Finding good deals is the key to a successful real estate business. Where and how you find these deals is entirely up to you. Instead of relying on the same sources as every other investor it is important to come up with ideas that are unique to you. The less competition for deals the better chance you can secure the property at a price that works for you. In every market there are a handful of things you can do that will give you an advantage over your competition. Some of these will be tedious and at times you will question exactly why you are doing them. All it takes is one closed deal to make all of your efforts worth it. Here are five tips to find investment properties in your local area.
- FSBO. There are a few ways to attack your local FSBO (for sale by owner) market. The first is to make note of any property listing you drive by with a FSBO sign in the front yard. Put the address in a dedicated excel spreadsheet and give them a call or email. If you are having a tough time reaching them you can also try sending a letter or even better knocking on the front door. The goal of the conversation is to find out exactly why they are selling and what their goal for the transaction is. With most FSBO sellers they are looking to avoid paying real estate agent commission or are limited in their available equity. Even if they aren’t quite ready to sell today you never know when they will change their mind in the future. In addition to the driving by the property you can also find FSBO’s on many local real estate websites such as Craigslist, Zillow and more. Not every person you call will be open to talking but the ones that do you know at least have some interest in selling.
- Abandoned Property. If you are like most people you have probably driven by an abandoned looking property and thought nothing of it. As a real estate investor you may be missing out on opportunity. Abandoned and distressed properties can be ideal situations for investors. In most cases these properties are from homeowners who are either in default on their mortgage or have tenants who are facing eviction. In either scenario the homeowner may be looking for a quick closing simply to get out from the mortgage. Abandoned properties often require a little legwork on your end. You can try sending letters or placing business cards on the front door but this is often to no avail. If the owner does not live in the property you need to go to town hall and find the address of their tax bill. By sending the contact information to that address you will have a much higher chance of initiating communication. The more abandoned property owners you speak with eventually you will find one that is ready to sell.
- Tax Lien Auctions. One outside the box way to find new leads is through tax lien auctions. When a homeowner does not pay their tax bill a lien may be placed on the property. Tax liens take first priority over everything else on title with the exception of federal tax liens. After several attempts to collect tax payment some towns move forward and place the lien on public auction. By taking ownership of the tax lien you have the right to collect interest from the government and possibly take full ownership of the property if the homeowner does not pay the lien in full in 90 days. There are specific rules and regulations based on the specific town and state it is located in.
- Developing Strong Local Contacts. Instead of fighting with every other investor for deals on the MLS (multiple listing service) you can circumvent the system. Why not have deals come to you? You can make this happen by developing a strong base of local contacts. Reach out to a local mortgage broker and discuss what they do with leads they cannot find a mortgage for. Some will refer them to a local attorney but in most cases they don’t have an investor that can deliver a quick closing. Another important contact are local divorce, probate and real estate attorneys. Each of these attorneys handle a specific niche but all of them have a need for a quick closing from time to time. The same is the case with a local accountant. An accountant may come across a client that needs to liquidate assets in short notice. If you develop and stay in touch with your contacts regularly they will think of you when a deal comes their way.
- Eviction List. You should an hour or two every week at town hall. Not only can you find information on out of town owners but you can also find local eviction notices. A landlord that is going through an eviction may have enough of the property and be ready to let it go. Not only is an eviction time consuming and expensive but it can have a lasting impact on a landlords psyche. On every eviction notice the name of both parties in addition to the property address is listed. This is all the information you need to make contact. Do whatever you have to do to get a response. What you will find is that property owners going through an eviction are typically ready to sell and move on.
There are literally dozens of ways to find investment property deals. Look for a few original ideas that few in your market are doing.
