Driving for Dollars – How to Find Real Estate Deals
In this guide, I’ll share with you a step by step strategy called Driving for Dollars that real estate investors can use to find off-market properties with low competition.
Currently in my real estate market inventory is low and demand is high. This makes it difficult as an investor to find investment deals at cheap prices.
Anytime a property comes for sale in the lower price ranges, it instantly gets multiple offers, often pushing the purchase price above the listing price.
For example, the other day my buddy and I partnered together to purchase a foreclosure REO from the bank.
We had to wait 7 days to make an offer per the rules of the listing, which gave plenty of time for other investors to spot the property and also make an offer.
Once we made an offer, the realtor sent back an email asking for everyone’s highest and best offer by Monday at 5pm.
This happens when a property gets multiple offers and the seller wants to see who will step up to the plate and offer the most money for their property.
We ended up getting out bid by quite a lot of money which is fine. The property had a lot of issues we were skeptical about taking on that could greatly reduce profit potential if we tried to flip it.
This whole competing with other buyers has been going on several months now in 2017. Inventory of homes is low across the United States in general and not just in my local market.
Therefore, I want to share what I’m doing now to find real estate deals in a seller’s market when lots of buyers are fighting for the same low hanging fruit.
The Driving for Dollars Method – Real Estate Investing
How do we move away from the MLS and Zillow where everyone is looking and find real estate deals nobody knows about?
The answer is to go out there and begin searching for off market real estate deals. Drive every street in your city looking at the houses and look for ones that appear run down and vacant.
Driving every street will not only help you spot abandoned properties, but also help you discover different neighborhoods you feel comfortable investing in and neighborhoods to avoid.
Since the market is tight in my city, I’ve been driving through areas I feel are good locations to own investment properties as rentals in case the flip falls through or we decide to keep it as a rental.
To help you spot out vacant properties, look for overgrown grass, plants, etc. as this indicates the owner hasn’t been keeping up with landscaping responsibilities and likely the inside of the property as well.
Talking to Neighbors in Different Neighborhoods
You can also talk to neighbors in areas you want to invest and let them direct you to properties they know are deteriorating and being abandoned.
Neighbors hate when a crappy property sticks out like a sore thumb in a nicer neighborhood, impacting the value or image of the rest of the homes. They’ll be glad to help you if it means you’ll fix it up and make their neighborhood nicer again.
To speak with neighbors, simply locate people outside walking their dog and have a brief chat with them letting them know you’re an investor seeking property in this location and wanted to know if there are any problem properties in the neighborhood you could fix up.
Typically, I would avoid going door to door until you’ve spotted a vacant home in a neighborhood. And make sure you know your real estate terminology (read this first) so you don’t sound inexperienced.
Then you can ask specific questions to gather more information since the neighbors will likely know which property you’re asking about.
Don’t believe me?
I’ll give you an example right now.
We have a property in our neighborhood that has sat vacant for several months and I assume it’s going through the foreclosure process since it has sat for so long.
I didn’t have to go searching to find this property.
It was easy to spot by just being a member of the neighborhood, driving the streets every day as I enter and leave for work.
I’m sure other neighbors in my neighborhood also have noticed this vacant property and are curious why it has sat vacant as well as when someone is going to come fix it up nice again.
Summary lesson here is to get out there and talk with people and they’ll spot deals for you that no one else should know about unless they are residents of the neighborhood with inside information.
What Happens Once You Find a Vacant or Distressed Home
Maybe the home isn’t actually vacant but it’s in very rough shape.
Regardless, once you find a potential deal the next phase is conducting further research and then sending the home owner a letter in the mail asking if they’ll sell.
You can use the city tax records to find the owner’s mailing address that gets sent the property tax bill each year. You may notice the billing address differs from the property address, which could indicate it is being used as a rental property.
Type up or hand write out a short letter explaining how you’re interested in buying a home in the neighborhood and noticed the house appears vacant.
You would like to know if the seller would be interested in selling it to you and if so to please contact you so you can work out a deal.
Alternatively, you can knock on the door of that property if it’s clear that the property isn’t vacant. This would be a direct way to speak with the owner and gauge their interest level in selling to you.
You’d be surprised at how motivated some seller’s would be to get a problem property off their hands. You may think they’ll say “No, I’m not selling” but in reality you’ll find that a good percentage of them are open to hearing your price and potentially discussing a deal to sell to you.
How to Buy Your First Investment Property
If today’s blog post inspired you to get into real estate investing but you don’t know where to start, check out more articles from my blog that have lots of educational lessons and tips.
I also have a beginner’s course with 16+ modules packed full of lessons on every topic you need to know as a real estate investor.
You’ll learn all the basics plus more advanced topics:
- Why real estate is better than the stock market
- How to find deals with large profits
- How to fund your deals if you have little money
- How to analyze deals and know which one’s are worth offering on
- Setting up legal entities like an LLC
- The due diligence phase prior to closing on the property
- 4 ways you build wealth through real estate investing
- And much much much more!
Learn Real Estate Investing in 10 Days
Learn the 10 basic steps to becoming a real estate investor by signing up for my free 10 day email course. Each day I'll send you the next lesson.