The Massive Opportunity of Overlooked On-Market Deals

Dave:
You don’t need to send mail, you don’t need to knock on doors. You don’t even need to work with wholesalers. There are great deals sitting on the MLS right now, just waiting for you to come by ’em. Hey everyone, it’s Dave. And recently I realized that we talk a lot about off-market deals on this show, but personally, I actually rarely buy off-market deals, and unless you’re a full-time professional investor, you probably don’t either. So today we’re talking about how the MLS has actually become a sort of underrated tool for real estate investors and we’ll also talk about some of the trade-offs with off-market deals and some potential dangers that you should think about and try to avoid if you’re going to go for off-market deals. So joining me for this conversation is Dan Nelson. He’s an agent and an investor in Chicago who helps clients from BiggerPockets and elsewhere find great deals on the market every single day. So let’s jump right into our conversation with Dan. Dan, welcome to the BiggerPockets podcast. Thanks for being here.

Dan:
Hey, thank you. Appreciate it.

Dave:
Let’s jump right in. Tell us a little bit about yourself and your career in real estate.

Dan:
Yeah, so my wife quit a job once came home and I said, what are you going to do? We just bought a house. It was,

Dave:
Did you know she was going to quit the job?

Dan:
No, she just walked away
And I said, what are you going to do? And she said, I think I’m going to start flipping properties. And she started on the house we were working on and I went very reluctantly, started my real estate career. She’s been very successful at that. She’s been doing it for 20 years now. Along the line, I said, it probably makes sense to buy multi-unit properties honestly for the insurance of it. What if one of these goes bad? Then we have this to kind of, and so that’s how I got into buying rental properties and I was working with the real estate agent was really great. And then eventually my wife, I’m an insane workaholic, wanted me to quit and I came home and I’ve been doing this since then.

Dave:
What were you doing before you got into real estate?

Dan:
I was in learning and development, so very early building, sort of those training things that you do online. Then I worked for a textbook company as they moved into digital and then I actually got a job training real estate agents and that’s when I would come home and tell the stories. I said, you’ve got to do this.

Dave:
Oh, nice. Well, we are here to talk about deal finding and specifically about finding deals on market versus off market. Can you just tell me a little bit about your history of acquiring real estate and how you’ve typically found properties?

Dan:
Yeah, so it’s funny to me how much people talk about off-market deals because we started, we didn’t know anything about off-market when we started. I mean, right when we began, I started listening to BiggerPockets and all that when it started up and got into that, and that was the first time I heard about it.

Dave:
What year was that?

Dan:
It was 2004 I think.

Dave:
Okay. Oh wow, you were way back then. That’s

Dan:
Awesome. Yeah, so we were buying things on the market and that’s what we did. And over time I built relationships with wholesalers and other people and I source some off market deals as well, mostly for my clients than myself, but for ourself, most of our properties we bought are on the market and my fellow real estate agents that do investing, that’s crazy. But I think that there’s a lot of advantages to buying on market properties. So even though I have access to off market, I tend to still buy most of ’em on the market.

Dave:
So just for everyone listening, if you’re not familiar with the terminology here of on market versus off market, on market means that the seller has put their property on the MLS, the multiple listing service, which is basically, if you’ve never done this before, it’s the properties that you typically see on Zillow or Redfin or realtor.com. These are things that every agent that subscribes to that MLS gets access to off market deals describes a whole different category of property where the investor or someone who works with the investor like a wholesaler or even an agent sometimes develops relationships with a would-be seller before they put their property on the market. And there’s all sorts of advantages to this, which we will dig into in the course of this episode, but just wanted to make that clear. So tell me a little bit, Dan, why do you primarily look at on market deals when the common dialogue these days is that off market is the only way to find deals?

Dan:
Generally off market properties come with a problem. Now this isn’t true of every single one. They come with a problem and it’s a problem that no one’s going to pay you for. So let’s say one of the most recent ones I looked at, there was a crack foundation, which was of course hidden by furniture and rugs and all that kind of stuff, but I found the crack in the foundation, which wasn’t like something to be sealed. It was you’re going to have to repo the foundation. So if you repo the foundation on the house, you can’t advertise when you flip it a brand new foundation that doesn’t make anyone feel better,

Dave:
Right?

