It’s not hard to find great real estate deals, you just have to know where to look. You have to go beyond the public search engines and multiple listing services (MLS) used by real estate agents and brokers. The key is to have an inside scoop or network that can share leads with you before they’re public.
This article will outline seven ways to find your first or next real estate investment deal. Use this article as a guide to help you find opportunities that other investors miss. The sooner you find great real estate deals in the market, the sooner you will earn passive income and build wealth.
1. Network to Increase Your Net Worth
Make Friends with Real Estate Agents
Whenever someone tells me they are about to close on a house, the first thing I ask them is Did you like your realtor? If they say yes, my second question is Can you connect us? I don’t think you can ever have too many real estate agents in your contacts.
However, it’s important that you do more than collect the numbers of real estate agents. You should also reach out and connect with them. Spend time getting to know them over the phone or in-person over coffee. Let them know that you are interested in investing in real estate and would love to hear if they come across any good deals. It helps if you have a vision of what type of properties you want to invest in.
For example, do you want to purchase a home for yourself and house hack or rent out the basement or bedrooms? Or are you more interested in purchasing single-family homes in a friendly neighborhood with good schools? Whether you want one unit or multi-family property with several units, make sure the real estate agent knows. That way the agent can contact you when the right deal comes along.
Get to Know Wholesalers
There are individuals in real estate who wholesale real estate properties. These people are more commonly known as wholesalers. A wholesaler is someone who puts a contract on a property with a seller and then looks for an investor to buy the property. Wholesalers make their money by claiming a percentage of the deal or selling the home to the buyer at a higher price than the seller is selling the house for. Since the wholesaler does all the work to find a property, the deals come to you.
Your job is to be ready for the deals when they come. In most cases, the properties will be distressed and in need of some TLC. But remember, fixer-uppers is where people make good money in real estate investing. You fix it up and have the option to flip it, rent it or own it for yourself. Either way, it’s your property to do whatever you like.
If you get on the email list of a wholesaler, you could get a couple of leads on properties each day.
Befriend Property Managers
When I became a landlord of a property out of state, I hired a property manager to help me manage the day to day tasks. One benefit of establishing that relationship was that I also learned about other properties for sale by investors before anyone else. My property manager had an email list just for pairing investors who wanted to buy, sell or trade properties. Yes, you heard that right, you can actually trade properties. If the deal is right, an investor will scoop it up quickly. Then, when I was ready to sell my property, the property manager found me a buyer, willing to pay cash, in less than two weeks. The best part is, I was able to sell the property at a profit in the winter, which is normally not the best time to sell a home.
2. Hunt for Foreclosures
No one really wants to think about losing their home through foreclosure, but it happens. If someone is trying to sell their home and protect their credit, they are what I call a motivated seller. At the point before foreclosure, the seller probably tried all they could to save their home. They may have tried to sell it at market prices, attempted to negotiate a lower mortgage payment with the bank, and other measures with no success.
So you can imagine if you can find a buyer before the lender forecloses you may have a lot of opportunities to negotiate the price even further in your favor. Banks are often willing to get something for a property rather than nothing. You can find properties facing foreclosure by checking court records, driving around town, and working with real estate agents. You can also attend housing auctions, but be prepared to purchase a house you are not able to thoroughly walkthrough or inspect before you bid.
3. Look for Tax Liens
Justin Pogue, the author of Rental Secrets, started his real estate portfolio by purchasing three tax liens for vacant land, which he later sold to developers. At his peak, Pogue owned 70 units and later decreased his portfolio to 38 units. However, along his journey, he gained extensive experience in real estate investing.
If someone can’t pay their taxes, they are probably behind on mortgage payments, too. Buying tax liens on land or properties is one way to eventually becoming the owner outright. There is a slight chance the owner will get current on tax payments. Nevertheless, if they do, they’ll have to pay you the taxes back plus interest. So either way, you earn some money out of the deal. If the owner is not able to catch up on past-due taxes, you could end up owning a property for a fraction of the market value.
