Tips & Tricks for Real Estate Investors
To Finding Investment Properties In A Tight Market
PREFACE
Sourcing investment properties requires a plan, not magic. Most properties acquired by investors are “on market, ” meaning they’ve been listed with a real estate agent and are publicly available to anyone.
So any sourcing plan should include a strategy for targeting “on market” homes that meet your criteria.
There also is a grey market for “off market” deals. Here, you might, with heavy emphasis on the might, get a better deal on the property. But, “off market” deals typically require more experience and knowledge to execute.
Finding and developing relationships with wholesalers is a good place to start with “off market” deals. Utilizing a mix of the on and off market strategies laid out for you in this guide will set you up for successful sourcing.
Sourcing investment properties requires a plan, not magic. Most properties acquired by investors are “on market, ” meaning they’ve been listed with a real estate agent and are publicly available to anyone.
So any sourcing plan should include a strategy for targeting “on market” homes that meet your criteria.
There also is a grey market for “off market” deals. Here, you might, with heavy emphasis on the might, get a better deal on the property. But, “off market” deals typically require more experience and knowledge to execute.
Finding and developing relationships with wholesalers is a good place to start with “off market” deals. Utilizing a mix of the on and off market strategies laid out for you in this guide will set you up for successful sourcing.
Chapter 1
ON MARKET Even in a tight market the multiple listing service, or MLS, is a critical resource for most professional investors. Buying off of MLS requires clarity, speed and persistence. Clarity in that you need very clear parameters on what you will buy (minimum square footage, minimum bed/bath, maximum property age, required construction materials such as brick, etc.). Speed in that you need to have a system in place so you are notified immediately when a new listing meets your criteria. Persistence in that you must be prepared to make many offers, receive many rejections and followup like a pit-bull. Here are some tips for landing on market (or nearly on market) deals: Enlist the help of an investor friendly real estate agent: Most agents primarily work with traditional buyersmarily work with traditional buyers, however there are some out there who are privy to the needs of investors and may even be investors themselves. You want this kind of agent on your team since they are already investment savvy. They can notify you the moment a property becomes available, and can draw on their experiences to give you reliable advice. Meet these agents by attending networking events like your local REIA. You also can find them by finding properties listed for rent in your target area and calling the realtors that are handling those listings. There is a good chance those realtors work with investors. Tell EVERY realtor in your target market what your criteria are and to bring their qualifying properties to you before listing on the MLS: Tell them you’ll buy these properties “as is” saving the seller the time and frustration of preparing the property for listing and saving the realtor the hassle of having to manage the property make ready process. If an agent can sell a property before it even hits the market, it means a quicker pay check, less work for them AND a happy seller who may become a grateful referrer or repeat client. If you’re a cash buyer, make sure they know this. When an agent hears “cash buyer” , they hear “quick close, ” meaning they make their money faster. Hustle. If you offer is rejected, continue to follow-up. Deals fall out all the time. If you are persistent in following up with the listing agent, you just might be in the right place at the right time to pick up a deal that has fallen out. Expired Listings: Realtors have access to all listings that never sold. As opposed to terminated listings, which were taken off the market early by the seller, expired listings are ones in which the property stayed on the market until the listing contract expired. This means the seller wanted their property to be on the market for sale the whole time, but it never sold. There’s a high probability that they still want to sell.
Chapter 2
OFF MARKET
Purchasing properties off market is undoubtedly a much more involved, tedious process than finding them on the MLS. However, there a few advantages to utilizing this strategy. Advantages of off market property buying Less competition: This strategy is more intimidating, time consuming, and difficult. Therefore, many investors either don’t attempt finding off market properties, or they’re inconsistent in their efforts to do so. This means you’re more likely to get the contract. If you're willing to do the work that no one else will, you'll get the results that no one else will. It works in the seller's favor: Sellers don’t like paying a 6% commission to realtors. If you can save them money by not involving an agent, they're going to like you more. . Maybe more importantly, make “as is” offers. If you are willing to buy the property “as is” this saves the seller time, money and a tremendous amount of hassle and uncertainty. Most sellers are ill-equipped to handle or even coordinate repairs to their home before listing it for sale. The whole process of making repairs is intimidating and uncertain for most.