Dan:
So you just took on a price to do something that isn’t going to add any value to a property. If you buy something on the market, you could still have a crack foundation, you still could have it, but you’re not going to buy that property, you’re going to buy something else. The more likely scenario, if it’s on the market, they’re going to have taken care of a lot of the things that you have to do and the things that are wrong with it, you’re probably going to be easier to find and easier to identify. So as long as the RV there, and so I’ll say arv, which is after repair value, basically after you do the work on the property, as long as you can see what you could sell it for, it really doesn’t matter where you buy it. So I would not dissuade someone from buying off market properties, I would just say they generally have a problem and that’s why they’re off market.

Dave:
That’s a great way to put it because why would, there’s no other reason why someone would choose to sell off market to an investor rather than put it on the open market where you’re likely, especially in this type of investing climate, to get more people bidding on your property and you at least have more potential buyers with which you can negotiate. And to be clear with Dan, I agree with you Dan. I think that foundation, structural problems, inherent problems with the property are a common one. You also have people who want really specific situations like they want long rent backs or the seller has some particular stipulations that aren’t going to be popular on the MLS. So there’s usually some sort of hurdle to get around if you’re doing an off market deal. But I agree, there’s no reason to say that you shouldn’t do off market deals. I will have to admit I’ve only done one in my entire career. But the point of why I wanted to bring you on is because a lot of real estate educators right now are saying and teaching that you have to do off market. So I’d love to just hear about some of the types of deals that you see in Chicago that are on market. Are these all flips? Are they heavy rehab? Are any of them stabilized?

Dan:
Yeah, and I think that’s essentially, when I think about off-market properties, I think of it as it’s a higher skillset to buy ’em. And so the message that that’s what you should find, I think it’s important to realize that it’s a higher skillset across all of that, and we can go into more detail if you want on that later. But essentially I’ll see a property, I gave you one example, but it’s not an uncommon one that I can find between 200 and 400,000. There’s pretty much every price point in my market, but we all get lured into the lowest price is the best property,
But you have to make sure that the place that you’re putting it on the market, there’s actually a market for you to put money into it. So that matters a lot. So in the areas where you can get the cheapest properties, you have very little opportunity to make a mistake. If you make a mistake, you’re going to lose money because the margins are so tight and if you move up a little bit in price, then you can get something where there’s a lot more room to make money and there’s a lot more leverage. If you don’t hit all your numbers perfectly, you still will be. Okay. So an example would be recently I helped somebody buy a property in Evanston, Illinois, which is where I currently live, and it was on the market. A lot of people passed up on it because it’s a weird property, it has a weird kitchen and a weird layout, but the layout was relatively easy to fix. You just had to open it up and it would look like a typical property in the neighborhood. So they’re going to actually add another floor to the property, basically build up on that, and we’re going to sell it for 600,000.
And I think the market between 600 and 700, where they are is really good. So they want 700,000. I tell them, shoot for 600,000 and then if we can get there, we can get there, but if they can make money at 600,000, they’re going to do great. And that’s an example, but that’s a common example.

Dave:
Alright, time for a break, but we’ll be back soon with more of this week’s deep dish. We’re back with investor and agent Dan Nelson. Okay, so that’s for a property that you’re doing value add on. Are there any properties, at least in your market in Chicago where you can buy something that at least breaks even in terms of cashflow on the market and is stabilized, is renter ready?

Dan:
So in general, anyone that’s selling a rental property pretty much across the board, unless it’s a flip, the rent is going to be way below market value, not near market value, way below market value. So when you buy it, you’re not going to cash flow, but yeah, once you turn over those tenants and bring it up to market, there are lots of opportunities in Chicago.

Dave:
Can you explain why you say that? Why does everyone selling a rental property have their rents under market value?

Dan:
There’s two reasons. Number one, why are they selling it, right? So they’re selling it probably for one of three reasons. One, a family owned it for a long time and they passed it to their kids and they have no interest in being landlords, so they’re selling it. So

Dave:
That’s like the accidental landlord thing.

