Business Management

How I Find, Vet & Purchase Investment Properties While Working a Full-Time Job

Expertise: Landlording & Rental Properties
23 Articles Written

?I am a W-2 buy and hold investor. I am in it for the long-term cash flow. I also use a real estate agent and work full-time. To make my real estate business work with my time constraints, here is what I do to find buy and holds:

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I stay away from pre-foreclosures. Foreclosures are great, but in my area, they are pricey and need work.

I like short sales! They are great little gems for many reasons. To learn more about short sales, check out my previous article here.

I buy cookie cutter houses, and this is my process.

Related: The Art of Saying “No!” (Or How to Avoid Buying a House That Could Literally Kill Somebody)

The Home Buying Process I Use for Maximum Efficiency

  • Define My Area: I buy in very specific areas based on age, school districts, locations, etc. These are all terrific buy and hold areas fitting my goals and represent great deals if bought for the right price.
  • Define My Ideal House: I define the type of house I am looking for and a “no higher than” price for the area.
  • Have a Target Price Per Square Foot: The MLS in my area has the price per square foot listed. Many people use this to compare apples to apples. After two years in my market, I know what a good price per square foot is compared to a high one.
  • Utilize MLS Automation: My realtor is amazing and one of the best. Therefore, to not “abuse” her, we have a system. Our system is she adds me to the automatic list with only my area and house selection criteria. This allows me to do 2 things: a) watch for houses that are in my “price per square footage” criteria and b) to generally watch the market. I look at every house that pops up on my phone, but only ask about that ones that fit into my “zone.”
  • Follow Up on Those That Fit: If it fits into my zone, I then follow up with my realtor and ask her “Why is it so cheap?” Most of the time, she says, bad area, not your type of house, etc. But enough of the time, she says, this is a short sale, and it is perfect for our numbers.

Making the Offer

Once it is perfect, we than discuss strategy, what price I should offer, etc. This is all virtual and done quickly. Than we offer on the house, site unseen. She sends me over everything electronically, we put in the lowest price possible, and then hit submit! Occasionally we talk in person, but most of the time it is all done virtually. We have a good enough relationship that I trust her.

Related: The 3 Most Important Things to Consider Before Buying Your First Property

I only look at the house once it is approved by the bank at the price we are looking for. I have enough houses that fall through before this time that it doesn’t make sense to waste anyone’s time. Remember, you are a investor and want to earn money. At the same time, your realtor’s time is money! So you need to save her energy for when you really need it.

If we don’t like the house at this point, then we walk away.

My realtor works in a small area, so most of the time, she has seen the house or knows it very well. So after working with her on 9 transactions together — mine or helping her with others’ — I trust her. Plus, most of the time she has already been in the home.

Some More Pointers

A few more things to note in the process:

  • We have had more short sales go through than don't. You don't want to over-offer and become "that" buyer. On the other hand, you need to have backup because they take 9+ months. I have heard a lot of talk with investor that the magic number is 2.5 for every one. Again, you will know the short sale area, etc.
  • My houses are cookie cutter, so if you have seen one, you have seen them all.
  • We buy based on neighborhood and location! These are the biggest importance, which helps narrow the houses down.
  • The houses are newer — most less than 10 years old. So while there definitely can be issues, they tend to be cosmetic and not as much of an issue as other things can be in older homes.
  • Not only do you need to be efficient, but you have to remove all emotional attachment. So don’t follow in love with a house! Wait until the number come back and make sure they work for you!
  • Short sales are dramatically increasing in price. So look at all houses and figure out the deals that work for you. While we have yet to buy a traditional sale, we are working on one right now. Remember, it is important to close deals! So while you definitely want “good” deals, if you never close anything, you won’t be successful either.

By having our processes concise and to the point, we are able to continue investing while working full time and having busy side jobs.

What about you: What are your best tips for investing while working a full time job? What would you add to my tips?

Leave a comment below, and let’s discuss.

