Buying By the Numbers: 5 Efficient Ways to Find Off-Market House Deals

by Danny Johnson


mart real estate investors know that the secret to true success is

usually bank-owned or estate-owned and are for sale on the open market. Yes, you can get these deals, but they are going to be much harder to buy due to the level of competition. That’s because thou- sands of other investors—including many who are far more experienced than you— are right out there with you trying to find those same deals from properties currently for sale and on the market. The easier it is to find the deals, the more investors are going to be jockeying to buy them, whichmeans you’re going to pay more. THERE ARE THOUSANDS OF HOUSES FOR SALE THAT ARE NOT ADVERTISED AS BEING FOR SALE I prefer to buy off-market deals. You find those off-market deals by beating the streets and finding owners of houses who want to sell fast to avoid the hassles of going through an agent or For Sale By Owner. There are two approaches to finding what are typically called “motivated sellers,” though I find most of the people who sell to me are not motivated, per se. They just feel the speed and ease of the transaction is worth the equity they are giving up. The first approach is to do general marketing that gets seen by a lot of people in hopes that the would-be seller will see your message and contact you. Typically,

investors will put up signs with wording such as “We Buy Houses Fast” and their phone number. The other approach is direct-response marketing. This is where you target people based on their situation. The situations you are targeting are the ones that would gener- ate motivation to sell real estate. Focusing your energy on the people more likely to need your house-buying service will allow you to avoid the tire-kicker home- owners who will call on a sign just because they think you might be willing to pay full market value for their house. These five methods for finding off-market deals are a combination of what’s commonly referred to as inbound marketing (signage, websites, etc.) and outbound, direct-re- sponse marketing where you are targeting people with specific situations. I offer them in descending order, down to my favorite. VIOLATIONS When someone complains about a house because it needs a lot of repairs, is vacant and has a very overgrown yard, the city will issue a code compliance violation and tell NO. 5 CODE COMPLIANCE 5 EFFICIENT WAYS TO FIND OFF-MARKET, MOTIVATED SELLER DEALS

finding deals with great numbers. So as a house flipper, in order to increase my profit margins, reduce my risk and allow myself several “outs,” I buy as far below market value as I can. Almost everybody underestimates what it will cost to fix up a house. Almost every- body underestimates how long it will take to rehab a house. But if you buy right, your chances of incurring a loss are much lower. I typically buy at 70 percent of market value, less the cost of repairs to get the house in sellable condition. Buying with these margins allows me to make some mistakes here and there and still make good money. If you flip enough houses, you will run into surprises. Those surprises could run in the thousands of dollars to remedy. If you buy right, these surprises just mean you are not going to make as much on the deal as you’d hoped. This is much better than losing money. Nothing is worse than taking on all that risk, dealing with headaches and problems and then finding out you paid to do it. SO HOW DO YOU FIND THESE GREAT DEALS? Most investors turn to the MLS and agents to find deals. These properties are

26 | think realty magazine | mar :: apr 2016

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