how can i find good deals on 3-4 fam properties?
here in Manchester, CT, all of the mls postings are priced too high to make any money. example:
just looked at a nice 4. all 2br’s. can get (on the high end) $800/unit. need very little work. listed at $359,000. and thats one of the cheapest in town. best case scenario, not figuring repairs and vacancy’s, i could make about 7-800/ month IF they give me a deal on it…
is the MLS the wrong place to look for deals? can my real estate agent find me a deal? or is there another way to find a property that cna make me some money in a high priced area???
please help me out…
paants
You don’t really find good deals, you make them.
For example, that $359k property, maybe if you can get it for $320 or $330k, it might work. How much of a down payment do you have? The more you have, the easier it is to make the property cash flow work out. So 320k with 20% down is a 256k mortgage. If you do owner occupied full doc, you might be able to get a 6.5-6.625 interest rate. That’s $1639.20 a month for the payment. Your 4 units at $750 each kicks out $3000 a month. Once you roll taxes and insurance into it, you’re still making money. At the end of the year you also deduct your interest and real estate taxes plus you take some depreciation equal to 1/27.5 of the value of the property (excluding land) and you’ll come out ahead.
i dont have any money for a down payment.
It’s much harder to make money if you don’t have it. I think there’s the old saying that it takes money to make money.
Anyway, in that case, you get a second mortgage for the other 20% and now you’re talking higher interest rates and another $550 or so a month extra. In that case, you barely break even and you make money at tax time. Real Estate isn’t the place to be if you’re trying to make a quick buck.
never said anything about a quick buck… my question is, considering the high price of multi fam rentals in the area, does anyone have a creative way to find deals below market rate???
the deal i listed above is too thin and you’d be a fool to invest in it even with 20% down. you forgot to figure vacancy, repairs, and maintenence into your numbers which make this a very thin deal.
These are the natural barriers to entry in the real estate market.
If you’re handy, the way to find the deals is to buy something that needs a little work and put in some sweat equity. Investors are always playing second fiddle to owners because owners are willing to pay more than an investor because they’re not buying the building to make money, they’re buying it to live in which is worth more.
Anyway, I don’t think you need to get too creative, you just need to find a motivated seller. For some strange reason, in the MLS listings you’ll occasionally see remarks that say motivated seller and then you know you can get a decent deal on the property. Those are the ones more likely to sell to a below market offer. But you never really know until you make the offer and start the negotiations. There’s no short cut for that part.