Elizabeth Colegrove is a passionate "buy and hold" investor who specializes in turning her once-negative transient lifestyle (Military) into a positive lifestyle. She self manages her entire real e...
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    Chris Cooper Investor from Mundelein, Illinois
    Replied over 5 years ago
    Hi. Thanks for sharing your procedures. I love the automation aspect, such a time saver. One question, You wrote, “If we don’t like the house at this point, then we walk away.”, But according to your steps above, this happens for you after the bank accepts your number. If they accept it, doesnt the deal move forward? How are you able to walk away if your bid is approved? Thanks again! Chris
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    Chris once the bank accepts your offer one starts their due diligence. This is the time that your inspections start to occur. As with traditional sales if something comes up during inspection you are allowed to walk away. Once the bank accepts your offer, the same process as a normal sale starts. The difference with a short sale is there is all that wait time in the beginning.
    John B
    Replied over 5 years ago
    Elizabeth – thanks for the post. We recently bought a pair of duplexes via short sale. Each had a first position mortgage, and a second – so 2 properties x 2 loans = 4 lender negotiations which was painful to say the least although we ultimately closed. I like the way you describe your “buy box” – do you have a rule on properties with second mortgages? After my experience I would be inclined to add that to the list of factors to stay away from. John
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    I am working on a 3 lien short sale. If successful it will be my best deal to date! I am buying my first traditional sale because the short sales are starting to not be worth it. They are starting to be in worst condition and more expensive than traditional properties once the bank is through with the negotiations. That being said if a deal makes sense that I can get the sellers to agree to! I would try it no matter the liens unless I didn’t have the time to fail. I wouldn’t want to try a short sale if this house “had” to close in a certain amount of time at a specific price. If a deal falls through were fine, bummed yes but in no financial hardship!
    Chris Cooper Investor from Mundelein, Illinois
    Replied over 5 years ago
    Oh, I see. Hadn’t been down short sale path – wasn’t aware it was a regular sales contract after the offer is accepted. Thanks and continued success!
    David Bennett Investor from Methuen, Massachusetts
    Replied over 5 years ago
    Hi Elizabeth, thank you for your post. I wonder if you can go further by elaborating a bit on your financing strategies and your tenant-marketing strategies. thank you and best regards -Dave
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    I use conventional 30 year financing. We market predominately on postlets.
    Pyrrha Rivers Investor from Yokosuka, Japan
    Replied over 5 years ago
    Hello Elizabeth, Thank you so much for the breakdown of your purchasing process! I’m living abroad and your posts have been instrumental in moving me forward with the knowledge that it CAN be done remotely. I believe I found the right Realtor and like you, I value her time and don’t want to abuse her. I am trying to replicate your process but did not understand what you mean by “We buy based on neighborhood and location!” I understand the neighborhood part as having to do with in your case “A” neighborhood, great schools, what about the location. I’m assuming location within your chosen neighborhood, so is that corner lots, center of a cul-de-sac, top of the hill, entrance to the subdivision, back of the subdivision? Or something entirely different? Thanks again for the inspiration and valuable information. Pyrrha
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    We focus more on the neighborhood, than the exact location within the neighborhood. We don’t buy on a busy street or an area that would turn off a mother. That being said we don’t get as detailed as you mentioned. In our area there are not alot of choices in the price range I want to pay. So while it is important to be “picky” to get a good asset. You want to be careful that you are being reasonable.
    Nature B. from Arlington, Texas
    Replied over 5 years ago
    Thanks for your post. I like your strategy of offering before you look at the house. I’ve been looking at everything that I want to make an offer on, but so far nothing has panned out. I might start offering 1st and if my offer is accepted, then look at the house. I don’t want to continue to waste my realtor’s time either.
    Elizabeth Colegrove from Hanford, California
    Replied over 5 years ago
    That strategy ONLY works well with short sales! I would not try that as much with traditional sales as it is harder to get out of the sale. You also start working with real people and not banks.
    Jeff Hensel Lender from San Diego, CA
    Replied over 5 years ago
    You have great discipline by creating and sticking to your criteria. Very necessary when time is extremely limited. Thanks for sharing.
    Sonny Smith Investor from Virginia Beach, Virginia
    Replied over 5 years ago
    Great post Elizabeth. It has prompted me to re-evaluate my strategy to make it more efficient. I also work a full-time job, so this post was right on point for me!
    Jen Kurtz Professional from Pittsburgh, Pennsylvania
    Replied over 5 years ago
    Great post Elizabeth! I can really relate to this. I have to ask, what areas you are mostly investing in? When you said you look for newer houses, 10 yrs old or newer, that perked up my ears. That’s not as feasible in a lot of areas around where I am. Most houses are from 1920 (which I LOVE the character and charm of for my own house)- 1990s. I couldn’t imagine though, looking at houses built in 2005 or newer. I drive a car that’s older than that LOL, but I am a frugal and wont pay a car payment unless I absolutely HAD to, haha 🙂
    Terrence Arth Investor from Scottsdale, Arizona
    Replied over 5 years ago
    Great post Elizabeth. I like the fact you have a structured approach to weed out all the clutter so you can get serious about the potential purchases–which you have very well defined. When you say “area” how big are you talking? A few neighborhoods, a few square miles or maybe half of the city you live in? I bought a foreclosure about 18 months ago and my realtor (we’ve done several deals) advised me to do our inspection before we made an offer, figure fix up costs and go in with a rationale for my number and have no contingencies. I realized I was out of pocket on the inspection but really wanted to nail that property. Obviously, your approach is sight unseen until the offer is accepted, then dig into it. I was second in line (back up offer) and apparently either the primary offer backed out ( most likely) or the bank bumped them due to no contingencies because they countered the following week. It took just under 2 months to close and even my agent was shocked. I think I might develop a more structured approach on specific properties rather than just looking to see whats available every day in my target area, something along your lines of thinking. Thanx!
    Vicky Tseng from San Diego, California
    Replied over 5 years ago
    Great post! Thank you for sharing Elizabeth!
    Tony Gunter Investor from Canton, Georgia
    Replied over 5 years ago
    Thanks for Sharing Elizabeth. Can you not use the same “make an offer and later walk away” tactic on foreclosures as well as short sales?