Every great investor is well aware of the importance of knowing how to find investment properties; few skills are more valuable from a residential redeveloper’s perspective. At the very least, understanding how to find investment properties is the foundation on which an investor’s entire career may be built.
For what it’s worth, today’s most prolific investors have learned how to find investment properties with surgical precision, and there is no reason you shouldn’t be able to do the same. So long as you mind due diligence and exhibit a propensity towards persistence and hard work, learning how to find investment properties should be as easy as developing a system that works for you.
It’s worth noting, however, that there is no need to reinvent the wheel. Investors have been finding great deals through multiple strategies for as long as I can remember. The key is to identify which strategy works best for you and implement it into your very business.
I maintain that the best investors are those that make finding deals look easy, which begs the question: How can investors make finding investment properties more habitual and less of a nuisance?
The secret’s out: The MLS (multiple listings service) is a great tool for investors to reference in the event they are trying to find their next deal. If for nothing else, the sole purpose of the MLS is to find and identify properties for sale in a specific market. I have had a great deal of success finding deals on the MLS, and so have many of my colleagues, but I digress. The MLS is far from the only resource one can use to find and identify deals worth pursuing. The MLS isn’t the only option made available to investors, but rather a small piece in an otherwise extensive deal finding methodology.
If you want to become a truly great investor, you need broaden your horizons; you can’t rely solely on the MLS for finding investment properties. And while I fully condone using the MLS, it’s in your best interest to use it as a compliment to a more extensive strategy. Conversely, those that rely solely on the MLS will significantly limit the amount of deals they are made privy to. So, without further ado, let’s take a look at some of the best way real estate investors can find deals without having to rely on the MLS.
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If you want to learn how to find investment properties without having to rely on the MLS, all you have to do is exercise a little forward thinking and mind due diligence. It is worth noting, however, that few things go farther for today’s investors than an inherent knowledge of the subject area. The more one knows about the area they are investing in, the easier it will be to learn how to find investment properties. With an unparalleled knowledge of a local market, more and more options will become available.
There are a myriad of options made available to investors looking to find their next deal; the trick is to simply know where to look. I have had great luck implementing the following techniques, and there is no reason you shouldn’t:
The aptly named driving for dollars technique is exactly what you would expect: investors physically drive neighborhoods looking for telltale signs of homes that could potentially represent their next deal. And while it may sound rudimentary, I maintain that it has produced great results for those with a keen eye.
As the name suggests, driving for dollars will have investors physically get in their cars and drive the streets of their respective neighborhood—or at least the neighborhood they intend to invest in. While driving, pay special considerations to the state of each property. Is the home obviously unoccupied? How well has the yard been maintained? Is it clear the owner has neglected to keep up with standard maintenance?
The idea is to keep an eye out for those homes that have been grossly neglected. And while it’s entirely possible the homeowner is simply incapable of maintaining the property, poor upkeep is typically an indicator that the home may be “weighing” on the respective owner. If that’s the case, there is no reason to believe the owners won’t at least entertain the idea of an offer. Who knows? Perhaps the next overgrown yard you come across will be a deal worth looking into.
In a world dominated by emails and text messaging, hand written letters may come off as out-dated or—at the very least—antiquated. People have grown accustom to the immediate nature of correspondences sent through a mobile device or the internet. It’s worth noting, however, that the pendulum is starting to swing back in the other direction. While email has become a staple for those with immediate needs, the growing need for a more personalized message has witnessed the popularization of handwritten letters. That’s right, the same snail mail email was looking to make obsolete is in the midst of a resurgence—a renascence, if you will. People are more inclined to respond positively to a piece of direct mail that has been personalized in such a way that will trigger an emotional response.
Perhaps it’s the impersonal nature of an email, or perhaps we are all just tired of being flooded with automated responses, but there is something personal about direct mail that can’t be replicated by an electronic form of communication. Having said that, you will find few investors that are a greater proponent of direct mail campaigns than myself. There is something about placing a physical letter in a homeowner’s hand that can’t be replicated by email.
Knowing full-well that direct mail is still a viable option for finding deals, I recommend investors give it a shot. Acquire a list of homeowners (this list could be absentee owners, out-of-state owners, or recent probate and eviction cases) and draft a short, concise letter stating your intentions. As with any marketing campaign, persistence will pay off more times than not. So while you may not get as many responses as you had hoped for on your first round of letters, keep at it. It’s been proven that people won’t respond till about the third or fourth letter they get from someone.
We have all heard it before: real estate is a people business. It could be argued that the relationships you create over the course of your career are far and away your most valuable asset. And as such, there is no reason to believe that (provided you have aligned yourself with the right individuals) those closest to you won’t ever have a deal up their sleeves, or perhaps know someone that does. Point being: you will never know if someone in your network has a deal waiting in the wings if you never ask.
It’s in your best interest to make your intentions known. Don’t hesitate to inform those in your inner-circle that you are interested in finding a deal. It’s entirely possible that someone you have established a working rapport with will know of someone looking to sell. Again, it can’t hurt to ask.
That said, I recommend expanding your network as much as humanly possible. Go to real estate investor meet up groups, attend meetings, and don’t hesitate to hold some networking meetings of your own. Make your best effort to put yourself in front of likeminded individuals in your own industry and the dividends will likely make themselves known.
It’s absolutely imperative, however, that your efforts to network are proceeded by a selfless approach. In networking to those you are meeting for the first time, I recommend offering your services before asking for anything in return. You will find people are more likely to reciprocate their kindness if they know you are willing to do the same.
There is perhaps no better source for trusted, local information on a real estate market than the agents with boots on the ground. It is the real estate agents in a given region, after all, who will have their ears to the ground more than anyone else. Additionally, real estate agents tend to share information about properties to spread the word of a potential transaction. After all, selling agents need to work with buying agents, so it’s safe to assume they will have the best information for finding properties. Their network alone is invaluable in the search for a deal. Add their expertise in a marketplace and partnering with an agent can mean the difference between finding a deal and not.
One of the best ways to find investment properties without the MLS is to get people to find you. Wholesalers, in particular, are always looking for an end-buyer to wholesale a home to. That said, it could pay huge dividends to network with local wholesalers. That way, they won’t only know the type of home you are in the market for, but they will also contact you when they find one. The idea is to get on what is known as a buyers list. This means they will attempt to contact you in the event they find a home that could serve as a potential deal for you.
There is absolutely no limits to the amount of ways investors may find investment properties. While the three strategies listed above are some of today’s most popular strategies, they are far from the only ways to produce results. That said, one of the greatest things investors can do is to shift their mindset. Instead of simply learning how to find investment properties, investors should pay special considerations to the owners themselves. At the very least, finding motivated sellers is just as important as finding investment properties, if not more so.
One of the most underrated strategies for finding motivated sellers, and of course their properties, is to take a trip to the local courthouse. As it turns out, the financial situations of distressed homeowners (those who are at risk of losing their home, and therefore motivated to sell) are made available to the public. In other words, identifying the people most likely to sell their homes is as simple as looking at the records at your local courthouse. Those that neglected to keep up with property taxes or mortgage obligations, in particular, may be found by asking the on-duty clerk. They should be able to point you to the distressed properties, which will contain the addresses necessary to get in touch with the owners.
Understanding how to find investment properties has more to do with exercising a number of different funnels than it does with mastering one. The best real estate investors are aware that their next deal could come from anywhere, and the only way to cover all your corners is to commit to multiple marketing funnels. The minute you relegate your search to one medium (like the MLS), you will essentially limit your potential before you even get started. Take it from me: the more marketing funnels you can create for your investment business, the easier it will be to learn how to find investment properties.