When my wife and I got into Real Estate Investment we did what most new investors did: we found a Realtor and looked at properties.
It our understanding was properties was thru a Realtor. I have since learned a lot more. As a beginner and NOT connected into the local Real Estate Investment network that made sense. Well, mostly. We bought 3 properties, a 10-unit apartment building, and 2 single-family homes. Because we assumed the Realtor had extensive knowledge in investing, we took her advice. So, we paid ‘retail’ as if we were a homeowner. Of the 3 we still have one of the single-family houses. The other two were giant money pits.
What we learned could fill a book, So, I will focus on the process and less on what we learned.
Using a Realtor to buy houses is very convenient. And this way you ‘CAN’ be very successful. Buying this way is buying properties that are On-Market. The main advantage to On-Market is you can go see them on your schedule. This Saturday I want to look at 5 to 7 hours – Schedulable. The Realtor handles most of the paperwork (So, I don’t have to learn it), and there is sometimes a ready supply of houses.
The downside is those properties have been picked over by retail buyers (people who want to live in the home) and other investors who can act fast when they see a deal. Some deals are already taken before they are posted onto the public sites (also, called a pocket listing).
On-Market means it can be seen by a lot of people, this includes the MLS (Realtors) but also, includes the public websites like Zillow, Realtor.com, Trulia, etc. There are a lot of them. So, you are competing with other buyers, both Retail (who can pay too much without regard to making a profit) and Investors (who can act fast, sometimes with teams scanning the sites hourly).
There are still some really good deals On-Market, but you have to know how to quickly evaluate them and make your offer(s).
The other method is Off-Market. These are properties that nobody (or almost nobody) knows about. And there are a LOT of ways to find them. And this is what I’ve learned over the years. We started with only the On-Market, but now we buy most of our properties from Off-Market sources.
Now, you are asking yourself, where are these Off-Market properties and how do I get them? But first I want to let you know there is a downside. You have to do some marketing (ie spend some or a lot of money) and you have to answer the phone. For me, this is the hard part. A phone call comes in at 8PM and I’m about to watch my favorite show – oops, I need to answer this call. If you don’t, the caller will call someone else and you won’t even know about the deal. There are ways to fix the answering part but not when you are just getting started. You have to answer the phone!
Now that I’ve gotten that out there, I’ll give you some direction on where to find Off-Market properties. The most obvious is the Bandit Signs – these are those yellow signs that say ‘We Buy Houses’ and a phone number. They work. Some of the calls will be from the cities where you put them up. They are banned everywhere but they still work great. So, do you violate the law and buy some great deals? Or do you whimp out and say they are illegal, So, I won’t do it? Your choice.
Another way is to call the ‘for Rents’. What you say? Why for RENT? Because they are trying to rent the property because it is vacant. And when it is vacant is the time most landlords hate the property the most. The property needs repairs from the prior tenant but there is no income. The other time is when they must do an eviction (but more on that in another post).
Other sources include networking with other investors. Yes, investors also, sell the houses that they find and that they own. You will never know why some sellers will sell their property and the reasons are as varied as there are sellers. Just ask.
Hope that helps you find some properties. Keep in mind the market changes every day (especially right now) So, what works one day may not work another day and you will have to be flexible. In a buyers’ market, just looking at the MLS may be enough. In a sellers’ market, you have to get much more creative.