Real estate agents really like to gossip. I was recently chatting with my agent and she yammered on and on about who’s doing what in the local market. I actually find this information useful, as she’s a great source of on-the-ground information and insider knowledge that I can leverage in the course of my day to day work.
So I got the scoop: people are holding onto their homes, even in the lowest price bracket, making competition stiffer for those who are seeking to find cheap investment properties for sale in and around Chicago. That’s why a robust lead generation strategy will be increasingly critical for investors.
Chicago’s Cheap House Market Tightens
Our local housing market is following national trends. While there is a healthy supply of higher-end homes, we’ve seen a 7% year-over-year decrease in sales of existing homes priced below $100,000 across the country. The demand for these homes is strong, especially as Millennials reach an age when homeownership is more viable. This drives demand—and higher prices.
In Chicago, the number of single-family houses and condos on the market has been almost slashed in half. From the first quarter in 2012 to the same quarter in 2017, inventory of the lowest-priced homes dropped off from around 11,000 to approximately 5,900. While prices remain about 20% below the pre-housing crisis level, they are indeed rising significantly here, especially in popular areas such as Lakewood, Lincoln Park, and the Near West Side.
The suburbs, however, are still holding out for economic recovery. This region has one of the highest rates of underwater homes in the nation. Yet, even these homeowners are not selling. Instead, they are waiting for home values to reach a price-point that enables them to afford a bigger, better property when they decide it’s time to sell.
Finding Leads When Inventory is Low
With the inventory of cheap houses tight, investors will find it more difficult to grow a strong real estate portfolio. Some will likely turn to buying Chicago’s city-owned property, but that can be an inefficient way to grow a real estate portfolio due to all of the red tape. Another option is to target properties that nobody wants—such as former meth lab houses or homes with high radon levels. Then, the investor simply pays for repairs and remediation, rehabilitating an otherwise “unlivable” property. That can be very costly though, and you will have to disclose what you know about the house when selling it. It’s a gamble as to whether home buyers will bite, even if the work is performed by an experienced, licensed and insured contractor.
Another way to acquire cheap houses involves marketing your home-buying services to distressed homeowners. You can try outbound marketing, which entails buying lists of contact details for distressed homeowners. Then, you work to engage the prospects via phone calls, direct mail, email, or newsletter campaigns. While this method is pretty straightforward, the response rate is quite low. Some investors place a property valuation widget on their website, hoping it will drive inbound leads. But first, you need to be positioned to drive traffic to your website. Ad networks, like Google Adwords, can help you target specific audiences to bolster your website traffic—for a price.
The Most Effective Lead Generation
I have a solid professional relationship with my local real estate agent because I have bought and sold numerous homes over the years. Even distressed homeowners are comfortable with my approach because they know and trust my real estate investing franchise, which leverages HomeVestors’® “We Buy Ugly Houses®” marketing.
More often than not, though, distressed homeowners simply contact me directly. This is due, in part, to the extensive HomeVestors marketing campaign, which offers solutions for homeowners when they need help selling their house without hassle. If your real estate investing business could use this kind of effective lead generation, get in touch with HomeVestors.
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