Finding a great real estate deal is becoming a challenge, as more and more people get involved in the industry looking for a reliable way to build wealth. Real estate experts agree – the secret to finding the best deals is to diversify search efforts across different channels to maximize potential reach. From using the internet to sending out direct mail, there are many ways to find great deals that are not available on the open market. Off-market real estate deals could be very lucrative to the real estate investor.
Tips & Tricks
These are the top five New Silver tips and tricks for finding a great off-market real estate investment deal for fix and flips and fix and rents:
1. Social Networking
The internet is one of the most powerful tools available for real estate investors today. Of all the different methods, the internet is by far the most user-friendly way to get in touch with the latest property listings. The trouble with these listing is also exactly that which makes it great: easy access.
By getting access to brand new listings faster than ever online, there is an emerging issue where the competition is so stiff that it can be hard to have any single offer stand out. Better online deals can, therefore, be found via private listing websites, or on social platforms like Facebook Marketplace and other real estate investor groups, where the property listing would have had less widespread exposure. The visual aspect of Facebook has been a great contributing factor to the popularity of the platform with properties for sale.
LinkedIn is another valuable, albeit unexpected, source of good real deals. Through posting on personal profiles or in groups, reaching out to other professionals directly via the LinkedIn network or even putting out paid advertisements can help narrow down the property search.
2. Direct Mail
Direct mail is a traditional tool for finding off-market properties. Using direct mail involves sending out targeted letters to a group of property owners who may or may not be considering selling their home. The idea is that a certain number of the receivers will have seriously thought about selling, but may have not acted on it. With a compelling enough outreach, there is a good chance they will respond, but expect this method to take a little longer to pay off.
There are a number of tools available to locate off-market properties and relevant contacts. Some examples are Prospect Now and REONomy, amongst others. The best way to craft a letter is to research and identify a neighborhood you are interested in targeting and identify a number of properties specifically. Then craft a letter with an actual dollar offer – this will compel the owners to action if they have some interest in selling.
Sometimes finding the best deal is as easy as asking around. Networking can be a great way to find deals. It can be as simple as the investor letting people in the community know about your interest in purchasing real estate. A community member might know of a local home going up for sale, or might even be thinking of selling their own property.
Many areas may even have specific real estate clubs or networking events, which is a great way for investors to get familiar with locals and pick up some tips. Real estate professionals like brokers hard money lenders can often be found at these meet-ups, and it’s a great way to meet new people. Facebook can also be used to find networking groups for real estate and property sales.
Real estate wholesaling is the business of approaching sellers and connecting them with buyers who are interested. The wholesaler is interested in doing volume deals because they make money on the spread between the buy and sell prices, and usually, there is not a huge spread on each deal. For example, a wholesaler might take on a contracted property for sale for $115,000, and sell it to the buyer for $120,000, making a $5000 profit.
A connection with an experienced wholesaler is a good way to get in touch with great off-market deals. The majority of wholesalers are not in the “fix and flip” business and instead will focus on concluding each deal as fast as possible, so they are likely to want to sell quickly and are open to negotiations. However, it’s also important to note that wholesalers are effectively a middleman, and the deal might not be as affordable as it could be had it been a direct transaction between buyer and seller.
5. Bank Auctions
Bank or foreclosure auctions are another great place to pick up discounted properties. These auctions are organized by banks when a distressed seller (who often carries bank debt ) forfeits on their loan, allowing the bank to auction the collateral to recoup the funds. In most cases, properties are sold at discounted prices and the outstanding bond is forgiven. Banks are in the business of lending, not managing property, which is why they’re motivated to sell these on as fast as possible. You can also recent court records and identify divorces, deaths, bankruptcies and other events that may result in the property being put up for sale at an auction. These auctions can be found via online searches, through network connections or by checking with the local courthouse.
Great value can be found in picking up off-market properties. Unlike with MLSlistings, where multiple investors may put in offers, off-market properties are far more exclusive and allow the investor to get in an uncontested offer. The internet, direct mail, real estate wholesaling and bank foreclosures are some of the best places for investors to find opportunities. Once a deal has been found, an online deal analyzer can be used to determine how successful that property will be as an investment.