Driving for dollars, for those of you who are unaware, is simply the process of driving targeted subdivisions with the intent of locating distressed and or abandoned properties. This is a guide intended to help aid investors in locating distressed properties by “driving for dollars” from steps A to Z, from locating properties to marketing. This method can be utilized by real estate investors, wholesalers and bird dogs alike.
Defining a Market Area:
Before stepping foot in your car, it’s a good idea to establish an area to drive. This will depend on your target market area, exit strategy and multiple other factors such as: tax assessed value, house age, zip codes, crime rates etc. Whatever your criteria the same concept applies. Once you have your target area defined, make a list of subdivisions within that area you would like to drive.
In my example below I am targeting subdivisions within a certain tax assessed value.
What You Will Need
- Print out worksheet
- Pen or pencil
Once your list of subdivisions is complete make a simple excel file to print out for use in the field (as shown in the image below). Alternatively, make a grid on paper. In addition, bring a camera to take pictures of any distressed and or vacant properties you may find. Note in your print out worksheet which camera pictures are associated with a given house.
Street Scene Analysis
The key component when driving for dollars it to be vigilant and observant at all times. In general, the best time to drive is from 10 am to early afternoon during the weekday. At this time people are typically at work and it makes it easier to take your time driving through the subdivision.
This process becomes easier if you are driving for dollars during Halloween, Christmas or a trash pickup day. Why? When Christmas or Halloween is approaching a good portion of the neighborhood will have decorations of some sort on display. Likewise, during trash pickup day, garbage canisters will be out on the streets. Vacant properties stand out like a sore thumb, as they won’t have decorations during the holidays or a trash can out front on pick up day.
Red Flags to Look For
When driving for dollars there are several “red flags” you should pay attention to. For Example:
- Tall Grass
- Boarded up or broken Windows
- Mailboxes filled to the brim
- Code Enforcement taped to the door
- Piled up newspapers
- Overgrown vegetation
- Deferred maintenance
Record & Research
As you drive the neighborhoods and locate distressed properties record the address and any additional notes in your print out work sheet. Take a picture or two of the property as well. Try and take the “best” worst picture of the property as possible, this will come in handy later.
After you finish your drive, return home and research the properties you located on your counties local Central Appraisal District (CAD). Now go through the list of distressed properties you jotted down in your print out worksheet. During the research phase you will want to filter out properties that do not fit your criteria. For instance, if you are looking for high equity properties you need to look for deed dates 15+ years back. Once you have selected all the properties that fit your criteria, create a final list. This list will be used in your marketing. Make certain that the current owner is not a bank, if so you will likely need to discard it.
If you are unsure how to find your local CAD try google searching “[your county name]central appraisal district” or “[your county name]tax assessor.” Alternatively, you can research properties in the field with your smart phone or other wireless device on the CAD website.
Central Appraisal District Examples
Below is an illustrated example of what you will find when researching properties on your local CAD, although the format and presentation will vary from one county to another. When researching some investors like to delineate between absentee owners (land lords or inherited properties) and owner occupied homes (personal residence). It is very simple to check which category a property falls under when researching on the CAD. If the owner address and property address match, it is a owner occupied home. If the owner address and property address are a mismatch, it is an absentee owner. Personally I mail to absentee owners and owner occupied homes alike.
Market to your Leads
Once you have finalized your list its simply a matter of selecting your marketing piece of choice, whether that’s a yellow letter or post card. In my business I receive the best response rate by using custom invitation style envelopes and a letter template specifically designed for this lead source. Select one camera shot from in the field. You will use two versions of this picture. One copy will be inserted into the body of the letter, the other will be re-sized as a thumbnail to print on the envelope itself. This gets my response rate incredibly high, since before they even open the contents of the letter they can clearly see an image of their house in the upper left hand section of the envelope.
Make certain to use the owner address for your mailing address. If the property is owner occupied the mail will go to their personal residence, and if its an absentee owner it will go to wherever there primary residence is located. Continue to mail any leads you find in this manner every 2 to 3 months. Remember the key to success is to be consistent and persistent with your marketing campaign. You will yield the best results with repeat mailings.
What If You are Unable to Find the Owner?
Not to worry, read my follow up post which covers this in-depth and includes some additional driving for dollars tips, click here to read it.