Business Management

How to Find Great Deals By Seeking Out “Tired Landlords”

Expertise: Business Management, Mortgages & Creative Financing, Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate Deal Analysis & Advice, Commercial Real Estate, Personal Development, Real Estate News & Commentary
228 Articles Written
tired_landlord

When I first started investing in real state, I was looking all over the place to find deals.

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Most of them were the common places like the MLS (Multiple Listings System). I would look for things like long time periods on the market, expired listings, out-of-state owners, probate situations, and divorces.

I even went driving for dollars and would cruise through various neighborhoods looking for the boarded up real estate. Then, I would try to track down the owners.

But there are also many other places to look for deals that sometimes get overlooked, or at least get much less attention. For example, bank REOs, administrators of estates (oftentimes nursing home scenarios where all the proceeds go to the nursing home), and stigmatized properties may be good deals as well.

But when I was a newbie, I never realized the potential of getting deals from tired landlords.

What Makes Someone a “Tired Landlord?”

A tired landlord could be anyone with an investment property who is looking to exit the deal. For example, this investor may be experiencing one of the following situations:

  • The investor is tired of the management of tenants, the maintenance of the properties, or the Township’s requirements;
  • The investor needs to dissolve an investing partnership;
  • The investor has little cash flow or owns an upside-down property with little or no equity;
  • The investor has gone through a catastrophe;
  • The investor owns too many units or owns property outside their area of expertise;
  • The investor has inherited the property, or the investor has figured out that he/she is no longer interested in the real estate business.

Working with this type of real estate investor has its own advantages as well, besides finding a deal and helping the investor exit their deal.

Advantages

A tired landlord is usually a motivated seller and is also knowledgeable about real estate investing. In other words, they’re more likely to get creative with their deals. For example, maybe they’ll hold some paper, give you some repair credits, or offer a seller assist.

Also, there are no real estate commissions being paid so everyone is starting with a lower number.

Depending on the situation, the property may also be rent ready or currently tenant occupied. For example, if the investor was having a hard time selling the property, it was already prepped for sale and so that means it would be rent ready.

If the tenant is not the reason for the sale, the advantage may be that you’ll acquire a good tenant along with the property.

As for properties with bad tenants, the advantage may be that you’ll be able to acquire the property for a good price and on good terms.

Where to Find Tired Landlords

Of the tired landlords that I bought from, I met many of them through networking with other real estate investors. For me, I worked in different areas of real estate (realtor, property manager, etc.), so I did find a lot of opportunities that way. Then again, I didn’t have access to a BiggerPockets community at that time. Also, there’s other opportunities, such as joining real estate investor groups.

One of my first deals actually came across my desk as a real estate agent. It's my largest cash flowing apartment building, which I still own today, and I purchased it off an old real estate broker, a boss of mine whose wife wanted him to get out of the business.

Several properties came from landlords I had sold properties to, and then I ended up buying them back. One was a divorce situation, and the other was the dissolution of a partnership that went south, and the partners couldn’t seem to agree to disagree. Both of these properties came to me tenant occupied, and the tenants lasted more than 10 years after I purchased the properties.

Other deals came from my role as a property manager. And yet another deal had come from a colleague of mine who had bought a rehab deal, fixed it up, couldn’t sell it, rented it out, and then had to evict his new tenant. Boy, was he frustrated.

And he was a perfect fit for one of my favorite strategies: the lease-option. After all, it just comes down to two simple questions: “Would you ever consider a long-term rental? And if I took really good care of the property, in fact handling all the minor repairs under $300, and were to pay my rent regularly and on time, would you ever consider selling the property to me down the road?” If the answer is yes to both questions, the lease-option strategy may be a good fit.

Overall, if you’re networking with others in the real estate business and they’re complaining about something, it may be an opportunity not only for you to find a good deal, but for the tired investor to find the exit for their deal that they’ve been looking for. It’s a win-win.

What’s worked for me is just learning and retaining different tools and knowledge. Then when the situation arises, you’ll know which tool/strategy to pull out of your tool belt.

So, get on out there, and good luck!

Have you ever purchased great property from “tired landlords?”

Let us know your experiences in the comments section below!

