With 51% of investors being new to real estate investing, the challenge is always finding the good properties.
Today more people are renting than in the past 20 years. Renting for a variety of reasons has become a choice of many, while still an only option for some. This increased number of renters makes it even more advantageous for the investor to own and operate a thriving investing business.
Stop searching the MLS for investment property
Of course my first reply is to look for property in sustainable markets, but that is covered in the sustainable market post. Once you are looking in a sustainable market, where do you seek out and find property that makes a great investment? The best properties of course are non listed properties which often confuses people. If you stop to think about it, it makes great sense. People who list properties for sale on the MLS (Multiple Listing Service) are looking to get top dollar for their property. The MLS is considered a retail outlet (sort of like shopping within a shopping mall). Of course you know you MAY find sales in the shopping mall, but for the most part you are buying retail products at retail prices. The same is true for buying property on the MLS.
Other challenges with investing through the MLS
It is all speculative. If it is turnkey, buy and hold rental property you desire you have to buy a property, guest-i-mate what you can rent it for, guest-i-mate what any repairs may cost and try to establish a pro-forma. You then have to buy and close on the property before you can even start looking for a tenant because until you own it you cannot show it to prospective tenants. This creates non income time and that cost an investor money.
If it is fix and flip properties you seek, the same challenges arise. You may have down time getting your crew to work on the renovations and of course you are paying close to retail prices.
The better place to find investment property
If you are looking for buy and hold property, the best place I have discovered is to find turnkey already rented and managed property. These properties by definition are turnkey. You buy them with a tenant and property management already in place. In essence you are buying a little business.
These properties are acquired by turnkey companies who use economies of scale to buy, renovate, tenant and manage property. The economies of scale allow you to buy better property for the money and the turnkey company has taken on all the risk of the unknowns.
As you acquire them, you know what acquisition, holding costs as well as the what the income will be allowing you to make sound investment decisions. These turnkey companies obviously do not sell these properties on the MLS as the buying audience for these properties typically do not shop the MLS for investment property. These are typically marketed through promoters like Equity Builders Group. These companies use promoters to pre-screen customers to insure that investors are ready willing and able buyers. As these turnkey companies wear many hats, they prefer to have promoters match buyers and sellers together.
If it is fix and flip properties you seek; you will best be served working with wholesalers. Finding distressed property that can be purchased cheap enough to buy fix and flip for a profit takes a lot of work and marketing efforts. These wholesalers typically create buyers list identifying interested buyers. As they find these wholesale properties they share them exclusively with fix and flippers that are on their list. As a fix and flipper, you want to have your funds in place and be able to move quickly and if you cannot the next person will. Wholesalers will typically put a contract on the property, mark it up a bit and sell you the contract for a small profit. Then they repeat the process.
You see either turnkey for the passive investor or fix and flip property for the active investor are both better served finding un-listed property though specialists that focus all their attention on searching and finding these non-listed properties.
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