Learning to invest in real estate while wading through markets both full of foreclosures and light on inventory helped me experience the best of the market and the very worst. These tactics for locating deals stand out as my favorites that any new investor can utilize to find their first or latest real estate deal.
Calling For Cash
This is hands down my favorite method of locating deals. It gets you speaking to potential sellers right away, and without costing you a dime. All it takes is a little nerve, a bit of effort and research, and a phone.
Begin by compiling For Sale by Owner and For Rent by Owner lists, because the information is relatively easy to obtain. Foreclosure information can be, too. Once you have the property and contact information, call every single person selling or renting their home within your preferred distance or travel time — mine was within 45 minutes of my house — and ask a few questions to try to gauge the sellers' motivations.
If the seller seems to be experiencing financial pressure, either caused by the house or that could be fixed by selling the house, ask them to meet. At that meeting, begin your negotiations to purchase their home. Great investors are great at talking to sellers, and there is no better way to practice than by meeting with people for free.
Driving For Dollars
This tactic simply involves driving through neighborhoods looking for signs of seller motivation: neglected houses, moving trucks, "for sale" or "for rent" signs in the yard, etc. When you locate a house showing signs that the owner may be willing to speak to you about selling, get out of the car, and knock on the door. Tell the owner you are interested in buying a house in the area and are curious if they could point you toward someone looking to sell. The ultimate goal of this scenario is to get into the house to sit down and make them an offer.
If no one answers the door, leave a flyer on the door indicating you are someone who buys houses in their area, and provide your contact information. Consider taking down the address in case you want to add it to a direct mail campaign or follow up in some other way.
Network
Over time, your network will bring you the best and most deals. But it takes a while to build this. As you move through your real estate investing career, you will likely graduate from driving neighborhoods and calling for cash, but you will never graduate from networking. These two important contacts could help you find your best deals:
1. Wholesalers: A real estate wholesaler is an investor who is good at finding quality deals with the intent to sell them to other real estate investors. Be mindful that wholesalers typically mark these houses up a little in order to profit from finding the deal. You can find wholesalers through your local real estate clubs or other industry networking events. Be sure to give every wholesaler your card, and let them know you would like to be added to their buyer list.
2. Other Investors: You may have heard people say that real estate is not competitive. I may not fully agree with this, but it does drive home the point that real estate investors can work well together. Many investors are looking for properties with a lot of equity that they can get in and out of quickly. Others are looking for less equity but more cash flow, as they want to hold onto the property for the long haul. Investors generally fall into one of two categories: wanting great value or wanting great terms.
Examining investors by these two categories makes it easy to see if and how you can work together. Both types set up marketing campaigns to find sellers. Great terms include easy financing and an owner who will carry the loan or a long-term lease. If I am a terms buyer and value buyers know that, we could collaborate on deals that do not have enough equity for them. I can pay them a small fee and have leads come to me. The opposite is also true for terms buyers who don’t want big equity deals. They can mark those houses up and sell them to another investor. Big equity deals typically means rehab and resell, and not everyone is looking for that.
As you grow as a real estate investor, you will become able to allocate a marketing budget and start campaigns that will help get your phone ringing. After driving for deals or calling for cash, there is no better feeling than answering a call from a seller who wants you to buy their home.+-
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