South Florida Newbie - Expectations vs Reality

[Denis Moreira]

Hi Everyone! 

I've been a BP forum lurker for a couple of months now, but I decided to knock on the door & see what awaits me.

I work in the TV production industry down in South Florida, covering all the major pro & college teams. I've been an avid stock/dividend investor since the great recession and I bought my primary home in 2009. 

Lately, I've had the itch to dive into real estate investing using the multi-family home hacking method. After listening to the BP podcasts along with Afford Anything and Creating Wealth podcasts for months now, you'd think I'd be ready with all the knowledge I need to jump in and make a deal. Easier said than done.

I've been pre-approved; up to 425k. I can go either the FHA or conventional route. I've even created an LLC in case I do go the conventional route. My goal is to rent out my current home and move into this new purchase (Multi-family).

Of course, in South Florida these days, reality is that 425k doesn't get you much; at least on the MLS. I've ran many properties through the rental analysis calculator and the numbers just don't seem to make sense in this market. I haven't found a property not in a war zone that gets close to the 1% rule. I've nearly ruled out condos because of high HOAs & unexpected assessments.

Still, I remain positive. 

Through all this, I have some questions for the BP community that I'd like your input on.

1) For listings that have been on the MLS for months (whether it's a flip or owned by a long-time homeowner), how low is a low-ball offer? Example; the rental analysis makes sense at $375k but not at $425k. Is it too much to bring them the printout of that and use it as a bargaining tool? Or do comparable sales/appraisal have the ultimate say?

2) Once again for listings that have been on MLS for months and the listing price is close to the 1% rule but they only take conventional loan offers, do you think offering near full-price but with the condition that it's an FHA loan would do the trick?

3) For homes that have been renovated/rehabbed - is it wise to put 3-5% CapEx/Maintenance in my calculations instead of 10%? Doing this gets skews the numbers back towards the green and my thinking is those type of properties will have only minor issues the first 5-10 years.

4) Many people advise to do the drive for dollars strategy, and this may be a dumb question but in a hot market doesn't that just wake up a sleeping bear? Seems like a "tired landlord" would just say oh thanks for the interest but if i wanted to sell i'll just sell at market value via the MLS, no?

5) The foreclosure & short sale market is drying up in this area but even those that are listed have prices close to market value and need substantial rehab. South florida folks, are you noticing different?

If you've read this long; thank you. Your input and knowledge is greatly appreciated.

-Denis