Dan:
Yes, you got it. That’s a perfect phrase and that’s a big part of the people that are selling it. And then the other one is the person that owned it that’s selling it, they bought it in 1987. They’ve been cash flowing since 1990. So the fact that rents are below market, they don’t care because they’re living in Miami and all they want to do is have tenants that will never ever call them and they know they rents are so low, so they’ll never ever call no matter what, they’ll fix everything in the apartment itself. So they don’t care. Honestly, they’ve been out of the market so long, they have no idea how much the market has changed.

Dave:
Yeah, I’ve met a lot of these landlords, people who I’ve actually lived with landlords like this to my benefit where they don’t know how much they should be charging and you get away with a

Dan:
Steal. Yeah, I’ll give you an example. I own a four unit property and in that property I know the owner on both sides of me and I told him how much we’re getting for rent, how much I’m getting for rent, and they’re getting two fifths of what I’m getting. What? Okay, not even half what I’m getting. Yeah, no. And they said that’s impossible. They said, that’s impossible. You can’t get that much rent. I said, no, I am getting it and I can show you how other people are getting that too. They won’t even listen to me. They think I’m just lying

Dave:
And are you pushing rents really high or is this normal market value?

Dan:
No, I mean try to be basically, I certainly want to be at market value. I don’t want to be the top of the market value. I don’t want to be below market value, but they own their properties outright, so they’re like, Hey, I’m cashflowing a hundred percent of my money. I don’t believe you can get that much more. Even though I’ve told them, even though I’ve showed ’em, even showed them an ad, look, here’s my ad. She goes, oh yeah, I’m sure you advertised it but you didn’t get it. So I don’t know what to tell them.

Dave:
Okay, so the first one was accidental landlords. The second one, these people who have been in the property for so long, they’ve just lost track of what market rent should be and what’s the third one?

Dan:
The third one is somebody that is a recent landlord and they bought the property where the rents weren’t at market value and then they didn’t raise the rents and they’re like, oh my God, being a landlord doesn’t make any sense. It doesn’t make any money at all. So they put it back on the market with the same tenants that they inherited.

Dave:
I mean maybe this is just me because I look at market data all the time, but that is so surprising to me that people wouldn’t try and charge what is a fair market value for their rents. Do you think people just they don’t know or they’re too nervous to raise rent?

Dan:
It’s the second thing. They probably never should have been landlords or they should have just said, I understand the value of owning a property. It’s not all it’s cashflow as you know, and you talk about a lot, of course it’s not all cashflow. That’s only one of the things and they should say, I’m not worried about cashflow. Get a property manager and then direct them to do what they don’t feel comfortable doing. But people get thrown off the fact that they have to get a property manager and how much money they’re going to lose that way. And also they don’t want to actually manage the property. They thought it would be easier than it was.

Dave:
Yeah, I totally buy this. I buy small multi-families in the Midwest, and I see this a lot where the property is for sale, and I think the thing that makes it hard is that the rents are, let’s say they’re $2,000 a month and then the pricing of the property is based on what rent should be. Then the job of the investor then becomes buying that property knowing that your business plan has to entail getting those rents up and as the investor, you sort of have to eat those whatever six to 12 months that it might take to have the tenants turn over or raise the rents appropriately, hopefully at a reasonable way working with existing tenants. And I’ve done that, but I am curious, do you think that’s the move, right? Do you buy it at the full market price or what they’re asking for and then just take on that sort of risk and responsibility yourself as the investor?

Dan:
So the answer is if you think of multi-unit purchasing as a short-term process, then you should be worried about doing the things that you said. But if you think about it as 5, 10, 20 years, what do you care about? Year one, you’re basically outsmarting the owner. That’s how you have to think about it. This owner doesn’t know what they have. I’m going to dig for this piece of gold, I’m going to clean it off and then it’s going to be a valuable asset. But of course we’ll try to negotiate the price down and it has to make sense to the buyer. But essentially that’s it. Anytime people talk about value add property, there’s lots of things you can do to the property to raise rent as well that he never did. So there’s opportunity to get exactly as it is and just clean it up a little bit and there’s opportunity to add a lot to it and get a lot more rent.

