I get asked a lot by other real estate investors how I find my real estate deals. Do I buy them on the MLS? Do I buy them off-market? How do I find off-market residential deals?
To answer those questions, most of my deals do come from the MLS but I often get asked how I find off-market residential deals. There are five ways that I go about finding these deals, and keep in mind that about 20% of the projects I do are off-market, the other 80% are straight from the MLS.
The benefit with the off-market deals is that you have very little competition. It’s a negotiation between you and the seller, and there are no other parties involved. There are no other bidders involved, so you can negotiate with the seller and try to help them with their situation. It brings you deals where you have more negotiating power and you’re helping out a party who has no representation. It does allow you, in some cases, to get some really good deals.
Direct mail is essentially sending out letters to homeowners in a certain neighborhood where you want to do a real estate project or invest. You’ll send letters to these people’s houses and you’ll say, “Hey, Mr. and Mrs. Smith, I see that you’ve owned your house for long time. I also see that you owe back taxes, or you’re in foreclosure, or you have a lot of equity in your home, have you thought about moving? I’m a real estate investor, and I can offer you all-cash, I can close within a week, and I’m interested in buying your property, are you interested in selling?”
This is something that we send out to a bunch of homeowners in the neighborhoods that we’re investing in. And they do work, but of course the rates of success are very low. It does take a lot of repetition. Many people who are doing these direct mail campaigns will mess up because they’ll do it for a month or do it for two months. It need to be continuous in order for this strategy to work.
The reason why is because when people get a direct mail from you they hold it and they think about it. Or they have no interest in it at that time, but if you continue to send them letters monthly for six to twelve months, something may come up in their life where they think about selling. Then they think about your letter before they go to a real estate agent, and that’s where you have your opportunity.
Bandit signs are the signs that you see stapled to light posts that say “We buy houses for cash” and they have a phone number. These things need to be placed in places that have a lot of traffic in neighborhoods that you want to invest in.
The process is to get the leads in, answer their questions, get their information, and then go up to see these people as soon as possible to check out their properties. Some people like to hand-draw these signs and buy the cardboard at local grocery stores or at Staples. But you can also buy these signs online and choose from thousands of sign designs. You can also hire somebody on Craigslist to go and place these signs around town and pay them $1.00-1.50 per sign to place them and take pictures.
Be careful here with the legal requirements and the local laws in the neighborhoods that you’re doing these signs in. Many times it’s illegal to place these signs. Many investors place these signs on Friday night and remove them on Sunday morning because in many places it’s legal to place real estate signs over the weekend, but during the week it’s illegal. So check in with your local market and make sure what you’re doing is legal.
A lot of people self-manage their real estate properties, and they’re trying to rent out these properties or trying to get rid of these properties. Some of these people know no other method than by going to Craigslist. These are the old-school real estate investors or old people who are just landlords.
One way to get in contact with these people is through Craigslist. You can go and search in the neighborhood you want to invest in, you can see if there are properties for rent, you can give them a call and say, “Hey, are you a real estate owner, are you looking to sell this property, etc” We’ve found a couple of deals this way. I placed a couple of calls to some people who were looking to rent out properties and I asked him if they were looking to sell. And I’ve heard from many other investors that this has been a successful way for them to find some rental properties that they could purchase.
Biggerpockets.com has what they call the marketplace where people can do real estate transactions and real estate deals and connect with one another if they’re trying to buy or sell their real estate properties. To be involved in the marketplace, you do need to have a pro membership which costs around $30 or $40 a month, but you can still have access to the marketplace if you have a free account.
I’d recommend going in there, checking out the listings that are available, typing in a zip code you’re looking to invest in, and seeing if there’s anything available. If you find something good then just connect with the person who is selling that property. Reach out to them, send them a message, get their phone number, get them on the phone and then vet the property while you’re speaking to them.
Real estate wholesalers are people who sell real estate opportunities by connecting buyers and sellers. Essentially they put a property under contract, they run all the analysis, run how much it’s going to be to rehab this property or how much the property will rent for. They’ll do all the legwork, take pictures, etc., and put the property under contract. And then they’re looking to sell that contract to another investor who’s going to go forward and take that property and that project to fruition.
For this the wholesaler gets paid a certain dollar amount, and they should be very transparent about how much they’re getting paid if they’re a wholesaler. It is fine to ask the wholesaler how much they’re taking off the top, how much they are buying it for, and they should be transparent about it.
Some ways to get in contact with these wholesalers would be through the Bigger Pockets marketplace or through Craigslist, and you can also search online for real estate wholesalers in your city or your zip code. Some of them are very sophisticated and they do this full time.
These are my five recommendations for how to find off-market residential deals. There are plenty of other ways to find these kinds of deals, but these are ones that I’ve tried in the past and have worked for me. Remember that only 20% of the deals that I do are coming from here, but you still can find some gold if you do some digging and put in some money for the direct mail or bandit signs and try to get leads coming in.
Good luck to you. Comment below if I can help you in any other way. Let me know if you have any questions about this. Connect with me, shoot me an email, let’s talk!