Five Creative Ways to Find Deals in the Competitive Market
Regardless of whether you are a professional investor or just starting out, one of the biggest challenges for real estate investors is to find the deals. Traditionally, an investor could just purchase properties off of the MLS (Multiple Listing Service), and although there may still be hidden gems out there, the margins get very slim in a competitive market. When inventory is low, and competition is fierce, savvy investors must think outside the box. That’s why we created this list of the top five creative ways to help you find your deals.
The Five Creative Ways Are:
- Find A Real Estate Agent
- Direct Mail Campaign
- Driving For Dollars
- Search In Craigslist
- Find A Wholesaler
#1 Get A Real Estate Agent For Real Estate Investing - It’s Free!
Whatever market you’ve decided to invest in, start networking and find an RE agent that works with investors. Let them know that you are looking for deals, and be specific about what type of deals you’re looking for and where. This costs you nothing. The relationship you develop with an agent (or multiple agents) may be one of the most important ones and will help you in the long term. Not only can they find you your perfect deal, but they will also be able to list your real estate properties once you’re ready to sell. The agent makes a commission on the purchase and/or sale of the house, which is how they’re incentivized to bring you these projects and do the business with you. It’s easy to make this useful contact – just pick up the phone or drop them a line. You can find contacts on specialized resources, such as realtor.com, or even on common review websites like Yelp or Google.
#2 Direct Mail Campaign To Target Audiences
In our technological era, mailing a letter or postcard feels about as outdated as sending a fax. It’s an old-school method, yes, but in real estate marketing strategy, it still works.
According to a 2018 report conducted by the Association of National Advertisers, direct mail delivered a higher response rate than all forms of digital marketing. The way it works is you identify your target audience (which will vary depending on the types of investments you’re looking for) and develop a mailing list. You can do this yourself, which is very time-consuming, or you can purchase various lists from specialized sources via online or offline. Then build your marketing materials – postcards and letters are the most common – and fire away! If you send enough letters, you’ll eventually get some responses; it’s a numbers game. The average investor sees between a 1-3% response rate on their mailers. That means if you send 10,000 mailers, you can expect between 100 and 300 phone calls. Out of those, you have a pretty high possibility to find a few that hit the mark. This method does take time, a financial commitment to the mailers’ cost, and the willingness to have phone conversations, which at times may feel burdensome, but it’s simple, and it generally works.
A direct mail campaign is still considered to be an excellent way to connect with potential clients, and it is also a perfect option in the current pandemic situation. Remember – safety first!
#3 Driving For Dollars In Rental Properties
Driving around looking for a deal or, as it is commonly known, “Driving for Dollars” is one of the oldest ways of looking for projects. In a way, this strategy resembles hunting in the residential area. You walk, bike, or drive around the neighborhood you’d like to invest in and look for houses that appear vacant or show signs of distress. When you find something, just take down its address. Come back home, research the address and learn who owns the property. County records, local title companies, mailing list companies and brokers, advanced property data, and owner information platforms will help you in this. The next step is either to send the landlord a mailer or cold-call them and offer to buy the property and make deals.
Driving for Dollars is not easy: it eats up a lot of time and energy, and it is definitely not for the faint of heart. You need to be comfortable with rejection and have patience to make money as most of the calls you’ll make will either be ignored or worse. It is not unheard of to even be cussed out by your prospective seller. Nevertheless, it is a tried and true method that works well in real estate investing, and best of all: it’s free!
#4 Use Craigslist To Find Real Estate Investments Opportunities
The problem is that when you are looking to buy a property in a highly competitive market, along with scores of others looking to do the same, it’s tough to get a good deal. A different database of listings that is free and may contain some hidden gems is Craigslist. Look in the Sales section for properties that are targeted towards investors (many times, you’ll see them listed as “investor specials”).
Another way to look at CL is to go to the rental section: apartments for rent. You can also do this on Zillow, Apartments.com, or any rental listing sites in your area. Look for properties listed by the owner and not by management companies. Those that are listed by company are either outdated or appear to need work. And then just pick up your phone and call them to invest in those. Pitch the idea of buying the property and hope for a favorable outcome.
#5 Find a Real Estate Wholesaler
You may have heard of Real Estate Wholesaling but may not know precisely what this term refers to. It’s actually a pretty simple and straightforward concept: a real estate wholesaler does the hard work for you. They find distressed properties, put them under contract, and sell the contract to an investor. Typically, the wholesaler looks for off-market properties and buys them for below market value. This is how they make a profit. Once they find a deal, they basically sell the contract to you and create a “finder’s fee” on the transaction for paying them.
Sometimes wholesalers get a bad rep as their predictions can be a bit “ambitious.” Don’t let this deter you! As with anything else, you should ALWAYS do your own due diligence, get independent bids and run the numbers yourself. Not every deal they present will be a slam dunk, but something good will likely materialize with the right connections and a little patience to get started.
The bottom line here is there are no “Get Rich Quick” shortcuts in the real estate industry. Finding investment properties takes time and effort, but the more opportunities you explore, the more doors will open for you. Find out the obstacles and opporunities existing in the real estate market during this pandemic. There is no single right way of finding deals to make money. Try multiple different strategies and sources and expand your horizons. And if something works, don’t be afraid to stick with it. As they say,
“If it ain’t broke, don’t fix it.”
What about you? What’s your best advice for finding off-market properties? Comment below and share your experience with fellow investors.