Not too long ago, I ran into my neighbor, Scott, checking out books on real estate investing at the library. The stack in his hand was impressive. He had books covering business plans, valuation methods, and interior design. He even had one on flipping houses for beginners. Since I was already there, checking out a couple of books on trains for my son, I offered to skim the content to see if the titles he held measured up to the suggestions I could give. Not to toot my own horn, but I’ve been investing in real estate for a long time. I know what I’m doing, and I also know there is a lot of misinformation out there. Upon hearing my feedback, Scott promptly put the books back. And, that’s how the weekly library chats with my neighbor, and new real estate investor, got started. On tap for this week: how to find houses to flip and successfully beat out the competition.
The Usual Suspects for Finding Houses to Flip
When you’re building your real estate investment business in a competitive city, like New York or in Austin, where Scott and I live, finding leads on distressed homes to flip for a decent ROI can get tough. But, if you want to buy houses to rehab and resell for a living, you not only have to find great investment homes at below market prices, you have to find them on a regular basis. That’s why I always recommend skipping public marketing platforms, like your local Multiple Listing Service (MLS), and searching for off-market properties instead. There will usually be less competition driving sale prices up and you’ll actually have a chance to close on a deal. There’s no better way to beat out the competition so that you can build a good business out of flipping houses.
And, as luck would have it, there are several usual suspects for finding unlisted properties and they aren’t hard to get your hands on. Here are some examples that I’ll be sharing with Scott:
Customized Lead Lists
Lead lists have been used by real estate investors for decades and for good reason. They list homeowners who have filed for bankruptcy, are getting divorced, experienced a death in the family, or who have taken their home off the MLS because it didn’t sell. In fact, these days you can find a list showing just about any financially and emotionally distressing situation that might cause a homeowner to want to sell fast. If you can contact them before anyone else, you might have an opportunity to acquire a good deal. As a bonus, you no longer need a real estate agent to get lists for you. You can now buy them—and customize them—from multiple vendors found easily online.
Unfortunately, that’s one of the main issues with these lists and why you may not want to bother with them at all. You won’t be the only real estate investor who can easily find them, nor will you be the only one who uses them. So, even when the information on your list is correct, there’s no guarantee you’ll be the first to find out—or, the first to contact the exasperated and embarrassed homeowner.
Local Government Websites
In most states, local government entities—particularly county offices—post information on their websites about properties at risk of being foreclosed. Whether homeowners are behind on their taxes or defaulting on their mortgages, the information is made public and that can be to your advantage. Since buying foreclosed homes and flipping them often comes with more risks than rewards, connecting with a distressed homeowner who hasn’t yet lost their home stands to benefit you both. You’re likely to get a house that’s in better shape but still discounted. And, the homeowner has a better chance of repairing their credit and keeping their dignity.
But, because government websites are rarely user-friendly, it could take you some time to find all the information you need. Even then, it’s possible the data isn’t up-to-date. Depending on where you invest, the foreclosure pipeline may actually move faster than your county government’s information pipeline. So, the house may have already been seized by the bank or the owner could have gotten current on the loan before you make your call. Either scenario is only going to result in a very awkward conversation—and, no deal.
Putting some boots on the ground in up-and-coming neighborhoods is one of the oldest ways to get your eyes and hands on some potentially good deals. Properties that have lost their curb appeal because of cracked paint, crumbling walkways, and overgrown lawns can signal a homeowner who can’t afford the upkeep. And, this may direct you toward someone who’d also like to sell. You may have to dig a little to find the owner, of course. But, once you do, it’s possible they’ll be glad for the chance to transition the house from draining their pocketbook to your portfolio.
The problem here is that you risk damaging the trust that you’d much rather build when you go pounding the pavement and knocking on doors. The homeowner may not be interested in an unsolicited offer while, for instance, they’re trying to have dinner—especially if they don’t see anything wrong with the property that you think looks “distressed.” Plus, locating a homeowner who does not live at a house can take more time and energy than is worth putting forth. They may be deceased and the property in probate or there may be tenants inside who do not want to cooperate. Either way, trying to make contact may only create offense, not the returns you were hoping for.
Any of these strategies will lead to some results and using all of them could get you better ones. But, when you want to be the best at what you do, you’ve got to implement the best tools that will help to get you there. That includes a system that generates leads for real estate investors that has lower competition and a higher rate of conversion. And, you can only achieve that if you have motivated sellers of distressed homes contact you.
An Unusual Method for Yielding Potentially Extraordinary Returns
As an effective lead-finding strategy, having distressed homeowners contact you when they’re ready to sell is like hitting the jackpot. And, long before I became an independently owned and operated HomeVestors® franchisee, that’s exactly what I tried to do on my own. I quickly found, however, that producing television and radio ads, advertising in newspapers and online, and mailing targeted postcards and flyers were not only expensive, but it was also impossible with my budget. But, if I wanted sellers to come to me and not my competition, they needed to know I existed. So, I was in a bit of a pickle.
But, after joining the HomeVestors® team, I was no longer jammed up and struggling for leads. All of the direct marketing that I’d been trying to do on my own was immediately available and already successful thanks to the strength of the HomeVestors national brand. So, as soon as I opened my doors, the “We Buy Ugly Houses®” national ad campaign was hard at work bringing me off-market distressed property leads. The conversion rate was better than anything I’d previously tried, too. It was an unusually good start to what’s become an extraordinarily great professional real estate investing career. Though, I do have to take some of the credit. After all, I made the call that started it all. And, that’s what I plan to tell Scott to do next.
Beat out the competition by getting qualified leads to come to you. Call HomeVestors to start your professional real estate career today!
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