Purchasing properties off market is undoubtedly a much more involved, tedious process than finding them on the MLS. However, there a few advantages to utilizing this strategy. Advantages of off market property buying Less competition: This strategy is more intimidating, time consuming, and difficult. Therefore, many investors either don’t attempt finding off market properties, or they’re inconsistent in their efforts to do so. This means you’re more likely to get the contract. If you're willing to do the work that no one else will, you'll get the results that no one else will. It works in the seller's favor: Sellers don’t like paying a 6% commission to realtors. If you can save them money by not involving an agent, they're going to like you more. . Maybe more importantly, make “as is” offers. If you are willing to buy the property “as is” this saves the seller time, money and a tremendous amount of hassle and uncertainty. Most sellers are ill-equipped to handle or even coordinate repairs to their home before listing it for sale. The whole process of making repairs is intimidating and uncertain for most.
Finding the property Driving for Dollars:
Once you've determined which neighborhoods you want to invest in, search them for distressed properties. Owners of these properties are likely motivated or straight up NEED to sell. Houses that look vacant or like they may need a little TLC are prime subjects (Note: Necessary repairs do not need to be major to be considered a hassle for the owners. Most buy-and-hold investors look for turnkey rentals that need little to no maintenance. However, if your strategy allows for flexibility in paying for major repairs, then include homes that need it in your search). Key indicators of a potentially distressed property are: -Tall grass or overgrown vegetation -City code notices taped to property -Overflowing mailbox or piled-up newspapers -Trash pileup -Boarded up or broken windows -Shiny roof shingles (indicating old roof) Bring a notepad or voice recorder with you so you can record addresses and any pertinent notes about the interesting
Once you've determined which neighborhoods you want to invest in, search them for distressed properties. Owners of these properties are likely motivated or straight up NEED to sell. Houses that look vacant or like they may need a little TLC are prime subjects (Note: Necessary repairs do not need to be major to be considered a hassle for the owners. Most buy-and-hold investors look for turnkey rentals that need little to no maintenance. However, if your strategy allows for flexibility in paying for major repairs, then include homes that need it in your search). Key indicators of a potentially distressed property are: -Tall grass or overgrown vegetation -City code notices taped to property -Overflowing mailbox or piled-up newspapers -Trash pileup -Boarded up or broken windows -Shiny roof shingles (indicating old roof) Bring a notepad or voice recorder with you so you can record addresses and any pertinent notes about the interesting
Hire Bird Dogs:
Work smarter, not harder. Increase your chances of finding a property to close on by hiring people who are willing to search for properties that meet your criteria for a referral fee. Mailmen, trash collectors and lawn-care workers are prime candidates since they pass by HUNDREDS of homes a day. They often work the same areas on a regular basis, so they can also identify a home that seems to be transitioning quicker than you can by driving through the neighborhood a few times a month.
Work smarter, not harder. Increase your chances of finding a property to close on by hiring people who are willing to search for properties that meet your criteria for a referral fee. Mailmen, trash collectors and lawn-care workers are prime candidates since they pass by HUNDREDS of homes a day. They often work the same areas on a regular basis, so they can also identify a home that seems to be transitioning quicker than you can by driving through the neighborhood a few times a month.
Bandit Signs:
Bandit signs are the yard signs you see at intersections that usually say something like "I Buy Houses!" with a name and phone number to be contacted. You can buy cheap blank signs and use a thick marker to handwrite your message. Get creative with your signs so they stand out. You'll want to place the signs in or near the neighborhoods you're targeting for investment. Be sure not to place them on someone's property, and avoid placing them at big intersections where they're more likely to be pulled out soon after you plant them.
Bandit signs are the yard signs you see at intersections that usually say something like "I Buy Houses!" with a name and phone number to be contacted. You can buy cheap blank signs and use a thick marker to handwrite your message. Get creative with your signs so they stand out. You'll want to place the signs in or near the neighborhoods you're targeting for investment. Be sure not to place them on someone's property, and avoid placing them at big intersections where they're more likely to be pulled out soon after you plant them.
Estate Sales:
Estate sales are used by people needing to liquidate several belongings. This need usually arises from events like downsizing, moving, divorce, bankruptcy and death. People conducting an estate sale often need to sell their house itself, and quickly. A simple google search will yield several sites with local estate sale listings. You can also search for estate sale companies servicing the markets you invest in. Let the auctioneers know that you buy houses. Offer them a referral fee and they’ll gladly let you know which clients want to sell.
Estate sales are used by people needing to liquidate several belongings. This need usually arises from events like downsizing, moving, divorce, bankruptcy and death. People conducting an estate sale often need to sell their house itself, and quickly. A simple google search will yield several sites with local estate sale listings. You can also search for estate sale companies servicing the markets you invest in. Let the auctioneers know that you buy houses. Offer them a referral fee and they’ll gladly let you know which clients want to sell.
