I love real estate investing. It’s endlessly fascinating and ever-evolving. But, you really have to stay on your toes—especially nowadays. In the decade following the ‘08 financial crisis, we saw significant changes in the housing market. The housing bubble burst, foreclosure rates went through the roof, and homes were abandoned in virtually every neighborhood across the country.
But, the market tides have clearly turned these days. Due to rising wages, lower mortgage rates, and higher home equity, we’re now seeing a marked decrease in foreclosure rates and abandoned or “zombie” properties that used to be easy pickings. It’s become harder to find great investment properties with a lot of upside. But, there’s some essential tips and tricks to navigate the market, even as foreclosure rates drop.
Knowing How to Find Investment Properties in a Tight Market
We saw the first truly significant drop in foreclosure rates since the market collapse in 2018 when nationwide foreclosure activity dipped to a 13-year low. And, foreclosure rates have continued to break record lows in 2019 and 2020. It’s a trend that isn’t likely to alter course anytime soon, so it’s important for you to strategize how to find investment properties when the availability of distressed houses is low.
Start by thinking about your overarching real estate investment goals and dedicating more time to generating leads that match those goals. Your lead generation strategy should be as aggressive as your targets. Here’s some ideas about how to find investment properties in even the most challenging housing market.
Take to Social Media
When used wisely, social media is the perfect way to get in touch with distressed homeowners. Start by placing an ad in your area. You can also create a public page and post helpful videos about how to avoid foreclosure. Joining an online network of investors is another great way to get the inside scoop on the latest properties. However, you’ll likely only get a few leads from these sources, if any at all, so don’t expect too much from this process. Set it, check it, and (mostly) forget it.
Invest in Lead Lists
While waiting for a bite on your social media accounts, you could buy a lead list from an online vendor. These are rarely that fruitful, but with foreclosure rates at the lowest point in decades, you need to exhaust all options. The information on lead lists isn’t always up to date and some homeowners on the list may get annoyed by multiple investors calling them about their houses. But, once in a blue moon, you’ll find a fantastic lead before other investors can get to it. The key is to be persistent and remember that lead lists are just a small part of a larger property investment search.
Foreclosures might be rare in today’s market, but that doesn’t mean they’re nonexistent. In fact, you may actually have more luck than usual when you search for recent foreclosures directly on lending and banking websites. Fewer investors are actively seeking out foreclosures because they’re harder to find. When you put in the extra effort by contacting government lending agencies, banks, and credit unions, they may offer to sell you whatever REOs they have. This isn’t an easy path by any means. It requires research, time, and patience. However, a road less traveled is also less crowded.
Contact Homeowners Directly
Cold calling and direct mailing can be tedious, but when it works it’s extremely rewarding. Take some time to drive or walk around neighborhoods that you suspect have foreclosed homes or distressed properties. If you find a home that you suspect might be distressed or abandoned, you can enter the address into an app like Lead Dog, which will automatically set up a direct mail campaign targeting the homeowner on record. It’s a great way to find investment properties to flip. However, it can also be a massive time sink if you don’t have the right tools to automate the process.
Get in Touch with Tax Assessors
If you really want to learn how to find off-market investment properties, you need to think a little outside the box. One novel way to potentially get your hands on an investment property is by buying a tax lien. With this method, you don’t have to wait for a home to foreclose. Many cities and counties provide a list of addresses that have delinquent taxes associated with them. If you bring these taxes current, you can charge the current owner an interest rate. And, if the homeowner does not pay what’s owed by a set deadline, you can take ownership of the property. The main downside of this method is that it requires a lot of time and there’s no guarantee you’ll get the house by the end of it. You could also unwittingly buy a property that costs too much to repair—perhaps even more than it’s worth.
Head to Auction…but Only as a Last Resort
Auctions are still a tried-and-true way to find foreclosed homes. So, why shouldn’t you start with auctions? Because these are also incredibly competitive and not always worth the money. There are fewer foreclosures available, so they attract a large crowd when it comes time to bid. In fact, bidding often gets so high that even if you win, you may not be able to break even after renovations. But, if you’ve exhausted all of your other leads and you’re curious to see what the auctions have to offer, this is a reliable way to find foreclosures. Just keep your expectations—and your bids—low.
If you want to know how to find investment properties, keep in mind that foreclosures aren’t your only option. You may find it easier and more profitable to look for distressed homes that are nowhere near foreclosure but that the homeowners don’t have the funds or patience to repair themselves. Some homeowners are looking to offload a house in disrepair so they can get out from under an “ugly” financial situation. As long as you know what you’re getting into and how much the repairs will cost, you can see some potentially good returns.
Find New Real Estate Investment Opportunities More Easily
Even if the number of abandoned and foreclosed properties continues to decline, you can still choose from a stocked supply of below market-value properties. I know personally. When I first started investing in real estate professionally, getting leads took up most of my time. It was time that I could have used turning around distressed houses that I purchased. Needless to say, my business wasn’t getting off the ground quickly enough.
That’s why I decided to become an independently owned and operated HomeVestors® franchisee. I immediately got the exclusive rights to use some of the best marketing tools for investors and the nationally-known “We Buy Ugly Houses®” advertising campaign. With this powerful brand behind me, distressed homeowners started calling me—not the other way around.
If you’re ready to find better real estate investing opportunities today, call HomeVestors to find out about pursuing franchise consideration today.
Each franchise office is independently owned and operated.