Do you now feel confident that you can secure an investment loan and pay the right price to secure a decent profit? If not, check out my first two blogs in this series before you continue reading. If yes, continue reading to learn some ways to find off market deals.
One of the biggest hurdles first time investors face is finding a property. Many try to go the traditional route to buying a house: hooking up with an agent or scanning Zillow for available homes. However, unless you already have an investment property that you are selling and trading up via a 1031 exchange, finding an on-market property can be quite tough.
On-market properties typically want too much money for your situation. Paying full asking price on a majority of these homes won’t produce a profit for you once you rehab and then sell or refinance. Even if you want to purchase a turn-key property to hold and rent, many times the purchase price is too high for the rental profit equation to work. So how can you find a deal? Well, if you really want to purchase an on-market property, I suggest finding one that’s been sitting on the market for awhile so that you can offer much lower than the asking price. You can also search for properties that are specifically marketed to investors (these sellers are fully aware of the condition of their home and have priced it accordingly). If you want an even better deal, though, search off-market.
When going after off-market properties, you are going to have to do the unglamorous work of reaching out to people who might be in a bind and need to sell quickly. These people are usually willing to sell under value in order to avoid the fees, the lengthy process, and the headaches that come with placing a home on the market. To find these people, you can knock on doors, contact people on distressed property lists, search tax records to see who might owe back taxes and need an out, hook up with lawyers to get access to people going through a divorce, drive around neighborhoods and look for houses that look uncared for, or market yourself as buying houses for cash and see who comes to you. If you just want to search lists, you could hire a real estate agent who has access and could produce lists for you. Or you could find these lists yourself for a fee at sites like foreclosuresdaily.com. This site will give you lists of all types of distressed properties (probate, pre-probate, inheritance, divorce, etc.), not just foreclosure properties There are many other sites out there that also produce lists like these, so feel free to do a quick Google search. If you are really serious, the site Propstream will give you access to a system that is similar to the MLS (the system only real estate agents have access to). It’s quite pricey, but it may be worth your while.
If all of the above just sounds like too much work for you, then I suggest you hook up with a wholesaler. A wholesaler is someone who does all of that work for you. He/she will find the distressed property, get it under contract to sell, and then re-assign the contract to you. You’ll, of course, have to pay the wholesaler a finder’s fee of their choice, but it’s usually worth it to have the property basically hand-delivered. You can easily find wholesalers in various Facebook groups. One group I highly recommend is The Michigan Real Estate Investor Network. Wholesalers and other investors post multiple deals on a daily basis. You can also hook up with hard money lenders, traditional lenders, contractors, insurance people, real estate agents, and everyone else in the industry who could help you with your projects.
This blog finalizes our quick crash course in real estate investment. If you missed the blogs about acquiring cash or figuring out how much you should invest in a deal, you can find them here. You also might want to join some webinars or take a few classes before you dive in.