"I closed my first deal!"
At least that's what I wanted to say in this year of 2012...
So everything seems at a point of stillness on my side. There's no new houses I've seen on the MLS that I've already taken interest in, nor FSBO's on Craigslist. I'm at a standstill and feel restless. I also feel fairly disappointed in myself. I feel like I have ALL the tools I need to work, but there is no work to be done.
I have multiple HML's lined up, I have an awesome mentor who replies to my mile long email's full of questions (thanks by the way if you're reading), I have my own money, I have a very nice and experienced Realtor, I have passion, confidence, and ALL the knowledge I feel I need; but no house. No prospects neither.
What to do?
Why are the houses I'm looking at being bought at such high prices? Is it that the buyers are actual home buyers and not investors, thereby offering FMV? Cause that's what it seems like. I've put out three offers since I've started. I gave up after three because my offers were usually around 65% of the asking. I felt stupid after the third one. And I felt like I was wasting my Realtor's time. Don't get me wrong, I kept prospecting, looking at houses, running comps, estimating repairs and coming up with offer prices but the offers are simply too low to offer.
Non-the-less... I keep looking everyday, keep hoping, and keep thinking. I mean, eventually I'll land a deal. I know if I keep going, I should be able to land a deal within 4 months from now. It's just out of pure probability. There's no way I can keep looking for more than 12 months and not find SOMETHING. Wouldn't you agree? I mean I started in July 2012, and if I don't find one that gets accepted by July 2013 then something is wrong. Perhaps that's it. Maybe I'm too conservative. Maybe I'm too harsh on my estimates. I must admit, when I price out things, say I see a lighting fixture for $20. I'll add 7% to it for tax and say another $10 for "safety". And I did that for everything. Sinks, baths, toilets, tile, etc... And my safety amount was bigger for bigger items. Like a fridge, I'd add another $50 for safety on top of 7%. I'm going to go reevaluate my pricing forms.
Somethings gotta give.
-Manuel Acuña
Comments (19)
To beat the dead horse you need to put in more offers. Look for private sellers if you are having trouble getting stuff off MLS. I would NOT write off the MLS though just don't worry about making stupid low offers. I have bought like 4 listed properties at ~55% list in the last year or so. It took tons of offers to get those though. Start with the low hanging fruit, grab that pile of places you analyzed and put in all of those offers! One thing I have learned doing this: You can't buy a house if you don't ask them to sell it to you!
Shaun Reilly, about 12 years ago
I never make offers with an inspection contingency. I always assume I'll have to replace the plumbing and boiler and maybe even the septic system and work those numbers into my analysis. I live in a cold climate and frozen or stolen plumbing is common and keeps the retail buyers away. On the rare occasion when the systems have been fine I've made more money.
Amy A., about 12 years ago
I like that idea! Thanks for your contribution!
Manuel A., about 12 years ago
Also, Don't worry too much about "wasting" your realtor's time. Let him/her know up front that this is what you plan to do and if they want to hang on for the ride then let em! If not, its time to find a new realtor who is hungrier for your business. I let all my realtors know up front what my company's 2 and 5 year goals are and that usually gets their ears perked up. The only way to meet those goals are to utilize these realtors to their max! If they wanna be a part of your regular business in the future they need to invest their time into you NOW. Its a two way street though, take care of them when you start having deals coming in and always look out for opportunities to refer them. Go out and put more offers in TODAY. There is no passive real estate investor who has ever made it. At least not to the level of success many of us are aiming for. Glenn
Glenn Espinosa, about 12 years ago
Manuel Acuna Are you being aggressive with your offers? Not necessarily offering more but lowering your inspection time or going with no inspection contingency. Are you putting up BIG deposits? I once put up 100% EMD on a house with only a 4 day inspection contingency. I was about $4k under the next bid but I was told the bank liked my offer more and thus I got the house! Do you due diligence and if a deal is good be aggressive with your offer. Always try to have a way out unless the deal is just too good. Also, look for relistings. The theory is that the banks just want to unload their inventory at this time of year. A deal that fell through late in the year is a major bummer to them and they are willing to discount the price even more for anyone who can bring cash to the table FAST. Let us know how it goes. Glenn
Glenn Espinosa, about 12 years ago
Yes, I put in what I'd think are fairly aggressive offers. As follows: EMD = $3k Due Diligence Period = 5 days. We argued about this one... He wanted something like 20 days so I could have sufficient time to turn on the utilities and get the pipes tested, a, "MERC" test he called it. He said they pressurize the pipes, go back the next day see how much pressure is lost to know if there's a leak. I on the other hand wanted 5, and that's what we kept it at. Otherwise, no other contingencies. I've noticed some houses re-listed, I'll check that out. Thanks.
