Remember, the key to successful real estate investing is motivated sellers. In Part 1, we discussed several ways to find motivated sellers. Let's continue.
It is amazing how many people do not advertise their home for sale. Some people are so sure the world will beat a path to their door, they just put up a single small, handmade sign. Sometimes it's not even legible from the street. Of course, this can work to your advantage as an investor. If you are the only one who pays any attention, you are also the only one to make an offer. Poorly advertised For Sale By Owner (FSBO) homes are an excellent source of leads.
Write down the phone number and call the owner. If there is no phone number on the sign, that's even better! Just knock on the door and start talking. Always look for FSBO signs when you are driving around. Take a different route home every day, and make it a point to cruise the neighborhoods looking for deals. Neighborhoods change every day and so do the houses for sale.
Would it benefit you to have ten people searching for deals on your behalf? How about a hundred people? Could you afford to pay them all? The answer is “Yes!” You can certainly afford to pay someone $250 or $500 when they bring you a deal that makes you $10,000 or $20,000. These folks are called “bird dogs,” and they are fine sources of leads you otherwise would never hear about.
It doesn't matter how many bird dogs you have because you only pay them if you actually close on the deal. If you're a serious investor, you should always get people to bird dog for you. Ask everyone you talk to if they know of anyone selling a house. Tell them that if you buy one on their referral that you will pay $250 at closing. Let the word get around town that you pay for leads, and you may have more than you can handle.
Flyers are even better than direct mail. Design an 8 1/2″ by 11″ flyer and distribute it door to door in the neighborhoods where you want to buy. I promise that if you put out 3,000 flyers in this manner, you'll be very pleased with the results. I don't believe I've ever done that and not bought a house as a result.
Basically, the flyer should read like our ad. Don't crowd it; just get the message across. The best part is the flyer can last for years and produce results when you least expect them. I made $23,000 on a house I bought from a year-old flyer. You can hire students or people from your local labor board to distribute them. Two people can put out 500 flyers in three hours. Put flyers on every door in the neighborhood. Car windows and mail boxes are off limits.
Whenever you canvas the neighborhood with flyers, you'll also want to be on the lookout for vacant houses. Vacant houses make motivated sellers and good bargains. Looking for them is another way to find houses that are not even on the market.
Look for the telltale signs of vacant houses: the lawn is not cared for; weeds have begun to take over; a pile of newspapers in front; old coupon flyers attached to the front doorknob; and other subtle signs. Record the address of the vacant house and check with the neighbors for the whereabouts of the owners. These are excellent leads, yet very few people are willing to hunt for them. So you will have little or no competition. If the neighbors can't tell you how to contact the owners, go to the court house or local tax assessor's office to get their name and address. Most of the clerks at these offices are very helpful and willing to guide you through the system used in their office.
Leave several flyers at the vacant house (the owners may come back) and send the owners of the house a letter. If it is first class, it may get forwarded to them. Another way to find out who owns a vacant house is to go to the post office and ask if they have a forwarding address for the vacant property. The post office charges $3 for this service, but it will often give you the name and next address of whoever was living there last.
Obviously, not all the letters you sent to owners of vacant houses will lead anywhere. But some will. All you need is for one or two of these leads to turn into a deal every three months for you to make a fair living. We have still only scratched the surface of how to find motivated sellers.