Since 2007, Dave Van Horn has served as president and CEO of PPR The Note Co., a holding company that manages several funds that buy, sell, and hold residential mortgages nationwide. Dave’s expertise is derived from over 30 years of residential and commercial real estate experience as a licensed Realtor, a real estate investor, and a fundraiser. As the latter, Dave has raised over $100 million in both notes and commercial real estate. In addition to his investments and role as CEO, Dave’s biggest passion is to teach others how to share, build, and preserve wealth. He authored Real Estate Note Investing, an introduction to the note investing business, helping investors enter the “other side” of the real estate business.

    Frank Romine from Visalia-Fresno, California
    Replied over 4 years ago
    Dave, Good article. Life events can trigger a favorable sell to a investor. Most of my owner carry properties have came from nice older women that are looking for passive income but can’t or don’t want to manage people. Frank
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied over 4 years ago
    Hi Frank, I agree – life events can certainly cause a favorable sell. Thanks for sharing your experience! Dave
    Ryan Young Investor from San Antonio, Texas
    Replied over 4 years ago
    This article is perfect timing for me. I have identified several streets or neighborhoods of duplexes in my target area that have 40+ duplexes on several streets within the neighborhood. I had the idea of looking up the Appraisal District information and seeing if I can identify any duplexes that have the same owner. I figured I could reasonably assume that if the same owner had 5 duplexes for instance, they’re probably an investor. I then thought how viable it would be to send yellow letters to these owners just introducing myself and telling them if they’re ready to retire or sell the properties to keep me in mind. I think it’s worth a shot. Anyways, nice article!
    Tyler Ray from Houston, TX
    Replied over 3 years ago
    Ryan, To follow up on your idea (a year later) I think another way would be to search the appraisal district website for properties that have a mailing address different from the property address. If the owner doesn’t live there, it might be a safe bet that they are a landlord, or if not, have the property for some reason other than a personal residence in which case they might be willing to sell. Some appraisal districts even let you download their information in Excel, so if you know what you are doing, you can quickly compile a list of potential properties. To take it a step further, you can look at the deed history to find out how long the current owner has owned the property. The longer they have owned it, the more “tired” they may be.
    Michael Buffington Rental Property Investor from Lewistown, PA
    Replied over 4 years ago
    Great article. I must agree, tired landlords are a good way to find real estate investments. Two of my largest and best cash flowing properties came from tired landlords. Thank you for sharing. Mike
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied over 4 years ago
    Thanks for the positive feedback Michael! I’m glad to hear you’re cash-flowing. Best, Dave
    Steve Vaughan Rental Property Investor from East Wenatchee, WA
    Replied over 4 years ago
    Great article, Dave. Without older, tired landlords early on I would still be frantically hunting for cheap houses from uneducated and mostly unmotivated homeowners. I started mailing postcards to folks with apts for rent a long time ago. I would look up the apt owner name and query it at the courthouse. Now all the info is on our assessor’s website and much easier to find. Eventually a couple came around and carried contracts for me. Apt owner are knowledgeable of more creative methods to sell and much more open to doing so. They also tend to have other property and/or know of others they will refer to you if you treat them right. One I first bought from 10 years ago (and am still paying) called me up and sold me another house on great terms May 1. When you get one, bend over backwards to keep the property in top shape. Never ever miss a payment, miss insurance coverage or miss a tax payment. Be extraordinary and it will pay off in spades!
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied over 4 years ago
    Hi Steve, You made a great point that I forgot to mention, which is that the tired landlord may have other properties or can refer you to other investors. Thanks for sharing! Dave
    Casey Murray Real Estate Agent from San Diego, CA
    Replied over 4 years ago
    Excellent article, Dave. I learned a lot from the information you presented. It’s always great when you can add value to the apposing party, in this case a tired landlord, and make it a win/win situation. Do you have a preference in terms of financing the properties owned by a tired landlord (seller financing, traditional mortgage, etc)?
    Casey Murray Real Estate Agent from San Diego, CA
    Replied over 4 years ago
    Excellent article, Dave. I learned a lot from the information you presented. It’s always great when you can add value to the apposing party, in this case a tired landlord, and make it a win/win situation. Do you have a preference in terms of financing the properties owned by a tired landlord (seller financing, traditional mortgage, etc)?
    Doreen Manson
    Replied almost 2 years ago
    Hi everyone, I am a novice in this business, I have located few properties and sent out letters out to manage their property. I was happy to receive a reply but the 2 deals were already gone. This is the kind of business I would like to do but need to learn a lot. I love all your reply and if there’s anything you can share with me as a starter, please do. Kind Regards Doreen