Dave:
I will tell you my opinion about this after, but I want to ask you first, when you have a client who’s an investor come to you and say you’re looking at one of these properties where it’s under market rent and the price is assuming that you’re going to get rent up, would you advise people to buy it if it’s not cash flowing on day one?

Dan:
I bought very few properties that were cash flowing on day one.

Dave:
Really? Okay.

Dan:
Almost none because I’m buying and appreciating areas, so I’m more interested in the other three things that are involved with it. I know the rent’s going to be up. I’ve already done my numbers, I’ve seen what’s there. So the four unit property I told you about, it was cash flowing at $50 a month when I bought it. Obviously that was not my goal and now it makes $24,000 a year. So the goal is to find sort of the secrets that are out there. That’s how I see it. It’s like don’t worry about year one plan, year two and year three by year three, you’re going to be cash flowing if you buy the right property. That doesn’t mean you’re going to lose money for the first two years, but it does mean you might be under a little bit the first year for sure.

Dave:
Okay. You sort of beat me to my follow-up question, but I want to expand on it. I was going to ask you what is your timeframe for breakeven? How long, just generally speaking, I’m sure it’s different for every deal, but how long are you willing to cover float a property while you stabilize it?

Dan:
So I am going to tell you basically there’s three types of properties. There’s one that cash flows from day one. It’s never going to appreciate in an area that’s not great. I mean when I say not great, I mean an area that is not appreciating and that’s part of the reason that you can get it for such a good deal. So rents, you’ll be cash flowing day one, you can buy a property that’s cash flowing a little bit and could cashflow a lot more if you made some changes and brought it up to rent. That’s what most people are looking for and also be an appreciating area. So that one, that’s what most people are looking for is going to be cashflowing probably mid year two, but certainly by year three. It all depends on the choices that they make. And then the third one that most people ignore and most people aren’t interested and most people on the forms would tell you not to buy is a property that’s not cash flowing at all. It’s not even close, but it’s an appreciation place. So if you bought all three of those properties in the same year, that first one would be cash flowing all along. It’s always cash flowing, but the cash flow won’t increase very much. The second one by year three, you’re going to be cash flowing by year 10, it’s going to really be cash flowing a lot. That first one will be similar to where it was when you first bought. It’ll be up a little bit, but similar,
But if you bought that other one that’s not cash flowing from day one in 10 years, it’ll be beating all of them on cashflow. So it all depends on your strategy. Most people are looking for that sort of middle property.

Dave:
Well, yeah, I was going to ask why would it take two or three years? Because I’ll just tell you my general strategy is I’ll float it for a year because my opinion is I’ll eat some cash for a year waiting for tenants to turn over. I’ve been doing this thing where I wait for the tenants to leave, I renovate it, that pushes up values, and then I’m able to do that all within a year. Why wait longer than that? Why do two or three years?

Dan:
So everything in that middle group can be a year. It definitely can be a year. So why would it take more than that to cashflow? Because you decided to add a bathroom in every unit and you decided to put washer and dryer inside the unit and you decided to take out the boiler and put in furnaces in each unit you decided to do all that work. So you’re going to take on a lot of cost upfront. That’s going to take you a while to cashflow. But if you’re like, no, I’m not going to do any of that. Maybe I’m going to spend $5,000 in each unit patching and painting and cleaning some things up and that’s it, then yeah, in the second year you should be cashflow for sure.

Dave:
Does this strategy of buying on market deals, do you think it works for beginner investors more than experienced investors? Or what type of investor should pursue this type of strategy?

