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Kyle SpearinPoster Pro Member
- Real Estate Agent
- Boston, MA
- 202
- Votes | 421Posts
Starting Out
Kyle SpearinPoster Pro Member
- Real Estate Agent
- Boston, MA
Posted Jun 23 2024, 23:41
If you listen to the BiggerPockets podcast, you’ve probably heard David Greene say something like “in these market conditions, good deals are made.”
I want to show you how I was able to put 0% down on a house hack/live-in flip in the Boston metro area…not to toot my own horn, but because I believe that ANYONE can create a good deal when buying a house hack.
Deal Backstory: Driving for Dollars, “Farming” and Referrals
For the past few months, my wife and I have been putting in offers around the Boston metro area only to lose bidding wars with people paying $50k to $100k over asking. Sound familiar?
After getting discouraged, we decided to take a different approach: looking for off market deals. I reached out to people in my network such as friends and family as well as local agents that I knew from being an agent myself. When I’d reach out, I would simply say something simple like “I'm looking for fixer-upper houses and can buy it off market for an on market price. If you know anyone, just let me know and we can figure something out!”
A month later, a family friend referred me to someone looking to sell after the loss of a loved one. They didn’t want to sell on the market because they didn’t want to do showings.
A Win-Win Offer: These are the Terms that Were Accepted
-$500k Purchase Price. The high end of what as-is comps were selling for in the area was about $490k.
-2 months before closing. This gave the seller time to pack and relocate. I connected the seller with agents in other markets and also set up an MLS search in case they wanted to rent instead of buy upon selling.
-My terms: a 5% commission (I’m a licensed agent) to be credited at closing towards the purchase, plus $10k towards closing costs. In exchange for paying the high end of comps for the house at $500k without going on the market, the buyer was ok paying a commission because they knew they’d have to anyway to fetch that price on market. Since I offered slightly higher than comps, it was still a good deal for them!
Actionable Steps for YOU to do the Same
1. Talk to list agents and get referrals from your network.
Chances are that someone you know knows someone who wants to sell–you just haven’t asked. In regards to real estate agents, they could save a ton of time with staging/showings and even dealing with other agents if you buy a house from them off market. You could even let them double end the deal for 5% commission because you’re taking out the competition so there’s no chance of a bidding war.
2. Find ways to Create win-win scenarios.
What could you do to help the seller solve their problem? I listened to the seller’s wants, showed them the comps for the area, and built trust by showing that I wasn’t trying to screw them over. As a result, I got terms that worked for everyone involved.
3. Don’t be afraid to “overpay”
As investors, we always want the best price, but that could be to your detriment. What if you could pay a little more on paper to get a better return later? If I’d tried to buy the same house on the market, I might’ve gotten it for $10k less but I also might’ve had to pay more.
People who do short term rentals might be willing to pay more because they know that their nightly price is more than what market rent is in certain areas. That leads me to my next point…
4. Know your comps, know your market
I bought the house for $500k knowing that I can put $50k of work into it and get an ARV (after repair value) of $600k based on comps that sold in the same neighborhood– I'm willing to put in the work to make this happen and can take my time since it'll be my primary residence.
As a house-hacker, you’re likely choosing a property based on one of your needs (close to work, near family, etc.). Once you’ve identified this, dig deep into the market and figure out its strengths (good for rentals, good for flips, short term rentals, something else?).
None of these things are out of your control, how are YOU going to make a good deal?
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