After taking a slew of online real estate investment courses, my wife’s friend, Bridget, came to me with questions about how to find the good off-market real estate deals to grow and investment business. Surprisingly, in one of her classes, she’d learned that you have a better chance of securing investment properties with potentially strong returns if you look for distressed homeowner leads that aren’t openly advertised. She’d also been given some ideas on where to find them. I was as curious about what her instructors had suggested as she was about which approach was best. So, we reviewed her options; then, I gave her a better one.
How to Find Good Off-market Real Estate Deals
Though I’m not a huge fan of online real estate investor training programs, I was relieved to hear that the learning how to find off-market real estate deals had been addressed in one of Bridget’s classes. When properties are actively listed on the Multiple Listing Service (MLS) or advertised online and in local print publications, buyer interest—and, therefore, buyer competition—increases. Obviously, that’s great for the seller who wants to get as many offers as possible for as close to asking as possible. But, it’s not so great for you when you need to find houses that you can buy at the lowest possible price to help you achieve the highest possible returns. Off-market deals, however, get you closer to that probability. The properties tend to be owned by motivated sellers who want to unload their properties fast, typically making negotiations easier—and your closing price lower.
But, as a new investor, you’re likely to discover that finding off-market properties that convert is at least as hard as it sounds. Below is how Bridget heard to do it and my opinion on the effectiveness of each.
Buy lead lists
Lead lists, the most commonly used strategy for finding real estate deals, can direct you toward homeowners who may be eager to sell, but who haven’t started advertising. That’s because they contain information on couples going through a divorce, families in foreclosure, and anyone who owes back taxes among a variety of other financially distressing situations that are usually kept close to the vest. You can customize the lists, too, should you want to focus solely on homeowners who have only missed a few mortgage payments rather than on those whose homes are headed to auction. And, thanks in part to the growing popularity of these lists, there are now multiple vendors who provide them at competitive rates. So, you no longer have to purchase them from real estate agents who set the price and sell to everyone.
Unfortunately, because they are more accessible than ever before, lead lists are bought by more investors than ever before—and the competition that this creates isn’t going to be your only problem. By the time that you buy a list, a lot of the information may no longer be valid. A homeowner could get current on their mortgage, for example, making your call inappropriate and annoying. Even when the info is spot on, your unsolicited call can still turn them off—especially if all of the other investors who bought the list called too. You’ll spin your wheels spending money on lists, which won’t get you any closer to a good off-market real estate deal.
Network with real estate professionals
There are a number of industry professionals who have access to off-market properties and finding ways to network with them can get you admission to the inside scoop. Real estate agents, builders, and estate attorneys often hear about properties that aren’t yet in the public eye. And, they each have associations they tend to belong to and that may hold meetings you’re allowed to attend. Additionally, most major metropolitan areas have real estate investing clubs in which membership can potentially connect you with these same pros as well as with other investors who have off-market deals that they personally want to unload. So, a little hobnobbing around town could land you on a list of investors who get the first crack at any deals coming down the pipe.
It takes time to network and earn the trust of other real estate professionals, however, and it could take a good chunk of cash, too. Showing up for one meeting with a single organization just isn’t enough time to build a relationship of any kind. So, for a while anyway, hobnobbing could become your next full-time hobby. But, it can be pricey to join clubs and associations, attend meetings and events, and go out for dinners and drinks every week and weekend—especially when you’re also trying to build a business. But, that’s what you’ll have to do if you want as many people as possible to get to know—and trust—you. Unfortunately, as fun as it can be, running up a high social tab doesn’t guarantee you’ll be in the running for the best deals when the time comes.
Market directly to homeowners
A more practical way for how to find off-market deals is to market directly to homeowners, inviting them to call you when they’re ready to sell. There are several ways to accomplish this, from sending out targeted mailers to buying billboard and bus stop ads. You could even try a few uncommon marketing ideas, like using Twitter and Instagram, to get your name on every possible seller’s mind and in their contact list. The more marketing avenues you utilize to their full potential, the less time it could take for you to reach yours as an investor in real estate.
Except that, taking advantage of the benefits that direct marketing has to offer is a costly endeavor and one in which the results are not so quickly seen. You may be able to send out one round of bulk mailers on the cheap but to get and keep at least one potential seller’s attention, you’ll have to put this strategy—and the others—on repeat. But, if you’re like most new investors when they’re just starting out, your advertising budget may not match your marketing needs. Even if it does, building brand awareness takes time and, in an industry when the good deals go fast, time is not always on your side.
Each of these methods for finding motivated home seller leads that aren’t on the open market is okay. But, a more effective plan of action—and the one I suggested to Bridget—is to join a team with a tried-and-true direct marketing strategy already in place. That route, I assured her, would drive distressed homeowners in her direction from day one and that all she’d need to do was answer their call for help and work hard to provide it.
The Secret to Getting Great Leads on Good Deals From Day One
It can be hard to know which lead-finding strategy will work best when you’re new to real estate, which is why, early on, many investors try multiple tactics at once. That was me back in the day. And, occasionally, I got a good deal. But, it’s when I became an independently owned and operated HomeVestors® franchisee that I got more chances to buy better deals. Those off-market opportunities started coming my way from almost the first day I opened my doors.
The secret is HomeVestors®’ nationally-known and trusted “We Buy Ugly Houses®” ad campaign, which has been marketing to homeowners across the country since 1996. Through television, radio, and print, motivated sellers in financial distress have learned who to contact when they need “solutions for their ugly situation®”—franchisees like me. So, I get easy access to off-market leads by being a part of an established brand that homeowners already trust. My job, then, is to keep their trust by offering a fair deal that not only helps to build my property portfolio, but that also prevents their circumstances from getting any uglier. And, if you’re as new at investing as Bridget is, HomeVestors will also teach you how to do it.
Get in on the secret for finding great off-market real estate deals. Contact HomeVestors today to become a better investor who finds the best deals.
Each franchise office is independently owned and operated.