Dan:
Well, I’m going to say anyone should if the deal makes sense. But for a beginner, when I started, I was listening to podcasts and I would hear people talk about buying off market properties like, Hey, yeah, that’s what I’m going to do, and I would get on a strategy one month, then I’d get another strategy the second month, then I’d get another strategy in three months. So many things that work right or that can work. And I wouldn’t tell anyone that the way that I’ve done it or the way that I help clients do it is the only way that you can do it. But it is certainly the easiest way
And it is what I ended up doing if I was starting out, this is how I would start. If you’re an experienced person, the thing about experience is you’re going to build your network. People hope to build their network from the beginning, then they’re going to be able to get everything off market. But just imagine I had the perfect off-market deal and you’ve never bought a property before and I don’t know how courageous you are not. And you say, yeah, I’d love a great off-market deal. What’s the likelihood you’re going to get that from somebody and it’s your first time versus somebody that’s bought two three properties for and I know they’re going to close if I make someone available and they don’t buy it, the person I worked with is never going to trust me again. So it’s really hard to get the best deal when you start the best thing just to start.

Dave:
Yeah, I really want to echo that because I don’t want to bash off market deals. I have looked at several recently. I’ve only pulled the trigger on one. It was actually a lot earlier in my career. But I think the key to these types of deals is you have to be flexible when you do the off market deals because usually at least the few I’ve looked at in the last couple of weeks, it’s my agent being like, I just found out about this pocket listing. They’re going to list it in three days. Do you want it? So you have to be able to either pull the trigger really quickly, have a bank lined up, be able to buy cash, be good at deal analysis, and know the market cold so that you can make a decision really quickly. Those things work for me because I’ve been doing this for 15 years. It doesn’t always work for new investors. That’s a high pressure situation that is not always necessary to force yourself into that sort of rapid decision making for these sort of off market deals. They all sound great, but just like everything in real estate, there are trade-offs and those trade-offs are usually speed and convenience for the seller, not for the buyer. And so the buyer is going to be giving something up for finding a deal that’s off market.

Dan:
Yeah, I totally agree. One of the best deals I’ve gotten in the last two years, someone reached out to me from BiggerPockets and none of my regular buyers were looking at that moment and I had talked to him and totally he was totally ready. And then I showed it to him and then he got really cold feet and I was like, oh my God, because I’ve convinced this guy that I had a buyer and he was getting so furious with me and he’s someone I depend on to source deals for. Fortunately, the guy did end up closing, but it was such a difficult time because I don’t want to pressure someone into buying it, but if you introduce ’em to something, if it makes sense, they have to pull the trigger. That’s ultimately it.

Dave:
Yeah, absolutely. I think this is one of the reasons why I typically recommend to people, whether you’re trying to figure out how to find your own deal in the market you live in or if you’re considering which market to invest in. I more increasingly in the last few years believe that the availability of on-market deals is a crucial factor in picking a market. And this is not for everyone. If you’re an experienced investor, if you’re flipping houses, if you want to work with wholesalers, ignore what I’m about to say. But if you are new to investing and you work full-time like I do, and the majority of the people who listen to this podcast do think about this a little bit because again, there’s nothing wrong with off market deals, but it takes a lot of effort. It’s a little bit more advanced for me, especially as an out of state investor now, it’s just what I primarily do.
I just want to be able to find deals on market that is so valuable to me that I’m willing to give up a point or two in cash on cash return because I know that there’s going to be more deals available to me. I’m going to be able to have a little bit more time. You often have more options that you can consider through. There’s better comps for on market deals. So there’s all these advantages that I think often get overlooked when people just look at like, Hey, I can buy an off market deal for 10 grand less than I can buy this one on market deal. You sort of have to look at it a little bit more holistically.

Dan:
Yeah, I totally agree. I mean, to me it’s equivalent to you saying, I buy all my groceries at the supermarket, and then you have someone that says, I grow my own food. It would be cheaper. It’s not easier though. It’s much more difficult and it takes a lot more a higher skillset. I think it’s great if somebody says, I want to be a wholesaler. I want to find my own off-market deals. It is essentially a full-time job in your part-time, telemarketer part-time negotiator. For most people, that’s not a job that people would sign up for. Even what I do is all day long I’m dealing with conflict and negotiating and something I’m extremely comfortable with. So if you feel like, oh, those are my two favorite things, then this is probably the right path for you. If you’re thinking, oh, I don’t love to make phone calls where I’m having to be in really tense conversations every day off market might not be what you want to do.

