A good real estate deal will mean different things to different types of investors. Some investors like to buy properties at 20% to 30% below market value, some like to buy in desirable areas with good appreciation, and others like properties that are already rented out with positive cash flow. Personally, when I look to buy a property, I'm not looking for a good deal, but a good steal. No! I'm not looking to cheat anyone out of their property. I'm just looking for the best steal out there. A steal is one that will (practically) assure me I'll make a decent return on my investment with minimal risk. The steals are out there, but you just have to develop a system for finding them.
Finding Real Estate Investing Steals
Most people starting out in real estate investing don't know where to find good real estate properties. The sources I use to find good real estate properties are not immediately obvious, are not outside screaming “big profits here”, and require a fair amount of investigative work. The best deals you can find are from private sellers – some of whom do not even know they want to sell you their property, until they see you. Over the years, I have purchased real estate from real estate agents, R.E.O. properties (real estate owned – i.e. banks, mortgage companies, HUD, Fannie Mae, etc), and foreclosures. I even purchase properties from other investors. None compare to private sellers – by a long shot.
So where do you find private sellers? In this article, I will share with you the system I have found successful. I hope my system works well for you.
Get Organized For Finding Real Estate Investing Steals
To begin making this system work for you, you'll need to be organized. Purchase 6 durable hanging folders and label them as follows:
#1: Property Appraiser Reports
#2: Phone Number Available – Follow Up
#3: No Phone Listing
#4: Write Letters
#5: Make Offer
#6: Not Interested In Selling Property – Call Back
Indeed, I understand this folder arranging business doesn't make any sense to you yet – hear me out.
Farming for Investment Property
Before we begin to use this system, you have to identify some good steals. Now the fun begins. to find the private sellers, you have to go out and “farm the market”. When you farm the market you are looking to acquire potential properties by driving up and down every street, once or twice per week, making mental notes of changes and activity. You will become a local expert or specialist in a given geographic area.
You are especially looking for distressed properties. What does one of these look like? One sign of a distressed property is when the property has a lot of physical damage (broken windows, peeling paint, a missing front door). Also, it's safe to say that most boarded up properties are in distressed condition. Add yards with accumulation of trash and debris, overgrown landscaping, and various other signs of vacancy (overflowing mailbox, old flyers, etc.) to this list.
Above all, if you see a condemnation sign posted to the front door, this is a strong indication the owner is looking for a safety line. When farming the market, if you run across any of these properties you should enter the address in your notebook to begin your investigation.