I’ve been seriously looking at properties in my area for about two months now. When I say “seriously” I mean I’ve used something other than “ooooh, I like that one” as a system for what might work. The trouble I’ve had is that for weeks I’ve focused on specific neighborhoods and because the market has such limited supply (at least on the MLS), I’ve been running numbers for just about everything that’s listed – which has been an unbelievable waste of time.
Today, I switched things up in a way that I bet most veteran investors would say “it’s about time, dummy.” Let me back up a little. In the last week, I’ve been out driving for dollars twice and in nearly three hours of driving I’ve only found nine properties that are good potential fits. Now, I say that as if it’s not good – and it’s not, at least it doesn’t match the goals I’d set for those days – but I’m still so early, I don’t really know if my results are typical (yet). But that experience coupled with losing out on a few properties last week and the week before has given me some urgency to evaluate more deals. You’ll never get a hit if you don’t swing the bat, and you’ll never swing the bat if you’re not in the game (pick your metaphor – you get it). Fast forward back to today, where I looked at 117 properties in one day but hopefully through a smarter lens.
Where did I get 117 properties? The MLS – specifically a single search that one of my real estate agents created for me. Today was all about small multi-family properties across 5 or so zip codes. For the most part, I’m familiar with the zip codes – what businesses are there, what the schools are like, restaurants, etc – so I have a good sense of what might work, but that’s not what I used today. Today, at least for the initial look, I used the 1% rule (or 2% depending on your area). If rents were at least 1% of the asking price, I shortlisted the property. If rents were 1.5% or more of the asking price, I short-short listed the property and connect with my agent to take a closer look. Using that system, I found 2 that were above 1.5%, 20 that were above 1%, and tossed out 95. Now I can turn my attention to the 22 properties that seem to work and take a deeper dive. I will let you know how it turns out soon!