Finding Deals - Strategies

[Drew Steusloff]

Hi BP community,

After spending significant time educating myself and saving for a down payment, I am ready to take action and move towards my first deal. I have been scouring Mashvisor and working with an agent to try and find properties that will cashflow. Primarily my search parameters are based on two strategies, House Hack, BRRRR, or the rare option that something can be rented immediately. My focus has been on single family homes in the Atlanta market. However, I have not seen anything that offers significant cash flow at my price point. I'm working with an all in budget of 300k and roughly a 10 percent down payment, but do have some room to increase if there is a deal that makes sense.

So far I have yet to see property listed that will meet the 1% rule and very few with a Cap Rate above 6%. I have widened my market to essentially the entire Metro Atlanta Area within the I-285 Perimeter, but this has done little improve my results. I have also looked into the suburbs, but have not seen anything that is significantly stronger of a deal. Additionally, I still feel that long term my current farm area will be a better investment, but I do not want to bank on appreciation. 

One thought I had was to perhaps put together a direct mail campaign to try and source deals, but my hesitation is that I am currently working with a conventional lender and do not have money on hand for cash deals which I feel are more typical in off market transactions. 

I would greatly appreciate anyone's thoughts or recommendations

-Drew

[Brenden Mitchum]

@Drew Steusloff

@Account Closed is absolutely correct. If you really want to find home run deals, the MLS is not the place to look at this point in the cycle. But don't worry about not being able to finance those deals. Instead, ask yourself how you can. Peter mentioned just two of many creative strategies. Then when you find someone who is open to selling you can provide them with multiple options.

However, don't discount on-market deals entirely. House hacking is still a viable strategy there. Small MF, while slowing down, is still pretty hot and difficult to house hack successfully. However, there are a number of SFHs that have potential, namely the ones with mother-in-law suites and other additions. That being said, now is not the best time to look for roommates to share common spaces with so that is something else to think about. I am also seeing some potential BRRRR deals on-market. The problem with these is that third "R." Lenders are really tightening up refinancing right now, plus know one really has a good idea of where the market is going to be in 6-12 months when you're looking to get that refi. With so much uncertainty around refinancing, I'd recommend tightening up your criteria for BRRRRs and accounting for this uncertainty. Also, start a line of communication with your lender(s) now, if you have not already, regarding refinancing.

I know we already got a little chat going, but I'd be happy to discuss these topics too with you if you'd like.