Driving for Dollars: Tips To Find Off-Market Properties

One of the toughest parts of real estate investing is actually finding properties—especially if you’re looking for properties in need of rehab. While MLS listings and foreclosures are an excellent source for below-market fix-and-flip opportunities, hunting down deals with great return on investment (ROI) often involves putting feet to pavement.

Real estate investors often call this “driving for dollars”—a practice that involves visiting targeted subdivisions with the intent of locating distressed or abandoned properties. This method can be utilized by real estate investors, wholesalers, and bird dogs alike. It’s especially useful in a hot real estate market like today’s, when listed properties go under contract in hours—with dozens of offers.

Driving for dollars helps you find distressed properties off the market, so you can provide the first (and only!) offer.

What Is Driving for Dollars?

“Driving for dollars” is a term used in the real estate industry, specifically real estate investing, referring to a strategy for finding potential investment properties.

This practice involves physically driving around neighborhoods and looking for off-market properties that appear distressed, vacant, or otherwise in need of repair. The goal is to identify undervalued or distressed property that can be purchased below market value and then sold for a profit, either after rehabilitating them or selling them as-is to another real estate investor.

Driving for dollars is part of a wholesaling strategy, as it helps real estate investors identify potential leads that may result in lucrative deals.

Tips to Find Distressed Properties While Driving for Dollars

Driving for dollars offers unique opportunities for real estate investors to find distressed properties not typically listed on the market. This hands-on approach requires a keen eye and attention to detail to identify potentially lucrative investment properties.

Here are some helpful tips to maximize your efficiency and effectiveness when driving for dollars in search of distressed or vacant properties.

1. Define your market area

Before driving for dollars, know what specific neighborhood you want to survey. This depends on your target market area, exit strategy, and multiple other factors.

You might want to consider things like:

Tax assessed value
House age
ZIP codes
Crime rates

Once you define your target area, make a list of subdivisions within that area you would like to drive. You can use Google Maps to create custom maps of your desired area. (Learn how to make those maps here.)

In my example, I am targeting subdivisions within a certain tax assessed value.

2. Gather your supplies

Before leaving, make sure you have a camera and a pen or pencil.

You’ll also want to create an Excel sheet or gridded worksheet with space for:

Property addresses
Notes—like “boarded-up windows” or “code enforcement on the window”
Photo identification information (so you know which photos map to which properties).

3. Analyze the street scene

When driving for dollars, you must be vigilant and observant at all times. In general, the best time to drive is from 10 a.m. to early afternoon during weekdays. At this time, people are typically at work, which 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 on 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 pickup day.

4. Look for red flags

You’re looking for “motivated sellers” with a distressed property. Generally, that means you’re hunting down property owners who consider their property a burden—and are eager to unload.

That might mean that they can’t maintain the property. It also could mean they have tenants who treat the house disrespectfully.

When driving for dollars, there are several red flags to note. 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

5. Leverage local knowledge

Local residents, especially delivery people, can be a great source of information about the neighborhood. They might know which properties are vacant, distressed, or owned by landlords who might be motivated to sell. This improves your efficiency when driving for dollars.

6. Make use of technology

There are apps designed specifically to help with driving for dollars. These tools can make it easier to log potential properties, track your routes, and even access property owner information.

7. Record and research

As you drive the neighborhoods and find distressed properties, record the address and any additional notes in your printed worksheet. Take a picture or two of the property as well. Try to 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 specific properties located on your county assessor’s website.

Now, review the list of distressed properties you jotted down in your printout. You’ll want to filter out properties that don’t match your criteria—for instance, if you’re looking for high-equity properties, look for deeds with dates at least 15 years back.

Then, make sure the current owner isn’t a bank. If it is, you’ll likely want to discard the property.

Once you have selected all the properties that fit your criteria, create your final marketing list.

What to Look for at the Assessor’s Office

While the format and presentation will vary between counties and states, here’s what you should find:

Reference numbers, potentially including account numbers and georeference numbers
Property location
Owner information, including name and address
Prior owner details
Legal description
Tax information

When researching, some investors like to delineate between absentee owners—landlords or people who own inherited properties—and owner-occupied homes, aka personal residences. It is very simple to check which category a property falls under when researching.

