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Updated almost 3 years ago, 01/13/2022
Hot Market, Deal Fell Through, Need Help! Brainstorm please!
Hi All,
I am in the Dallas-Fort Worth market. Very hot and still has not cooled down of substance. I've been looking since September, learned some hard lessons with lenders which wasted a few months. Made some offers, finally got a deal on condo, fell through because of HOA (lesson learned). The deal falling through discouraged me. I thought after holidays and taking a break, it'd be a reset and market will have cooled. I am typically very optimistic and faithful, but feeling slightly defeated. But recognizing it's more that I am new and learning in a tough time.
I have a purchase price amount up to $220K with 5% conventional owner occupied loan for first househack. I am with a W2 job that I was hoping to quit after I close on this property. I really wanted to have this property closed on by March because I am currently staying with family and I'm waiting to go full-time self-employed and have my W2 job get me my first deal. With the cash buyers and my price point putting me head to head with many other buyers in an area of exponentially expanding population, I feel I need to pivot, which is WHERE I NEED HELP:
In what ways can I pivot? Partnership? Get a short-term lease and wait for market dip with interest rates rising? If anyone has any other suggestions or can share thoughts on partnership ideas, please let me know. Thank you all very much in advance.
Best,
Chris
@Christopher Murphy Are you thinking of looking into another location? If you're set on a neighborhood, then your other options are to come up in price (assuming you can afford it, within reason you should be fine over a long term hold) or find a way to pay faster (line up private and/or hard money - it will cost you more to get in, but once you close you can start the refi process and get them their money back. You might even be able to start the application process before closing).
Best of luck! The most important thing is that you just don't quick. Pivot, maybe; but keep on truckin and it (maybe something different) will come!
@Christopher Murphy if you're waiting for the market to dip because of interest rates rising, don't count on it. Inventory has a far greater role on housing prices then an additional point increase in rates. Furthermore, are you tracking your numbers? A lot of investors brush this tactic off, but I find it extremely useful as a measurement for progress. How many offers are you putting in? Of those offers how many are being accepted, countered, or rejected? For your previous condo deal, that should have been avoided if you are using a reliable real estate agent. Any agent should have been aware of the HOA fees and if rental restrictions were in place. Going forward I see two potential strategies you can implement. First, try to get a deal off-market. Obviously, this will require work on your end and going direct to the seller, but in the long run could pay off. Second, you're going to have to get creative stylistically when it comes to converitng the property into an asset. What investment strategy are you trying to implement? Rent out the rooms? AirBNB? Live in the property for a year and then turn it around as a long term rental? If you're just looking at the investment in a one dimensional mindset, then you're not seeing the full opportunity, and therefore, you're not putting your best offer on the table. I hope this makes sense and helps!
Originally posted by @Simcha Davidman:
@Christopher Murphy Are you thinking of looking into another location? If you're set on a neighborhood, then your other options are to come up in price (assuming you can afford it, within reason you should be fine over a long term hold) or find a way to pay faster (line up private and/or hard money - it will cost you more to get in, but once you close you can start the refi process and get them their money back. You might even be able to start the application process before closing).
Best of luck! The most important thing is that you just don't quick. Pivot, maybe; but keep on truckin and it (maybe something different) will come!
Thank you for your feedback, truly! I have been quite flexible with my neighborhoods, despite having my preferences. And with paying with private money, I would have to go in 20%+, and couldn't refinance into an owner occupied loan, or could I?
Originally posted by @Michael Dumler:
@Christopher Murphy if you're waiting for the market to dip because of interest rates rising, don't count on it. Inventory has a far greater role on housing prices then an additional point increase in rates. Furthermore, are you tracking your numbers? A lot of investors brush this tactic off, but I find it extremely useful as a measurement for progress. How many offers are you putting in? Of those offers how many are being accepted, countered, or rejected? For your previous condo deal, that should have been avoided if you are using a reliable real estate agent. Any agent should have been aware of the HOA fees and if rental restrictions were in place. Going forward I see two potential strategies you can implement. First, try to get a deal off-market. Obviously, this will require work on your end and going direct to the seller, but in the long run could pay off. Second, you're going to have to get creative stylistically when it comes to converitng the property into an asset. What investment strategy are you trying to implement? Rent out the rooms? AirBNB? Live in the property for a year and then turn it around as a long term rental? If you're just looking at the investment in a one dimensional mindset, then you're not seeing the full opportunity, and therefore, you're not putting your best offer on the table. I hope this makes sense and helps!
That was great feedback, thank you. I have a handful of offers at this point, but hadn't thought about tracking. I will do so, good suggestion. My real estate agent was aware, but my lender did not run the numbers until about 5 days after acceptance because he "didn't expect the HOA to be that high". I did not educate myself on closing process as much as I should have and perhaps I could've tried harder to increase communication between my lender and agent. My real estate agent is hands-on and helpful, but not as aligned with my investor mindset and my lender I'm not particularly happy with. But I am in so deep I would rather just make it happen here and find an investor-minded and thorough agent & lender next go around.
Off-market is what I am trying to learn more of. My strategy is primarily rent-by-room, but I am fluid and thinking of other strategies: garage conversion, ADU, short-term rental, even get a finished van to sleep in on the property - all with the purpose of house hacking one year and keeping as a rental. My questions with off-market is what is the process of finding a deal, and turning that into a 5% down owner occupied conventional loan deal?