There's an old saying in real estate that you make money when you buy property, and not when you sell. This basically means that your future profit is determined by the price you purchase a property for.
In my experience, I've found this to be true. All the best deals I've done started with purchasing a property at a great price that generated great cash flow and substantial appreciation with minor upgrades.
Unfortunately, in today's market, finding properties at a good price can be difficult. It's common for properties listed at good prices to get several offers over list price.
Two major factors that helped me grow my portfolio of 22 apartments quickly were:
- Finding good deals that let me refinance my capital out to buy more properties
- Only purchasing one property that was actually listed on the MLS
This article will cover my top 5 tips to find real estate investments at a great price.
1. Let Your Friends Know You're Looking
The first thing you can do to start building a source of leads is letting your social circle know you invest in real estate. If you use social media, I'd recommend posting about real estate on each network at least once a month, until you become the "real estate guy or girl" among your friends or family.
It might feel a bit weird, but this strategy works. I will routinely get people I haven't spoken to since high school sending me a property that their friend is thinking about selling, wondering if I'd be interested in making an offer.
2. Networking With Top Agents
The best deal I ever purchased came from a real estate agent that had a client who didn't want to list their property publicly, and sold it to me instead.
In this situation there was only one other investor that was told about the property, and they took too long to make a decision on whether or not to offer, and we were already under contract.
For this strategy to work, you need to do two things well:
- Build trust with local agents that you're a closer
- Set clear expectations about your buy-box
Real estate agents that work with investors are always afraid that they will go under contract with an investor who doesn't have the funds to close, or will get scared away by an inspection.
If you can project an aura of confidence, and let other agents know about your past deals if you can, you can build trust that you're an investor who can and will close — that working with you is an easy way to get a deal done.
It's equally important to let agents know exactly what kind of properties you're looking for. If any agent knows you as "the guy looking for a good deal," that's pretty vague. Chances are you're not going to be top-of-mind when they get a new listing.
However, if you're "that guy looking for a 4plex with one vacant unit he can house hack" or "that guy who wants to buy an apartment complex with 2 bedroom units between $500k and $1.3 Million" and the agent gets a property that meets your criteria, your phone will ring.
3. Call For Rent Signs And Craigslist Listings
I used this strategy to buy my first ever renovation, and it's very easy to do.
If you're driving around town and you see a “for-rent” sign, pull over and look the house up on Zillow or HotPads.
If you don't see it listed online, congrats — you've got a lead!
Landlords who aren't using the most popular listing sites to rent their properties are probably older or less tech savvy, which means there's a good chance they might be looking to sell and avoid the headache of managing rental property and being a landlord.
In the same vein, another great strategy is to look for properties listed for rent on Craigslist, but not on more popular sites, then calling the owners and asking about a sale.
I've made several offers using this strategy, but have yet to purchase a property I found on Craigslist.
4. Driving for Dollars
“Driving for dollars” is a time-honored strategy that gets results. If you source your own properties, there are no other investors competing with you.
This strategy is simple: hop in your car and start driving around neighborhoods that you want to invest in, and look for properties in a state of disrepair.
Overgrown grass, peeling paint, broken windows, drooping gutters, and window AC units are all great signs that an owner has been neglecting updates, and might be interested in selling their property.
Once you find one of these properties you can send the owner a letter, or look up their phone number and give them a call to express your interest in purchasing their property. Driving for dollars can also be a great way to find owners that might be interested in seller financing, so they can get payments for a long period of time
5. Set Up a Bird Dog Program
A bird dog program lets you leverage your network to bring you business. All you have to do is offer a bonus to anyone that brings you a lead.
Think about people you interact with that view a ton of property, and reach out to them. Your mailman, cable installers, plumbers, roofers, and other contractors that work on houses can all be great resources to add to your bird dog program.
Buying an investment property that's a good deal takes a lot of work, but one thing is certain: you've got to take action if you want to make it happen.
Even if it's just calling one “for-rent” sign you saw driving by, if you take a small action towards your goal every day, eventually you will get there.
Buying your first property is the hardest step — it only gets easier from there. Stay persistent, don't give up, and hit your goals!