If the assessor lists the same address for the owner and property, it is an owner-occupied home. If the owner’s address and property address don’t match, it indicates an absentee owner. That means the homes are either unoccupied or used as rentals.

Personally, I mail absentee owners and owner-occupied homes alike.

Market to Your Leads

Once you have finalized your list, choose your marketing approach—typically, I prefer direct mail, like a yellow letter or postcard. I find custom, invitation-style envelopes and a letter template receive the best direct mail response rate.

Select one camera shot from 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 resized as a thumbnail and printed onto the envelope in the top-left corner.

This dramatically improves my response rate—before they even open the letter, they clearly see an image of their house on the envelope. I recommend handwriting the address, too.

Make certain to use the owner’s address for your mailing address, and continue to mail leads every two to three months. Remember, the key to direct mail success is consistency and persistence. You will yield the best results with repeat mailings.

What If You Can’t Find the Owner?

The more difficult it is to find the owner, the less competition there will be—and that means more opportunity for you. However, if you drive for dollars long enough, you will stumble upon circumstances where the owner’s address is unavailable.

How can you market to this lead if you don’t have their information?

Look out for red flags that indicate additional research will be required to find the owner’s address. Some of the more common situations include:

Vacant property listed as owner-occupied: You drove by a property that was clearly vacant; however, your assessor says the property is still owner-occupied. Typically, this means the assessor’s records are out of date—updates can take three to four months, depending on the jurisdiction.
Mail is returned: Returned yellow letters or postcards that were returned due to failed delivery indicate the owner has moved.
No data: Sometimes, the assessor’s office shows no data in the owner’s address section.

Not all is lost. These red-flag owners can often still be located.

Use deeds of trust and public records

To find a “missing” owner, pull data from public records and use it to mine Google for owner information. When your assessor lacks sufficient information, pull the Deed of Trust recorded in your county’s public records to identify the current owner.

To find your county’s public records, simply Google search “[your county name] public records.”

The deed of trust will display all parties involved within the transaction—from grantors to individuals with power of attorney. This data is invaluable when attempting to locate the owner of the property.

Mine Google for data

Once you have searched public records, start plugging the owner—and any grantors recorded in the Deed of Trust—into Google.

To start, try searching their full name. If that yields few results, try combining their name with local area codes. This might reveal:

Landlines or cell phone numbers of the owner or grantors
Current addresses
Websites they own
Company PDF contact sheets
Social media accounts

If you are unable to locate the owner but can track down one of the grantors, you can often get the contact information you need by reaching out to them. Sometimes you will find PDFs or About Us profile sections on company pages, and you can use these for updated contact information. If you find a URL they own, you can do a “whois” search on the domain and retrieve information that way as well.

Leave a note on the property

Tape a note to the property’s front door and/or garage in case the owner returns to their abandoned property. You can bet if they find a note taped to their garage or front door, they will read it. You never know when the owner may return to collect mail or check on the house.

Write the notes manually, or you can print out a stack of them using a handwritten font. Either way, bring a bunch with you into the field—and make sure to include your phone number, email, and website.

Talk to the neighbors

Often, neighbors are willing to divulge information on the abandoned property owner. After all, no one wants a vacant property sitting next door and dragging their property values down with it.

If you see a neighbor outside a distressed property, strike up a brief conversation, hand them a business card, and many times they will provide helpful information. They may even be able to provide direction on where to take your driving for dollars campaign next.

Hire a skip trace service

If the above methods fail, consider utilizing a skip trace service. However, if you take some time to research using the methods discussed, you should not need to use a skip trace nine times out of 10.

Pro Tip: Recruit an Army of Mailmen Bird Dogs

When driving for dollars, keep a lookout for mailmen or delivery people. Approach them on their route, briefly introduce yourself and your business, and hand them a card that explains what you are looking for. Tell them if they find a house that fits your criteria and you are able to close on it, they will collect a handsome referral fee.

Mailmen know what’s going on in a neighborhood better than you do, since they drive or walk specific areas every day. Get to know a few of them, and you will be richly rewarded.

Hopefully, with a little bit of legwork and persistence, you will discover some lucrative deals when driving for dollars. Take action, and you will reap results.

If you have any questions, please leave them below, and I will do my best to help.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.