Manuel A., about 12 years ago
I was in your shoes and felt very much the same way you do. I ended up going to a sheriff's sale and purchased a house with an extra lot for $7,500.00. I went out to look at it the next day. Some guy drove by, stopped and asked what I was doing there. I told him that I just bought the house. He stated that he had been trying to buy it for a solid year. He asked if I would consider selling it to him. I gave him a price of $15,000.00. He accepted. Happy ending........... Sheriff Sale, bidders line up like Storage Wars show on TV No paperwork like with a real estate agent You know if you were the high bidder on the spot You ink the deal the same day You go home with your Deed in the mail to you OBTW I am keeping the mineral rights on the 2 lots I bought and found out that there is a gas lease which pays out $500.00 per year, per lot. Very happy ending.........
John Brodie, about 12 years ago
Very nice, congrats to you! Yeah, I'm going to just keep on trucking. It'll come eventually. :) Manuel
Manuel A., about 12 years ago
Manuel, out of curiosity, are there lots available for sale in your area?
Karen Margrave, about 12 years ago
Yes, big lots for multiple houses, even entire neighborhoods in the west, and small lots for single houses. And those large lots are not even on the "edge" of town. Some are abandoned projects with some houses built but not finished, some are just empty lots with houses surrounding them. I do know my city is planning to start developing in a specific area in the west of my city. Stuff like libraries, museums, etc... Eventually I want to own some property in the area as I "speculate" that prices will go up once the city develops there. But I haven't really went into depth and researched it. It's just a quick thought I had.
Manuel A., about 12 years ago
Manuel, every market is different, and you need to take a good look at your specific market, and see what the numbers are. You have to focus on what will work for your circumstances, and make your offers. Some agents are terrible at telling people things they don't want to hear, so make sure your agent knows you want his honest, experienced, professional opinion, and then decide if you want to make the offers. You aren't going to get a 'deal' if you don't go for one. On the other hand if your market is so tight, maybe a slimmer profit margin will have to be acceptable. You have to weigh every possible angle. As for feeling bad about the agent not being paid, the reason agents get the percentages they do is that some deals are hard and take a lot of time, others are simple and everything goes right. It usually works out, and agents get paid commissions for a reason. As an agent myself, there have been deals that were excruciating, and others that went so smooth I felt guilty with the amount paid on commissions. Hang in there. But, I do think trying to find stuff that isn't on MLS will help you. Every dollar you can put in your pocket over someones else helps!
Karen Margrave, about 12 years ago
Joshua Dorkin and Brandon Turner It's not like I feel like giving up, it's more that I feel I'm wasting time by putting in offers 65% of asking. I want to put in offers at least around 80% of asking as that's what I've read from J Scott, and others. I really don't like feel like I'm wasting my Realtor's time since he's yet to get paid off from me. I've read there's close to 0% chance of getting a offer accepted under 80% of listing. I do feel like I should offer more often, but I just feel like I'm wasting time with offers that are too low. Because when I did offer, my Realtor would say something like, "I think it's fine, but there's already many other offers, probably above listing." I don't know why he says, "probably" but it's not that he tells me no, it's that I've been not wanting to waste time with really low offers. I still go and look at houses and estimate repairs and get comps, but that last piece of the puzzle (the offer price) is never good it seems. So therefore I think, maybe I'm too conservative? And thank you to everyone else with you're comments! It feels great to see everyone else's comment! Jon Klaus I think I may look into that very soon! Thanks. And just a side note - I'm never going to quit, I really feel like this is what I want to do in my life. I just feel frustrated! In a, "I need to try harder!" Kind of way. Haha, I want to get started! The disappointment is like a critique of myself, I'm not sad, or discouraged by it, I'm still very much doing what I think I should be doing, but I'm trying to document what I'm feeling and trying to openly write so I can see from a kind of third person view, what I can be doing different. Like the yellow letter campaign! And being less conservative as I think I may be super conservative; overly conservative. But I love everyone's motivational words! :) Thank you, Manuel
Manuel A., about 12 years ago
Awesome! Keep at it. Perhaps a thread on the forums about getting your 65% up to 70% would be helpful?
