Hi,
Where do you look for investment properties (multi unit residential)? Some properties that is close to the 2% rule.
I have been looking on realtor.com and most the properties monthly rent is 0.7% to max 1% of the value of the property.
I am new to real estate investing and I am learning more about it. I live in Massachusetts.
Thank you
Experienced landlords do not buy at full retail price - which is what you generally get on Realtor.com - full asking price. Most landlords will not buy at more than 80% FMV. In fact, FMV really has not meaning to landlords. It is the cash flow figures that are most important.
Someone who buys a rental property at something close to retail doesn’t understand the idea of the 2% rule or cash flow.
Where to look then?
What does FMV stands for?
Thank you
Fair Market Value!
Around here, the only thing that is going to cash flow is REO’s. I watch the MLS like a hawk for my properties. I’ve never seen a bank owned property not sold on the MLS. I have seen plenty of steals come and go within a day (a handful I bought)
John
Keep on eye out on craigslist. I see a lot of multifamilys listed on there, some through realtors and some FSBO.
In my experience, the majority of great deals are not on the MLS or the internet. To find a great deal you must find a desperate seller. I find the majority of my properties through personal contacts - in other words talking to people. Tell your family, friends, and everyone you meet that you buy property (and give them a business card). Over time, the word will get out and people will call you when they are desperate.
Finding great deals requires getting out of the house and meeting people. Real estate investing is a hands-on business as opposed to a stay at home, computer type business. Having said all that, I do agree with John that there are some good REO deals out there.
Good Luck,
Mike
Property management companies are sometimes good sources of properties that need to be sold. Since some people are having a hard time getting loans you may be able to find an owner who needs to sell because he cant refi.
Another source would be what is called a “real estate wholesaler”. They go out and get a property under control and then sell it to other investors. You can look on the internet or better yet, join your local REI club and get on their lists. There is still homework to do to make sure the property is in the right location, is the right price, the rehab is estimated properly, etc. But it is another source for you.
I am a landlord who finds my own wholesale property and as propertymanager said it is by finding people with problems but the most efficient way of doing it quickly is by actively looking for the problems rather than waiting for people to call you as that can take a long time to build up.
Eviction lists at the courthouse - frustrated landlord letters or calls. Can get good deals from landlords but they will most often try to sell you the house at full retail off the bat until you smack them around a little and let them know that you are not an idiot.
Probate court - letters or calls to executor or executees who now have a house on their hands from deciesed realtive. The best are out of towners that don’t know the value and don’t have any emotional ties to the house. Usually need rehab because the elderly person could no longer take care of the place.
Driving and finding vacant houses, writing down the addresses and going on your local governments GIS to find who owns it and calling them. This is where the best deals are but they usually need major rehab.
Tax Sale - call the tax man and ask him when the next one is.
Court house steps - you need to be able to accurately do title searches on your own to do this because when you buy the house you buy their liens and judgments.
We buy houses bandit signs all over the place
We buy houses ads on craigslist and your local cheapo free classifieds paper
Watch legal notices on your newspapers online classifieds and contact people that are getting foreclosed.
Etc.
You might want to try the auctions. If you are looking at keeping property in the next 12 months , foreclosed homes might the choice. If you are flipping you might as well forget what Ive said…But it looks like foreclosures peaked in april and this means there will probably not be any further equity devaluation
That being said, do your homework before going to an auction.
What is REO?
also, can someone explain the 2% rule to me? I mean, what it means and mathematically how it works? :help
2%
http://www.reiclub.com/forums/index.php/topic,43281.0.html
REO
Real Estate Owned by the bank. Foreclosures.
amd128,
Foreclosures have not peaked by a long shot. The government issued various foreclosure moratoriums to put off the inevitable. Most of those moratoriums have now ended, until another delay gets passed at least, and the market will soon be flooded with those foreclosures that were artificially held off the market late last year and early this year. Furthermore the banks are still trying to figure out how many bad loans they can pass on to the government so they are in go slow mode with their foreclosures. Meanwhile the Alt-A, OptionARM, and even prime are just beginning to blow up. :help