5 Ways to Find Unbelievable Deals for Your Next Investment Property
Looking for great deals on real estate? Finding profitable investments isn’t always as easy as the seminars and books make it seem. The good news, though, is that there is plenty of money to be made in the real estate market even when the market is strong. The key is knowing where to find the best deals and having a plan to act on them quickly.
Making money on real estate starts with finding property owners who want to sell quickly and will negotiate a good price. To find these opportunities, start by looking for bank foreclosures, evictions, properties that have been on the market for a long time, as well as for sale by owner properties (especially those that are sitting empty or need repair).
Where to Find Your Next Investment Property
But where do you search for these kinds of properties? And more importantly, how can you find the ones that will help you earn the most profit?
Here are our top six places to find unbelievable deals on investment properties:
1. Multiple Listing Service (MLS)
MLS is the gold standard for finding available properties. It consists of about 700 regional databases where real estate agents can search for properties by location, price, and specific property details. The only catch is that to access the database, you must belong to the local board of real estate agents. That means investors who want to access MLS will need to work with a real estate agent who understands the unique interests of investors and can perform the searches for you. Using the MLS, your agent can give you a wealth of information, including:
- Available properties by zip code, neighborhood, or street
- Square footage
- Number of bedrooms or bathrooms
- Property features
- Property tax information
- Previous price reductions
- Time on the market
- Foreclosure status
If you are looking for specific features in a property (such as location, price, or time on market), you can limit your search by these details. Be sure not to limit too much, however, since you could miss out on an excellent investment. There may be an ideal home just outside the zip code you’re looking at or lacking just one or two of the property features you want.
The key to successfully finding deals using the MLS is to search for properties others might pass over. Look for foreclosures, fixer-uppers (if you have the means and skill to flip them), or properties that have hidden potential.
Some investors choose to become certified real estate agents to aid their real estate ventures. Access to MLS is a nice benefit of this certifications, but it may not be reason in and of itself to become a real estate agent. That’s because most successful real estate investors find lots of deals that never make it into the MLS database.
2. Networking with other professionals
Networking with other industry professionals is a strategy that will serve you well whether you are a first-time investor or you have been in the real estate business for decades. Real estate meetups and networking events are excellent opportunities to pass out your business card, make connections, and build relationships.
There are two essential types of contacts you will want to make as you network in the real estate industry:
- Wholesalers – Wholesalers are in the business of finding good deals and then selling them to end buyers for a small markup. Even though you’ll be paying a little bit more by going through a wholesaler, the time and effort you save will be well worth it (and you’ll still be getting a great deal on the property).
- Other Investors – Investors look for different things in the properties they buy. Some want lots of equity so they can turn the sale around quickly, while others want excellent terms so they can keep the property long-term. As you network, it pays to take note of which category each contact falls into so that you can pass leads to each other. If you’re a flipper, another investor who focuses on quadplexes may find a lead that doesn’t fit her portfolio but is perfect for yours.
3. Driving for Dollars
Driving for dollars is a tried and true strategy that can yield good results if you are willing to invest a little time. It simply means you get in your car and drive around looking for houses that seem neglected, unoccupied, or in disrepair. Telltale indicators include overgrown lawns, boarded up windows, a lack of window treatments, or damage to the roof, gutters, or siding. When you find a likely prospect, look up the most recent owner on your county tax assessor’s website and reach out to them to see if they’re ready to unload their property for one reason or another.
You’ve probably seen so-called bandit signs before. They let people know you are in the market to purchase real estate, and they help you connect with people who are already looking to sell. Signs can be effective, but it’s important to use them strategically. Here are a few tips to help you get the most return for your effort:
- Research the laws in your area before you start. In some places bandit signs are illegal, and in others, strict laws govern where they can be placed.
- Keep your message short and memorable. Avoid overused wording and aim for a message that will pique interest.
- Make signs more visible by using larger sizes and bright colors.
- Place signs where people are likely to stop and see them (for example, on corners by traffic lights, on freeway exits, or by stop signs).
- Always include a phone number. If you have a website, include that as well.
Don’t be afraid to invest a little money up front to let people know you are looking for properties to purchase. Even if you get just one or two leads, you can easily make back the money you spent if you find a good deal. Direct mail, Craigslist, newspaper ads, SEO, and social media are all ways to get your message out and to search for buyers who want to sell. These avenues will be most effective if you have a website where you can direct people to collect their contact information. Getting inbound leads on great deals allows you to supercharge your real-estate investment strategies.
These aren’t the only ways to find deals, but they are tried-and-true methods that work in any real estate market. Try all of them and find the methods that produce the best results for your real estate strategy in your particular location.
The Key: Be Ready to Jump at the Right Deal
When the right deal comes your way, you have to strike while the iron is hot (so to speak). If you can’t act immediately, you may lose out to another buyer. So how can you be ready to jump on a great deal?
Get pre-approved for financing – Pre-approval sets you up for your purchase before you even start looking at properties. In today’s market, most real estate agents want you to be pre-approved before they will begin working with you. Your lender may also be able to connect you with top-notch real estate agents who can help you find the kinds of properties you are looking for.
Consider what loan you plan to use. There are several different loan options you might consider for financing your investment properties. For example, a fix and flip loan is the best choice for a fixer-upper property that you plan to resell, while a rental loan is a better option if you plan to keep the property and rent it long-term.
Be first or last to make an offer. Great deals usually don’t hang around long, and they attract offers quickly. One way to increase your chances of closing the deal is to make an offer before anyone else does by setting up automatic alerts and acting quickly. On the flip side, you can look for properties that have been sitting around on the market for months or years with no action and negotiate a better deal on them.
Real estate investing has become a favorite wealth-building strategy in today’s market, and it is still one of the best investments you can make to secure your financial freedom. With a strong financial plan and a practical strategy, you can earn a profit by knowing where and how to find the best deals.