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