Navigating through a new market and new problems

[Hugo Castellanos]

I am moving to Milwaukee soon and naturally started focusing on that market for my next few investments. I previously owned 3 properties in PA that I had gotten in the last couple of years. My strategy is primarily to buy and hold, but I wanted something else, something that would give me an edge to rent, but also not a lot of people were fighting over (meaning investors). So I started looking for the best school district I could afford until I found the three I liked best and then narrowed down to one.

Boy was I wrong! I not only started competing with other investors, but also with a large group of future home-owners trying to score a house in a great school district for their children, and precisely because they are not investors, they only have one worry, and that's that one specific house they put their eyes on, and they won't care to overpay or buy as is. In the end 10,000 dollars more in an offer can represent only  a thousand bucks more for them at the moment... or even only several hundred bucks! Their leverage is so much bigger than yours at 20-25% down for an investor... and this future home-owners just don't care, they just gotta have the school district!

All of this makes it for a very competitive and aggressive market, in which you have to know the market forwards and backwards in your sleep, because in such a market, you have to jump the gun on the property you like the day it comes out. This translates into making offers sometimes over ask because the other buyers will eat you alive at ask, or making offers without contingencies or choosing when not to give right to cure or having the advantage of a large sum for earnest money or a blitz closing (Thanks @Jason Dominski!) or any combination of the above will score you a deal or not!

I just bought 3 more houses in the last month and a half... and I was always sure I knew what I was doing... until I didn't anymore. I lost a couple of houses offering over ask, because somebody else offered a lot more over ask, I lost a house because I wrote an offer with a closing date too far out, I lost another one because I thought I had a couple of days to make the offer and so on. I think this is the most important part of what I want to transmit: just as important (or even more) as what houses you buy or the ones you lose, are the ones you will get stuck with and don't want to buy anymore! The ones where you were forced into a corner or will have the upper hand in negotiation, just depending on the way you wrote your offer and navigate through the appropriate steps of the process.

That's where I think a good broker's knowledge and experience will be the most helpful to you, when you have to navigate almost blindly through this maze at 10x your normal speed because of how competitive it is, when you feel you are stuck with 6k in earnest money in a house you didn't know some things about and your broker finds out for you that they have failed to disclose significant defects and he gets you out of it or when he helps you get a discount and a great deal or brings in his roofer in an hour and suggests you stay away! (Thanks @Michael Henry!)

In summary, know your market very, very well, and get someone reliable to help you navigate through each offer and situation individually. You just don't want someone to write an offer for you, you want someone to write the best possible offer for that specific deal!