If you are interested in becoming a real estate investor then this thought must have some across your mind, “How do I find investment properties”, or “How do I find abandoned homes”?
I want to share with you a few of the best ways to find good investment properties for either Rentals or Fix and Flips.
Finding a good investment property is just one step of the process. I have a book coming out soon that is a complete guide to real estate investing. If you are interested in being a real estate investor look out for my book “Anyone Can Invest in Real Estate” on Amazon, coming soon.
You may also want to take a look at my article “How to Start Investing In Real Estate”.
Yes, that’s right, you can still find good investment properties on the MLS! In fact, the majority of investment properties are bought and sold on the MLS. All of my investment properties that I have bought were listed for sale on the MLS.
The best part about finding properties on the MLS is that the sellers WANT to sell the property. The biggest problem with many other methods of find investment properties is that the sellers don’t always want to sell those properties.
A property that is listed for sale on the MLS has a seller that is motivated to sell the property. Some sellers are more motivated then others, but they all want to sell.
Another benefit of finding a property on the MLS is that is have a list price. You already know what the seller wants to sell the property for. With other methods of finding investment properties you have to guess what price to suggest to the owner or try to drag the price out of them.
Check Listings Daily
When using the MLS (Multiple Listing Service) as your main source of leads on investment properties you need to check it daily. You can set up auto searches to help you look. These will search the listing daily to find a property that matches your criteria. You can set up on of these on my company’s website NovaStarStark.com, just fill out the form and we will set it up for you.
Auto searches are not perfect though. They are great, and I use them all the time for myself and my clients but sometimes they will miss a good property because one item may not match the criteria you put in.
The best way to check the MLS is using your own eyes each day. I suggest pick a specific time each day to look through listing. If you are aggressive about finding a property you can check the MLS two or three times a day, but I suggest picking specific times for your searches.
Finding a good local Realtor that is an expert in investment properties is probably the best thing you can do. This is second only to you becoming a Realtor yourself.
A Realtor will have the first look at properties as they hit the market and they will also be able to get you scheduled right away for a showing. A Realtor can also get information like how many showings have been scheduled and if there are any other serious buyers or offers on the property.
Realtors have a huge advantage when it comes to buying investment properties. It is almost like having insider information. A Realtor can also get you more in-depth information to help determine how desperate the seller might be, information like; amount owed on the current mortgage or if they are behind on their mortgage or taxes. All of this will help you and your agent put together a good offer.
FSBO (For Sale By Owner) properties are not always the best for investment properties. There is usually a reason they did not list their home with a Realtor and this is most often because they want more then it is worth.
There are some FSBO properties that are not just greedy sellers. Sometimes they owe too much on the home and can’t afford to pay a Realtor or they just like saving money.
Occasionally you can find a FSBO that would make a good investment property. These are usually distressed properties that are in disrepair. Best case scenario is when the seller owes very little or nothing for the property. This way you can negotiate a great purchase price for your investment.
You can find FSBO by looking online or looking in your local newspaper.
This was extremely popular a few years back. It was called “Driving for Dollars”. You can find books and videos about this that show you how its done.
There is no secrete way of doing this. IT is basically driving around looking for distressed properties or properties that are in disrepair.
You will want to drive down roads that fit your business plan for investing. The roads you drive on for fix and flips will be different from the roads you drive on for rentals. This is because rentals are a long-term investment that you want to pay very little for and make money over time. Fix and Flips will need to be in an area that buyers highly desire and have better resale rates.
No mater what area you choose or the type of investment, Rental or Fix and Flip, the appearance of the property you are looking for is the same. You want to find the worst property on the block that looks like it hasn’t been taken care of or maybe even vacant.
What do you do when you find a property?
Whether the home is occupied or vacant you will want to look the property up online. Find out everything you can about the property, Tax History, Mortgage History, Current Owner, if it is Owner Occupied, Tax Mailing Address.
Once you get all your information you will want to prepare a letter specific to that property. Address it to the owner. If it is owner occupied send it directly to the home. If it is not owner occupied, then you will have to determine if the tax mailing address is an accurate mailing address for the owner. Some time the tax address is for the lender not the owner.
Send the letter and wait. You could also knock on the door of the home if it is owner occupied but this is sometime confrontational, and most sellers will not like this.
What to do if the seller wants to sell?
If the seller wants to sell, then that’s great! If they do not want to sell even after you make a good offer, then you must move on.
In the rare case that the seller actually wants to sell then you will need to make an offer, write up a purchase agreement and corresponding documents, then send it all to the title company.
It may seem a bit confusing and to someone who doesn’t do this all the time it will be a bit overwhelming and complicated. I suggest using a Realtor to write up all the documents and handle the sale. Realtors will usually do this for much less then you may think because you already found and negotiated the deal.
I want to point out that Driving To find investment properties has a very low success rate. It can work, and I have seen it done but you will spend quite a bit of time finding properties that owners may not want to sell.
You should use Driving as a last option. You should have other systems set up to find properties and use this option sparingly. You time is valuable, and you can’t waste it.
However you find potential investment properties you need to make sure you are ready to purchase the property before you even consider it. I suggest you check out my article on Investing to prepare yourself to be a successful real estate investor.
If you have any questions leave me a comment or send me an email.