Joshua Dorkin, about 12 years ago
Hey Manuel, I think you are doing great in your conservative estimates. I think like Josh said above- the key is making more offers. I like the philosophy of seeing 100 homes, offering on ten, getting one. If you are doing much more than this - you are probably offering too high. To be honest- I wish I would have begun a little slower. Some of my first few deals were stinkers (see my blog post <a href="http://www.biggerpockets.com/renewsblog/2012/12/07/evil-hard-money-lender/">here</a>)but had I been a little more careful and conservative I would have made more money. You'll make a lot more doing one great deal than ten crappy ones. Also, a few tips: 1.) There are certain strategies that work in certain markets. In my market (slow, cheap, no buyers) the MLS is all I need. It sounds like in yours- the MLS is not going to fly. However - this is not a bad thing. This is good because there are buyers! This means when you get the deal -you'll be able to sell it easier (hopefully). So the key is getting to those sellers before they go on the MLS. Like others said above- direct mail might be a great option in your market. 2.) If you don't have it already - find a Realtor who does "electronic signings" and is an eager beaver. Offer on a lot of properties. 3.) Especially look for ones that smell really bad. Smell is my favorite feature in a house because it's usually the cheapest to fix but drives buyers away and costs down. Keep in touch, stay active on the forums, and we'll help you get that deal! If you have questions about a particular deal - post the numbers up - and we'll help analyze! We want to see you succeed - and you will!
Brandon Turner, about 12 years ago
Look at each failure as getting you one deal closer to a great one. Each time one doesn't work out, you are evaluating why and finessing your approach. I like Ramit Sethi's approach, who runs the website "I will teach you to be Rich" where he states that if you don't have a "failures" folder on your computer that fills up more each week, you're not doing it right. Try that mindshift to see if it will list your spirits.
Page Huyette, about 12 years ago
Manuel, it sounds like you are in a market where house prices have started to firm up, and banks with REOs know they can wait for a buyer willing to pay market value. Unless you have cash, there's just not enough money in those deals to pay HML's and make a profit. In such markets you have to be extremely aggressive, be ready to do the work on the house yourself, and turn over every rock. Markets such as the one you're in are much more suited to buy and hold, but finding a good fixer isn't impossible. As Shanequa mentioned, you need to try to find something not listed, and Jon mentioned the Yellowletter, both good ideas. If you're going to make money in real estate, you have to be persistent, dedicated, and NEVER give up. The biggest problem with real estate investing is that people believe the stories about the easy money. Let me tell you, there are some deals that are easy, but on the most lucrative, you have to actually get out in the trenches 'work' for them! You have to be able to be objective and brutally honest with yourself, and make a decision of whether or not you are willing to do what it takes. Good luck!
Karen Margrave, about 12 years ago
Try looking for houses that aren't listed on the MLS.
Shanequa J., about 12 years ago
Manuel Acuna - Cheer up! I think you're being too hard on yourself. I also think you need to start making more offers. If you're giving up after three, you're not even giving yourself the opportunity. When you've made 10-30-50-100 and you get nowhere, then we can start to look at what may be wrong. It is just too soon, IMO. I'm not sure if you know about Dyson vacuums, but James Dyson built 5,127 prototypes before he found success. Had he given up after his third or tenth or hundredth or thousandth, he wouldn't be the billionaire he is today. (more on him <a href="http://us.gizmodo.com/5790556/praising-failure-james-dyson-talks-vacuums-5127-prototypes">here</a>.) Get back out there and keep at it, and anytime you feel like you're down or ready to give up, come back here and we'll see how we can help you make it happen!
Joshua Dorkin, about 12 years ago
Manuel, why not do a yellow letter campaign to find your deal?
Jon Klaus, about 12 years ago