Finding a deal in an hot/low volume market

[Kashta Andrade Booker]

Hi all,

I'm a newbie and plan to co-sign and invest with my brother. Can anyone help with a strategy to use when analyzing deals in a low volume high cost market like Portland OR? What would I look for that would make it a potential deal if there is negative cashflow in my analysis?

I've been putting in reps on analyzing properties on the MLS and I am feeling stuck because the negative COC returns. I'd like some insight as to whether I'm wasting my time in this market or I'm running my numbers wrong.

Here's an example of a property my realtor found for me.

Pre-approved for 380k SFH or 500k for a Duplex

Purchase Price of the Property: $415k  3b/1bth & 2b/1bth (the 3/1 is occupied 2/1 vacant)

Loan terms: 30yr FHA 3.5% down

4.65-5% Interest Rate

Mortgage $2,149

$1,450 Rental Income

$3,037 Expenses

-$1,587 Cashflow

-97.59% COC ROI

P.S. I am flying out to Colorado this weekend for the Real Estate Rookie bootcamp and am hoping to gain more clarity.

[Joe Villeneuve]

If you went to the grocery store to buy a carton of milk, but all the cartons at this store were leaking, would you buy 1 of those leaking cartons rationalizing that you could salvage some of the milk by drinking it really fast, and then transferring the milk (or what's left of the milk) from the still leaking carton to the empty carton of milk you are replacing at home?

No, you wouldn't.  You would go to a different store that has milk in cartons that are not leaking, and buy one of those cartons of milk.

Now, in this story, if you replace the leaking cartons of milk and the market that milk is in, with those negative CF properties, and the markets those NCF properties are in, you have what should be your answer.