In today’s ultra-competitive real estate market, sourcing quality deals is becoming more and more difficult. It is probably the biggest challenge faced by both new and seasoned investors alike. While there is not a secret recipe for finding good deals, there are a few tried and true sources that every real estate investor should be exploring.
Wholesalers are a great resource for finding off-market deals. These middle-men find a property, get it under contract and then sell or assign the contract to another investor. They do charge a markup in price, and sometimes investors get hung up on that detail. Keep in mind the wholesaler is most likely spending lots of marketing dollars and time in locating these opportunities, and what really matters is that the numbers make sense. As for the numbers, make sure to do your own due diligence when looking at an estimate of renovation and After-Repair-Value provided by the wholesaler. They can’t always see everything on the outside and inside of a house, so the best way to evaluate a property is to go look at it yourself and preferably bring a contractor that deals with investment properties. Wholesalers can be found through investor meetup groups, real estate forums online, craigslist ads, other investors and marketing signs like “We Buy Houses” that can be seen when driving around the city.
REI clubs and Meetup groups are also excellent sources of inventory as well as making important contacts. While usually offering some sort of educational piece to them, often times it’s even better for networking and ultimately finding deals. For instance, it is possible to meet a wholesaler, contractor, fellow investor or lender at one of these meetings. All of these types of people run into deals or could have a property they are currently trying to unload. In addition, it is usually a cost-effective way of getting access to potential deals. One word of caution is to be careful when being asked to partner on a deal with a person that you have no experience in dealing with in the past. It’s always best to be patient on that front and build relationships over time. The deals will come as it just about being present when the opportunity arises.
Realtors and MLS can often be overlooked in today’s marketplace because they seem obvious or the MLS system is viewed as oversaturated with competition. Realtors who specialize in investment properties can be a very useful tool though. They can find pocket deals that have not come onto the market which allows an aggressive investor to make an offer before others even see it. In addition, realtors have access to MLS and can utilize the system to hone in on specific parameters that a potential investor is seeking. Another value add that a realtor can provide is running comps on off-market deals to verify some of the numbers that are being presented by a seller or wholesaler.
Probate Attorneys are gatekeepers to potential sellers who inherit properties and many times they want to sell quickly after going through the lengthy probate process. These heirs can live out of state, not have the funds to maintain the property or in general want to cash in as quickly as possible on their inheritance. By building a working relationship with local estate planning or probate attorneys, aggressive investors may have an inside track to deals with little or no competition.
Driving neighborhoods or door knocking take a certain kind of person that is not afraid to roll up their sleeves and hustle. This practice consists of literally driving up and down streets in specific neighborhoods looking for homes that are not well-maintained, vacant or have some other issue that could be a hint that the owner wants to dispose of the property. Look for clues like a lawn that is in desperate need of mowing, mail piling up, or For-Sale-by-Owner signs. These owners may be more motivated when negotiating a sale price. Locating the property is only half of the battle though as the harder part is convincing the owner that they need to or should sell. Some investors take a more direct approach by knocking on the front door to begin a conversation on how they can help them by providing cash quickly to alleviate their problems. Other people send a mailer out introducing themselves in order to take a more subtle approach on making an offer on the given property.
No matter how one reaches the motivated seller, the key is generating more potential deals. As the saying goes, to be successful, one must be willing to do the things today that others won’t do in order to have the things tomorrow others won’t have!