Dave:
Yeah, well it’s so true because off market deal finding is a very different skillset than being able to analyze and operate rental properties. It’s just like you said, it’s marketing versus operations or versus analysis. And honestly, I would hate doing it. You have a very calm demeanor, Dan. I bet you’re very good at this, but I don’t know, it would stress me out way too much to do that type of thing. We got to take a break for some ads and then we’ll be back for more of my conversation with Dan about the value of making on market deals. Thanks for sticking with us. Here’s more of my conversation with Dan Nelson. So Dan, tell me a little bit about if people are into this idea, maybe they’re curious if their market offers these kinds of on market deals, what should people be looking for if you’re just, let’s assume they’re working with an agent or they’re just perusing zillow realtor.com, what should they be looking for?

Dan:
Yeah, I mean, I’m glad you brought up those apps too, because 20 years ago it was much easier to find and source off market deals because you really had no idea what your property’s worth and Zillow and those other apps aren’t a hundred percent, they can be off as much as 20%. I’ll give you an idea. So people say, where do you get most off market deals? It’s people I know, so my next door neighbor is going to sell her house. It’s not in great shape. And I said, what are you hoping to get for it? And she told me $200,000 more than what I could sell it if I sold it on the market and I’m trying to buy it from her.

Dave:
Where did she come up with that number? Was it just a estimate kind of thing?

Dan:
Z told her that’s what it was worth? Yeah,

Dave:
And they get anchored to that number. They see it and they’re like, that’s it. If they consider it in their bank account without thinking twice.

Dan:
So because of that, it’s really hard. So usually if you get an off market, there’s usually a reason soft market as we talked about. So wherever you’re looking, essentially do your math. Obviously BiggerPockets has a rental calculator that you can look at, but ultimately realize that you’re going to get probably if it’s spent on the market for more than two weeks, some money off of it, whether that’s 3% or 5%, some will be more, but essentially that. And then there are tools out there that you can use rental comps for, but most people when they do this, they look at the average rent or worse, the median rent. If that’s what you’re hoping to do, it’s going to be really challenging for you. You can’t get average or median rent in 2024 because it’s pulled down by all these people that own their property outright or got a 3% mortgage on it, and they don’t care that they’re not at market value. So on one street in Chicago, I told you about my street, you might see a two bedroom, one bath go for $1,100 all the way up to $2,500 a

Dave:
Month. That’s great.

Dan:
The same one in some cases you have to make a few upgrades to it to get it up there, but if you’re hoping to charge $1,100 or get the middle of that price, so we’ll say that’s $1,600. If you’re willing to do that, it’s probably not going to cashflow. So you got to look at the top third and say, that’s what I’m looking for, not the highest price that’s out there, but certainly the top third because that’s the 2024 rental price. Otherwise it’s just not going to make any sense.

Dave:
Yeah, that’s such a good point. I think this happens a lot, especially on BiggerPockets. We offer tools that help you estimate rent. I help design this tool, and we specifically show the distribution of rents. If you’re not familiar with what that means, it basically shows what percentage of properties are. If the median rent is 1500 bucks, what’s the high end there? Is it 1800? Is it 2,500? And same thing on the low end. And I think it’s super important not just to consider what Dan was saying is like, is the median actually representative of market rent? But also where does your property fall within that range? Because a lot of times what I’m buying is maybe it is around median when you buy it,
But then once you do an upgrade to it, you need to be analyzing your deal at the 75th percentile. And I never recommend people go the hundredth percentile. You don’t want to be counting on getting the best possible rent in your entire market, but if you have one of the nicer products in the area, you should count on that and you should have trust that you’re able to do that. So I think that’s a great way of looking at it. And I’m partially to blame for this. I put out a lot of content talking about the rent to price ratio in a city, and what we do for that is we use the median rent and the median price. Like Dan said, that’s not what you should be looking for. You shouldn’t be looking for a median rent place. You should be looking for a place where there’s some efficiency between the rent that you can get and the price that you can get as well.

Dan:
Yeah, I mean, I use that tool every time I use it because so many of my clients are from BiggerPockets.

Dave:
I love hearing that, by the way.