Direct mail campaign:
Send handwritten letters or postcards to the owner’s address. Remember, just because someone owns the property doesn’t mean they occupy it. You can use your county’s CAD to look up the owner’s residence. Handwriting hundreds of letters can be tiresome. Many investors outsource this task to save time (and their hands). The content of your message should be short and sweet. You can tailor it based on your notes about the property, or have a generic message you send to each owner. Either way, you just want the seller to know you’re willing to buy. No need to stress too much about what to say. The example below is simple and concise. “Hello Mr. Smith, I noticed your property at 123 Apple St appears vacant. If you have any interest in selling please get in touch with me. I’m looking to purchase an investment property in your neighborhood and can close without a realtor or commissions.
If you’re not quite ready to sell, please keep this letter.
Sincerely,
Investor Ivan 123-456-7890”
Send handwritten letters or postcards to the owner’s address. Remember, just because someone owns the property doesn’t mean they occupy it. You can use your county’s CAD to look up the owner’s residence. Handwriting hundreds of letters can be tiresome. Many investors outsource this task to save time (and their hands). The content of your message should be short and sweet. You can tailor it based on your notes about the property, or have a generic message you send to each owner. Either way, you just want the seller to know you’re willing to buy. No need to stress too much about what to say. The example below is simple and concise. “Hello Mr. Smith, I noticed your property at 123 Apple St appears vacant. If you have any interest in selling please get in touch with me. I’m looking to purchase an investment property in your neighborhood and can close without a realtor or commissions.
If you’re not quite ready to sell, please keep this letter.
Sincerely,
Investor Ivan 123-456-7890”
Door knock:
A more aggressive approach to contacting the owner is door knocking. This tactic isn’t for everyone and makes a lot of investors uncomfortable. It may be worth trying since it’s can save time and money on sending mail to the owner if they answer the door. If they don’t answer, then you send them a mail piece as part of your campaign. You could include language like “I knocked on your door but you weren’t home, I’m sorry I missed you”
A more aggressive approach to contacting the owner is door knocking. This tactic isn’t for everyone and makes a lot of investors uncomfortable. It may be worth trying since it’s can save time and money on sending mail to the owner if they answer the door. If they don’t answer, then you send them a mail piece as part of your campaign. You could include language like “I knocked on your door but you weren’t home, I’m sorry I missed you”
Talk with neighbors:
Distressed properties can bring down values of nearby homes. If the property you’re looking at is even slightly distressed, especially if for a long time, it’s likely the neighbor wants it taken care of. Neighbors are often willing to give you information about the property and owner, including contact info.
Follow Up:
You must have a system for follow-up. You likely will hear “no” a lot when trying to buy off-market properties. But you will be amazed how many times you can get to “yes” if you simply stay in touch with the prospective seller. Persistence and hustle are precious qualities in this business.
Distressed properties can bring down values of nearby homes. If the property you’re looking at is even slightly distressed, especially if for a long time, it’s likely the neighbor wants it taken care of. Neighbors are often willing to give you information about the property and owner, including contact info.
Follow Up:
You must have a system for follow-up. You likely will hear “no” a lot when trying to buy off-market properties. But you will be amazed how many times you can get to “yes” if you simply stay in touch with the prospective seller. Persistence and hustle are precious qualities in this business.
Befriend Wholesalers:
Good wholesalers perform every off-market tactic listed here and more to find their investments. They get properties under contract at a discount, then turn around and sell it to other investors for a small markup. These other investors are either fix-and-flippers or buy-and-holders. Flippers typically want the cheapest price possible since their strategy revolves around short-term profit. Holders focus more on long-term cash-flow. They’re usually willing to pay a higher price than an flipper. Wholesalers know that they can make more profit from holder, so they’ll likely bring a qualifying property to you first. You can find these wholesalers by attending networking events like your local REIA, calling bandit signs, or searching “sell my house cash” online.
Good wholesalers perform every off-market tactic listed here and more to find their investments. They get properties under contract at a discount, then turn around and sell it to other investors for a small markup. These other investors are either fix-and-flippers or buy-and-holders. Flippers typically want the cheapest price possible since their strategy revolves around short-term profit. Holders focus more on long-term cash-flow. They’re usually willing to pay a higher price than an flipper. Wholesalers know that they can make more profit from holder, so they’ll likely bring a qualifying property to you first. You can find these wholesalers by attending networking events like your local REIA, calling bandit signs, or searching “sell my house cash” online.
