What is the difference between you and the next Real Estate investor? Or maybe I should ask it this way, “do you want to consistently find truly great deals that separates you from others?”. Hopefully your answer is “yes” and if you are sincerely interested in finding motivated sellers then there are a few key principles that you as an investor need to master for success.
Specialize, Specialize, and Specialize!
Specialize in one area or technique in Real Estate to where you become an authority on the topic. There are so, so many ways like for example being a wholesaler of quality properties, a subject-to guru on “pretty” house specials, Section 8 landlord for maximum cashflow, etc. For novice to even moderately experienced Real Estate investors, generally speaking you will realize greater success specializing in an area while continually developing your skills to become the elite investor labeled as: Transaction Engineer!
Find a Niche Need or Service in your Real Estate Market
Find a niche need or service in your Real Estate market and capitalize on it! Some examples could be publishing a weekly/monthly foreclosure listing in your area selling to other investors, get a listing of investors that use bandit signs and provide service to distribute and/or produce bandit signs, locate larger bank REO companies to provide “winterizing” of vacant houses in cold weather, and lastly fulfill other marketing techniques that no one else incorporates more to come!
Be a Hybrid Investor Combining #1 and #2 listed above
This is a trend I see with many investors who I consider successful experiencing short and long-term success. That type of investor literally could write policies and procedures on at least one traditional area of Real Estate and then they combine that income stream with fulfilling another niche need specific to their Real Estate market. Being a step ahead of your competition or rather knowing how to stay a step ahead of your competition is the key for immediate and continued success in Real Estate. Finding niche marketing techniques is an area that you always need to explore and benefit from. That is exactly where we're at and it is my sincere hope that you too will, “Get All Fired Up For Motivated Sellers”.
The definition of motivated sellers all goes back to the seller having a “problem”. If sellers did not have a problem, then what would be their motivation for selling a property at such ridiculously cheap price and/or terms? That “problem” comes in too numerous of ways to adequately describe here but they could be foreclosure, lack of needed capital to fix a property up, property inherited and they don't want to be a landlord, fire damage, etc.
Hopefully you caught the last one there and which is my focus on providing for you another niche marketing technique. Properties that have fire damage are prime candidates for fitting my criteria of being a motivated seller. Like an injury trial lawyer chasing ambulances, you as a real estate investor need to seek properties with fire damage. The bigger the problem equals the bigger the profit potential many times and fire damage properties should be a no-brainer area of opportunity.
Now, some of you already out there may be trying to prematurely rule out this technique before you even hear me out and stating that you don't deal in “junker” properties. If you feel that fire damaged properties can only be associated with lower-end appraised properties, then unfortunately you may be too narrow minded and unable to grasp this concept with fire damaged properties. Yes, fire damaged property leads are more dominant in lower-end appraised properties but there are some gems out there to be had with pretty house specials too.
Once you identify a property with fire damage then you may be closer than you think to having a great deal. See, with fire damaged properties the party of motivation you can negotiate with can be the seller of the property and/or the mortgage company if existing financing is applicable. To many sellers you may be just the ticket they are looking for to take this problem off their hands once and for all but at your price and/or terms.
Sure there are many properties that once you identify as having fire damage the seller will not be motivated to sell as insurance will rebuild probably in better shape than even before. What about the owner, whether owner or non-owner occupied, that didn't have insurance on that property Yes it happens all the time. If the owner was too cheap or simply just didn't have enough money to insure the property, do you now think they will have enough money to be facing a high five-figure repair bill? Most probably not. So, do you now think they might like to at least get something significant for the property and be done with it? Once again the answer is “yes” and when you lock into those types of situations they spell profit for you.
Here are just a couple of specific personal examples to show you:
- One owner I marketed to aggressively had a property with extensive fire damage and actually did not have insurance on the property. The owner also did not have the money to repair the house and was in need of personal income so I accommodated at my steeply discounted price. I could even have repaired it three times over and inclusive with purchase price still would have been under 80% LTV on the property!
- Another motivated seller I profited from had an extremely large duplex converted into single family house that was picturesque from the outside with the back half of the house burned off and yes, I mean off! The owner even actually had insurance on the property and after settling his insurance claim, he sold at once again a steeply discounted price as the project was just too extensive for his taste. Actually it was for mine too so I wholesaled for a quick couple of thousand. I'm in and I'm out making a profit without having a time consuming extensive rehab project on my hands. You may be at this point stating that all sounds fine and good in theory, but asking yourself, “how do I find those deals?”. Finding the deal and fulfilling that niche technique previously outlined earlier is what you will need some creativity and all out personal “gumption” to get this done. My technique is not complicated and neither should yours be so don't try to make it harder than it has to be.
All right, here it is. I research in my area properties that have fire damage. The technique I describe here may or may not be applicable in your area depending on constraints with the information. You will just need to do some research and find out how and if these properties with fire damage have the information made public.
In my area the Department of Code Violations has to automatically respond to inspect any properties that the fire department was called out to extinguish any type of fire. I simply access those property addresses that meet that criteria and start mailing letters/postcards to the owner listed on county assessor's property records. For example on my first letter they receive it will go like this:
I noticed the other day where your property had extensive fire damage. I want to offer an opportunity to possibly buy the property due to this unfortunate event, however there is no doubt you have some decisions that need to be made.
It is not my intent to be confusing to your personal situation but rather to provide an option if you so may need. I am an investor and can close quickly if you have flexibility on your price, terms, or both. I do hope to hear from you soon if your situation needs immediate attention or please keep my name and number on this correspondence if another time would be more beneficial for you.
I'm the biggest fan of direct mail you will ever know and there simply is no secret how I find deals with fire damage. I mail, mail, and mail until sellers tell me to quit sending them letters or please come and take this property off my hands as quick as you can. In the above listed example on fire-damaged properties they will receive two letters and two postcards over a four-month period from me. I just keep my name and number out there and consistent in my marketing approach.
This type of technique is useful to investors no matter what your specialization whether it's wholesaling the property, rehabbing it, or what ever means necessary so that you profit from it. Hopefully if you weren't before, you now are “All Fired Up For Motivated Sellers”.