How Do You Find Your Deals??

HOW ARE YOU FINDING YOUR DEALS?

Since I spent most of my week making calls, working in/on my CRM, and meeting with motivated sellers I figured I would base this post on how investors are finding deals. Here are some ways investors are currently finding properties to renovate and resell or hold as rentals.   If you are finding deals a way that I didn’t mention, please let me know in the comments.

MLS

The multiple listing service (MLS) is where a lot of investors are still finding their properties today. The problem with the MLS is that everyone can see the properties on there and it can become very competitive. Just ask some of the Southern California investors how long good deals stay on the MLS and how high above list price they sell for. It is certainly possible to find a deal there, but it can be difficult and time consuming to sort through all the garbage to find the gold. If you have a good real estate agent working with you, it can be a mutually beneficial situation to make offers on MLS properties. I had a great one in MD who was always sending me properties but since moving to Florida, I have been struggling to find someone who can help with this.

If you are an agent in Pensacola and interested in working with me please send me an email and let’s talk.

Auction Websites

These are basically lead generating sites for foreclosure properties and include sites like Homesearch, Auction.com, Hubzu, etc… These sites are also getting competitive now and I have stopped searching there recently. The first flip I did was a property purchased off of Homesearch.com and it was a really good deal and experience for me. I spent the next year trying to find another like it and I have still not bought another property from one of these auction sites.

HUD / Homepath

HUD and Fannie Mae foreclosures (Homepath) are still out there and prevalent in my area, I’m not sure about yours. I do still make offers on the HUD website each day and occasionally look on Homepath for properties. I find these are typically good rental deals but the margins aren’t great for flips. Homepath typically fixes up the houses to a rental standard so it is usually rent ready when purchased. Locally, I find that they drop the price every month but they won’t accept low offers and only come down a few thousand off of list price. HUD foreclosures are a bit different and there are times that you can get a very good price on them. I have purchased one HUD foreclosure, which is now a rental and helped a friend buy a foreclosure via Homepath, which he uses for a rental.

Foreclosure Auction / Courthouse Steps

Here in Pensacola, the foreclosure auctions are done online instead of in person at the courthouse like they are done in most places. These auctions can be risky and you need to do your due diligence prior to bidding. This could be a whole other post and likely will be in the future, but the bottom line is there are still deals to be had here locally. They are getting more competitive lately with out of state investors coming in and bidding the properties up.

Networking

Networking with local real estate agents, other investors, people in your church or community, and general word of mouth are a great way to find leads and possible properties. I recommend talking about what you do whenever you can and over time, there will be deals that find you. This is clearly the best type of lead you can get as it is completely FREE and no time was spent looking for it!

 

Each method I have discussed up until this point are FREE ways to find properties. Some of you may say that working with realtors will not necessarily cost you money but it will drive up the price you need to pay for the house since the seller needs to pay their commission. I have no problem with a realtor getting their commission, especially if they are the one searching the MLS for me and bringing me a property I hadn’t found / wouldn’t find on my own.

Direct Mail Marketing

This could include writing handwritten letters, postcards, zip letters, business letter, or any other type of mailer you send to the homeowners you are targeting. There is typically a message on the mailer that you want to get across saying something to the effect of “I want to buy your house”. They would then give you a call and discuss their property and you can figure out how you can help them with their problem. This is a great way to find off market properties that you can buy below market price since you can cut out the realtor fees and buy the property cheaper than you would on the MLS or some of the more traditional methods. This type of marketing could even be done for your primary residence, it doesn’t have to be just for investors but it can become VERY expensive if you are sending out a lot of mailings.

Bandit Signs

These are the signs you see on the corner of the intersection saying “we buy houses” or “cash for houses” etc… These are typically investors trying to get their phones to ring with homeowners who want to sell their houses. This can be an inexpensive way to find houses to buy and renovate or hold as rentals. However, you need to be careful with the laws in your city or county and ensure that you aren’t doing something illegal by putting up these signs.

Driving for Dollars

This method involves driving around and looking for vacant or distressed properties. Once you find one, send them a letter or knock on their door and speak to the owner. Typically these houses are vacant so the best way to go about finding the owner would be a mailed letter as discussed previously. This is a great way to go if you are on a tight marketing budget.

Internet Marketing

This could include ads on craigslist, your website, facebook advertising, or pay per click. This type of marketing can range from free to extremely expensive so be careful. If you don’t know what you are doing, google adwords can blow your budget sky high. However, these are people who are looking for you and can be a very targeted form of marketing.

 

We are currently using all of these channels to find deals (except for bandit signs). Over the past few months I have focused my efforts primarily on Direct Mail Marketing and we have been seeing some great results. Here is a quick breakdown on the numbers so far:

10,000 letters/postcards sent

600 calls

30 appointments

2 houses under contract

3 contracts that should be singed in the next day or two

5 more that I hope to get under contract in the next few weeks

As you can see, direct mail can be very expensive, time consuming, and difficult to find good properties with truly motivated sellers. The idea is to get that mailer in front of the people you are trying to reach and have them pick up the phone to see how you can help them. When we find someone who really needs our services it is nice to be able to help them out.

SO, HOW ARE YOU FINDING YOUR DEALS?

 

 

2 comments

  • Great content Bill!
    How often do you mail the same homeowners?

    • Bill Allen /

      Thank you Yuliana and great question. I mail to them 5-6 times a year or until they ask me to stop. It will really depend on what list you are mailing too but most of the folks I talk to recommend at least 5-6 touches as well.

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