4. Go for a Drive Around Your Neighborhood
You know your neighborhood better than anyone else. If you drive around occasionally, you’ll see the for sale signs or signs that say a property is coming soon. In a hot market, some houses sell before they are even open to the public for an open house. Those signs, normally put out by an owner or real estate agent, are there to spark interest in the property and can be very effective in selling a home fast.
So drive around your neighborhood. Look for “For Sale by Owner” signs and distressed properties. In some cases, an owner may not have the money to fix up their property to sell it at a competitive price. So, if you contact them first with a nice offer they might just let you have it for less than market value. Then you can do the repairs and enjoy the hefty profit, too.
5. Join a Club
Joining a group that includes other investors is a great way to find investment deals. Find out where real estate investors meet up in your town and get to know a few fellow investors. If you are a beginner this is a great opportunity to learn more about methods used to invest in real estate. It also gives you a chance to find potential partners for future real estate deals.
6. Use Snail Mail
In most states, you can research property deeds or property tax records to learn who owns a property. Some counties may charge a fee to access this information; others require you to pick it up in person. Regardless of how you find the information, it can be useful to help you find a real estate investment deal.
On more than one occasion, my LLC received letters in the mail from other investors interested in buying my property or selling me theirs. The sellers used old fashion snail mail to contact me. On public records, you couldn’t find my name, but you did see that an LLC owned the property and paid the taxes.
Other investors can spot investors, and they knew this meant I was a real estate investor potentially open to buying more investment properties in the same neighborhood. You can use mail to find investors and real estate deals, too.
7. Spread the Word
When you make a definitive decision to invest in real estate, tell others. Tell your friends, family and neighbors. Who knows, one of them could come back to you with your first good real estate investment lead. They might be the first to contact you as soon as they learn of a property for sale. Really get to know your neighbors, especially if they are older in age.
My second investment property was sold to me by the estate of a man who lived in the property for the last 20 years. His children may have grown up in that house, but they had no interest in keeping it after their father died. So when I offered cash to take it off their hands, they took my offer and ran.
In some cases, older homeowners do not have the health or wealth to maintain their houses. Therefore, they decide to sell and downsize or move in with their children. When they make that decision, the family is usually eager to sell their property and get their parents settled in their new home as soon as possible. Being a friendly, good neighbor could ensure you get the news of the sale first.
Find it, Fund it, Go
These are seven great ways to find your next real estate deal. Take your time finding the right investment and then dive right in. When you find a property that you can afford and have a solid plan on how you will utilize it in your portfolio, then it is a good time to fund it.
Good investors have several methods in mind for financing real estate investments. Sometimes they will utilize cash for a down payment. Other times, they use a partner to split the expenses. If you are going to put a mortgage on a property, you can use banks or pursue funding from private money lenders for real estate deals.
Another option is to work out a private agreement with an existing homeowner. If an owner wants to walk away from a mortgage payment, you can suggest taking over the loan. In such cases, the loan would remain in the owner’s name, but you agree to make the payments and you get ownership of the property when the loan is paid in full. While it is important to ensure to get this agreement in writing, this is a great way to dive into investing without using your own credit.
Alternatively, you can convince an owner to finance the loan themselves. This is called owner financing. Under owner financing, you could pay the owner a down payment for the property just like you would with a traditional loan. However, you then agree to pay the owner a certain amount until the balance on the home is paid in full. This is a great arrangement for homeowners that want an influx of cash and then consistent monthly payments for the next few years. Together, you and the homeowner establish the terms of the agreement, but you could potentially own the home in five years or less. Plus, if you rent the property to tenants they would essentially pay off the balance due for you.
These are just a few ways to fund your real estate deal. Check them out to get your next deal funded soon.
I hope you find this guide helpful and use it to get your real estate investing portfolio started. Make sure to review the terms of any agreement closely and make sure you are financially ready to move forward. Please share with our community any other ways you recommend finding real estate deals. We would love to hear from you.