Dan:
Yeah, no, it’s great. It’s phenomenal. I started off using BiggerPockets as an investor and to be on the other side that most of my clients come from BiggerPockets. It’s just been amazing. But I show them that and I show them, see all these other numbers. Here’s the number of the BiggerPockets is saying you should get. And I literally say, that’s the sucker rent. If you’re charging that rent, don’t buy a property because it’s not going to work. It’s great that there are lower rents out there and there should be that opportunities out there. But I just go back to the same thing. If you’re in 2024, you got to charge 2024 rents. You can’t charge rents that somebody was charging even in 2014. It just won’t work.

Dave:
Do you target properties that have a little room for upgrade? Are these B class properties or where do you think the sweet spot is for on market deals?

Dan:
So yeah, I mean, I would say low bs. I mentioned before a second bathroom. Most of the rental properties in Chicago are pretty big because the city was built by people that rented. And so there’s so many rental properties in a lot of ’em are really large, but back when they were built, people didn’t take showers every day. So having one bathroom for your whole family was, it’s so funny to think about that. Yeah, that’s true. It wasn’t a big deal. Maybe they took a bath a week. So the idea of having a second bathroom is just seems crazy back then. But now most people want a second bathroom and it’s relatively easy to add a second bathroom and then you do that and that is the biggest impact you’re going to have on increasing rent. So yeah, I look for those kind of properties and other ones that need some work. A lot of people want something that’s a little bit closer to ready to go. So it depends on the person. I don’t want to do anything or I don’t mind spending just a few thousand dollars painting or something like that. So it depends on the buyer.

Dave:
Dan, this has been super helpful. I’m just curious if you have any thoughts on the flip side of this conversation. Where when do you think is the right time for an investor to look off market?

Dan:
So when does it make sense? It makes sense once you’ve learned how to do it. To me, once you’ve learned how, when I say learned how to do it, learn how to be an owner and a property manager and work with tenants, and then you can start to say, Hey, this is what I want to do. And you can get a sense of what really would work for you. And then you can start to build up your network. Obviously there’s lots of tools and all that available, but you are competing against a bunch of people. But if you start to just kind of get to know the area, Hey, I like this area. I’m in this area. And just focus on that area, that’s what real estate agents do. We focus on a particular location and we just target that. But if you do that and people get to know you and you’re essentially the mayor of that area, that would be a great way to do it.

Dave:
Awesome. Well, great advice. Dan. Thank you so much for joining us today. Any last thoughts before we get out of here?

Dan:
I would just say that there are opportunities all over the place, and the hardest thing about buying your first property, it isn’t cash flowing, it isn’t anything else. It’s getting over your own fear. Totally. And I say that word, that’s it. Once you buy a property, you will see the world completely different. You can listen to all the podcasts, you can read all the books, but you’ll start learning once you buy a property and you’ll just see the world differently.

Dave:
Totally. Yeah. I forget who was saying this. This is not an original thought, but you hear on these podcasts, other real estate podcasts, the mental leap that it takes to go from zero to one is huge, but to go from one to two is not that big, two to three, it just gets smaller and smaller and easier and easier every time. And so if you can find something that you’re comfortable with to go from zero to one, you’re going to benefit from that. From years, you’re just going to learn that there are things to learn about this industry. It’s not that complicated. You can figure it out. Most people who are willing to put in the time can absolutely figure this out.

Dan:
Yeah, I mean, I would tell you that most of the people that bought the properties that you’re going to buy ’em from, they got into real estate investing. They couldn’t do anything else. That’s how easy they consider

Dave:
It.

Dan:
You’ll be surprised how many people, and that’s one of the reasons rents are so far below market, is because they just don’t know what they’re doing, but they found a way to get in, and it’s easy enough to do that. If you just get over your fear, you’ll find out that there’s lots of opportunity.

Dave:
Awesome. Well, thanks so much, Dan. We really appreciate being here.

Dan:
Thanks, Dave,

Dave:
And thank you all so much for listening. We hope you enjoyed this episode. If you did, make sure to share it with a friend who’s been saying that you can’t find on market deals. Send them this episode and hopefully they’ll learn something and maybe find an on market deal for themselves. Thanks again for listening. We’ll see you next time.