BiggerPockets

Best Practice For Finding Real Estate Deals Under Market Value

One of the best techniques for finding real estate deals under market value is by finding vacant property and then locate the owner.

Regardless of whether or not there is competition in your local market, if you are willing to go the extra step and work harder than the other investors, you will be able to find deals and get in touch with property owners that have not spoken to anyone else.

As most real estate investing best practices do, this requires strategic thinking and planning.

Pick A "Farm" and Stick To It

Focusing your efforts in one area is key to finding deals, building relationships, and becoming the go-to real estate investor. Many investors spread themselves too thin in the beginning and they never gain any traction when it comes to having a constant flow of properties to make offers on.

Your real estate market will differ depending on where you are located, but make sure to choose a target area with at least 300 homes. It is also important to pick an area where there is "investment activity": homes are being rehabbed, there are limited REOs and short sales, there is gentrification taking place, and buyers are active.
Once you've picked your farm, it is time to start identifying vacant properties...

What Types Of Properties Qualify?

An important part of identifying vacant properties is being able to locate them by common traits and characteristics. While we are using the term "vacant properties" to identify this type of home, it is very probable that many non-vacant homes will fit the criteria for a good deal. Given the obvious boarded-up and run down homes, most vacant properties are not so distressed that someone passing by would notice them as a potential deal... unless they are on the lookout! Look over and remember the following traits. You'll begin to notice homes (that do not have 'for sale' signs on them) and they may have owners that are inclined to sell.

•Weeks or months of mail jammed in the front door or piled up
• Overgrown grass, hedges, and landscaping
• Excessive flaking exterior paint
• Rotted or exposed wood
• Lockboxes on doors, railing, or poles
• Boarded up basement windows
• Outdated exterior design
• Zoning/municipal notices posted on windows and doors

The main takeaway is to compare the home to the rest of the block. If it looks unkempt or out-dated, write down the address. If you're unsure as whether or not to write down an address, write it down anyway

Research And Due Diligence

"It is not the lack of resources, but rather the lack of resourcefulness that truly prevents real estate investors from reaching their investment goals."

Some of the strategies and techniques below may be different for your market, but that should not deter you. Having an open mind and thinking creatively about how to find new leads is key to real estate success.

Now that you have a list of addresses, what do you do next? It is time to cultivate those leads to get as much detailed information as possible. The more information you can compile, the faster and easier it will be for you or your team to find the owner.

• Search your county court house or online public records
• Lookup the tax record account online
• Have your realtor search their public records access (often times the MLS will have property information that is not available to the general public)
• Use 411.com or other online 'reverse address' lookup services
• Use pipl.comif you can only locate someone's name with no matching contact information

Some of the above steps will require further research. Don't shy away though, as this is the step where most other investors stop. Pick up the phone and contact key people in your market to see what websites and resources they know of. Call realtors, mortgage brokers, title agents, attorneys, appraisers, etc. Remember, this is the part that requires some digging and right-brain creativity. The way your market's public records and information is stored and accessed will be different, but do remember that there is a path and way to get to the root of what you are searching for. Spending time in this area can lead to finding leads that are otherwise inaccessible to the rest of the market.

Making Contact

Now that you have a list of names, addresses, and possibly phone numbers, it is time to develop a marketing campaign.

Below are a few techniques that have proven to be successful.

Send A Letter

For all addresses that you have, send a letter. One of the simplest and conversion-tested letters is as follows:

Re: 123 Main Street, Town, State, Zip
I am interested in purchasing your property.
Please contact me.

Name
Phone Number

Pretty simple, isn't it? Most people over-complicate this step and write too many details. Quite simply, if the owner of the property has interest in selling, your letter cuts right to chase and also incorporates a level or curiosity - a key component of good marketing.

If you do not want to send these letters manually (printing and then hand writing envelopes), there are many great mail services that will automate the process for you. You will first need to put your addresses into a spreadsheet (such as Microsoft Excel) and then upload them to a website. Often times the cost is only a few cents over the price of a stamp. Check out Click2Mail.comand make sure to click on "Letters & Flyers" and follow the onscreen instructions.

Knock On The Neighbors Door

Neighbors sometimes have information that you will not be able to find anywhere else. Learning how to approach neighbors and develop relationship is another great technique. Not only will they take you one step closer to the property owner, but if they know you buy property in the area, and they see value in what you are doing, they could become a good source of referrals for your investment business.

Feel free to use the script below until you get comfortable approaching people. Remember to relax. You are there to help get rid of the vacant, distressed house that is dragging down the value of their neighborhood. Write down any information they give you. Ask for the name and phone number of the owner. After you finish talking to them about the vacant property, ask them if they know anyone else that wants or needs to sell their home. Offer them a referral fee. Get them on your team and give them a few business cards. Also make sure to get their contact information as well so you can put them in your database and develop a relationship. The more eyes on the street working for you, the better!

KNOCK! KNOCK!

Investor: "Hi, I purchase property in the area and noticed the home next door. I would like to purchase and renovate the house, but I have been unable to locate the owners. Do you have a quick minute to help me?

Neighbor: "Maybe, what is it?"

Investor: "Do you know how I can get in touch with them?"

Neighbor: "No."

Investor: "Do you know if they have family or friends that still live in the area?"

Neighbor: "Yes. She has a cousin who lives a few blocks away on Mason Street.

Investor: "Did she ever give you a phone number or any way to contact her? Do you know her address?

Neighbor: "As a matter of fact she did. Let me see if I can find it for you."
(Neighbor finds a phone number and gives you the address)

Investor: "I really appreciate your help, thanks! If they accept my offer, I will get this place cleaned up and the block will look much nicer. By the way, if you know of any other people that want to sell a home, I give a $500 referral fee for each property that I buy. Please keep me in mind - here's my business card."

Keep in mind that each conversation will go differently. Don't worry if it doesn't always go smoothly. Continue to reach out to neighbors and over time you will refine and enhance your process. Keep this up and soon enough you will have a few key people on your team. These people will have their ears and eyes open to opportunities for you.

There are hundreds of different strategies to find discounted properties.

What techniques have worked best for you? Have you found any luck in locating owners of vacant property?

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