Looking back on the true bargains I have purchased in both property and notes I believe they fall into four distinct categories

1- situations where the seller needs a very quick sale and I’m able to pull the trigger immediately

2- situations where the seller needs to sell and it has to be all cash because financing is not available.

3. Situations where I was able to secure specific knowledge and or information other investors did not possess.

4. Situations in which my knowledge, experience, and expertise allowed me to reach a risk assessment quite different than what was commonly thought to exist.

An example combining some of the above was a auto repair facility that was being sold in bankruptcy and had an environmental problem. Because auto repair facilities are one of my specialties I was able to assess the environmental problem was no where near as expensive or serious as commonly believed. As a result I was able to negotiate a purchase price of $115,000, paid of course with all cash no financing available. I hired an environmental engineering firm that performed the cleanup for less than $3000. After 3 months retesting showed the site to be within the acceptable limits, and I sold the property a month later for $300,000.

In a more recent situation, I was able to purchase a note from a bank for $200,000. The upb on the note was $321,000. What the bank did not know was that while the borrower was 2 months behind in payments (the property was an owner occupied bar/restaurant), the owner had a small local chain interested in operating the property. Once I secured ownership of the note, I worked out a situation where the chain operator leased the property for $3200 per month triple net with all lease payments going to me for interest payment. 18 months after I purchased the note the tenant purchased the property and I received the balance of $321,000 payoff on the note.

The point is that the profitable deals are obvious in MLS pricing, they have to be. "Worked"