For most new investors one of the most difficult aspects is finding the deal. This was true in my case too. I’ve listened to hours of Bigger Pockets Podcasts, read through forums, networked with my local Real Estate Investor Community. Through that I learned that there is no easy way to find deals without putting in the work. With persistence and consistency I was able to make the right connections that got me my next deal. In today’s post I’ll talk about how I found this deal by networking with wholesalers and being specific with my criteria so I could buy with confidence.
Narrow Down your Target Focus
When that deal comes around you need to be quick in making a decision. I spent a lot of time researching neighborhoods and analyzing deals to develop a very specific buying criteria.
First step is to decide where you want to invest and also what you want to invest in. In deciding where you want to invest in, start at a high level. As you learn more about the community then get more focused: think individual streets or blocks. I knew I wanted to stay in Philadelphia so I could easily drive there and keep tabs on the property. That meant investing in a community within a 30 minute drive of where I was.
For the what, I was looking at single family or duplexes with good bones between 1000-1500 sf. The simpler properties meant that the renovation budget and scope would be smaller which meant less things to go wrong. When I say simple, I mean fewer kitchens and bathrooms. As a new and part time investor, I wanted a project (size and complexity-wise) that I was experienced with to understand what were the risks.
I narrowed in on the Cobb’s Creek section of Philadelphia, where there is a lot of development happening and shells (homes needing full gut renovations) are inexpensive. The more development happening meant the quicker the after repair value (ARV) is inevitably going to grow.
There are sometimes deals on the MLS but they are highly competitive and often won with cash offers. I had looked around with my agent and even put offers in, but ultimately was not the best offer.
I then started looking for wholesalers who were advertising properties in that area. You can find Wholesalers on Facebook groups, local real estate meetups, craigslist ads, and bandit signs. Wholesalers are in direct contact with the sellers and are great connections to hold on to. The wholesaler I used followed up with several other homes in the area after I bought that first one.
I found my wholesaler through a Facebook group and requested to be added to their “buyers list”. One of the assistants called me to follow up. I told them the types of properties and price range I was interested in. The second follow up call we discussed specific properties, one of which was Pearl House! I let them know what my max price and a few days later, I was signing over a contract.
When you sign a contract with a wholesaler, don’t be alarmed at how little actually goes into the agreement! I was shocked to find all I had to do was sign a single sheet of paper. It is a much different experience than purchasing a home through an agent and with a traditional loan.
Why I Chose Pearl House
Pearl House was that house after months of looking and networking finally felt right. First, the location was great! It’s very close to a major subway line that runs directly to the center of the city. It’s also a half a block from a Septa bus also taking you directly to the center of the city. The block it’s on has all residential use, creating a sense of community and a warm, welcoming environment. Throughout the project I ended up chatting with the neighbors constantly. This was the only vacant property on the block, so they were excited to see it being occupied again.
Second, the home itself was perfect. It was 1200sf, had a ton of original details, had great bones, and no obvious major renovation costs. I try to stick to homes that have more than 14′ in width and are greater than 1,000 sf. I see people renovating properties smaller than this and do an amazing job. However I found there wasn’t enough profit in the deal for these smaller homes.
This house was built in 1910 (ish) and still had so much of its original details. There were a handful of things I could not salvage like the metal kitchen and pink tile bathroom. However everything I could restore I did! This included large wavy glass window, intricate trim work, solid wood doors, plaster walls, and beautiful stair railings.
Check out this post for more detail on the house.
I hope you find this information helpful in searching for your next real estate deal! Stay tuned for more posts about the entire process of buying, renovating, cutting costs, and ultimately SELLING Pearl House!