how do i find underground markets to buy real estate

Dayton, Ohio
Buying & Selling Real Estate
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how do i find underground markets to buy real estate

Kyle Deboer
Member since 2024 · 3 posts · 47 votes

Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?

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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
1y
Quote from @Kyle Deboer:

Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


By "underground" I assume you mean off-market deals. Well, this is harder than it sounds especially when you're a beginner because you know no one and have no track record. So why get so bent on finding diamonds that other, more experienced people with contacts are also looking for? There's almost always something worth buying on the MLS. I've bought a bunch of houses right off the MLS and they've all made me a good deal of money. You don't need to find secret houses; you need to find houses that can be profitable.

Example: about 9 years ago there was a house sitting on the market near me for $100k. It was a 2br 1 1/2 bath and it was sitting on the market forever. I got curious enough and had my agent show it to me. Turned out that the house had been owned by a family who lived there forever and ran a small beauty salon out of the house, so one of the bedrooms had been turned into the hair salon and the dining area turned into a foyer. There were exposed water lines and pipes in the rooms and missing doors. I offered the owners $50k cash and they took it. I spent about 8 hours capping and removing water and sewer lines and putting a couple of doors back in and some plugs in the wood floor and suddenly I had a 3br house. My cost for that work was about $250 and a day of my time. That house recently appraised for almost $300k. Anyone could have bought that house and did what I did; I didn't find an underground house, I just found something that wasn't being used to its best potential. 

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    1y

    If you live in Ohio, start in your backyard. Ohio, across the board, is affordable, has good rental scale per price, and favors landlords. The best way to find the next good market is to find the hot ones near you and go two towns out in each direction and see which one is progressing more.

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
    1y
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


    By "underground" I assume you mean off-market deals. Well, this is harder than it sounds especially when you're a beginner because you know no one and have no track record. So why get so bent on finding diamonds that other, more experienced people with contacts are also looking for? There's almost always something worth buying on the MLS. I've bought a bunch of houses right off the MLS and they've all made me a good deal of money. You don't need to find secret houses; you need to find houses that can be profitable.

    Example: about 9 years ago there was a house sitting on the market near me for $100k. It was a 2br 1 1/2 bath and it was sitting on the market forever. I got curious enough and had my agent show it to me. Turned out that the house had been owned by a family who lived there forever and ran a small beauty salon out of the house, so one of the bedrooms had been turned into the hair salon and the dining area turned into a foyer. There were exposed water lines and pipes in the rooms and missing doors. I offered the owners $50k cash and they took it. I spent about 8 hours capping and removing water and sewer lines and putting a couple of doors back in and some plugs in the wood floor and suddenly I had a 3br house. My cost for that work was about $250 and a day of my time. That house recently appraised for almost $300k. Anyone could have bought that house and did what I did; I didn't find an underground house, I just found something that wasn't being used to its best potential. 

    Podcast Guest on Show #243
    Skyline Properties
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    7Reply
  • Sam McCormackBusiness Member
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes
    1y
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


     I can't speak for all agents, but because I primarily work with investors, I occasionally get my hands on off market properties, insights, etc. Is there an agent in your area that works like that you can connect with?

    [email protected]859-443-4952
    Sam McCormack Realtor
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  • Austin McClainBusiness Member
    Real Estate Agent · OH · Member since 2021 · 350 posts · 603 votes
    1y

    I've seen success in Washington Court House, Ohio. It's a smaller town that is seeing growth from a billiion dollar EV Battery plant that Honda is building about 15 minutes away from it. 

    [email protected]614-710-4827
    4Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    1y

    You're just fishing for situations to get a deal. Those exist on and off market. I would suggest doing the hard work of calling every listing that hits 90 days on market and just start asking the listing agent questions. Eventually, you'll find a problem that is not that difficult to solve (but kept other buyers away or forced the property to fall out of contract a time or two).

    You also have to know what a deal looks like. Know the strategy that you will employ and the numbers it takes to make a worthwhile return.  

    4Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    1y
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


     What do you mean by underground? 

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  • Brandon GoldsmithBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 1k+ posts · 1k+ votes
    1y

    If you look at the surround areas of a metro there are usually still inventory with less competition. It will still take work since off market is usually better than listed but might be a good starting point.

    [email protected]614-963-3340
    3Reply
  • Austin WolffPro Member
    Rental Property Investor · Los Angeles, CA · Member since 2024 · 139 posts · 134 votes
    1y
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


    Define underground? You live in one of the best cash-flowing-yet-still-appreciating states in the nation, near two of the some of the best growing economies (Cincinnati and Columbus). All things considered, that's how I'd define "underground." Unless you mean secondary and tertiary markets--I'd consider sub-markets near these two metros in that case. You live in a wonderful area, arguably top 10 when it comes to affordability and growth. Please take advantage of that.

    BiggerPockets
    3Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    1y
    Quote from @Remington Lyman:
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


     What do you mean by underground? 


    At first, I thought we might be talking about bunkers. :)

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    1y
    Quote from @Jonathan Greene:
    Quote from @Remington Lyman:
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


     What do you mean by underground? 


    At first, I thought we might be talking about bunkers. :)


     Lol. I assume off-market deals?

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  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    1y
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


    Hi Kyle! Do you mean off market opportunities? One of the easiest ways is checking off market Facebook groups in your target market where a lot of deals are posted daily. Start networking with local investors and attend investor meetups. Or if you're willing to hustle, you can try door-knocking and driving around and looking for FSBOs. As an investor myself, I need to be creative in sourcing deals so I connect with realtors and contractors who may have access to deals that aren't publicly listed. And what's great here in Columbus is we still see off market deals that are positive cash flowing. Happy to connect and answer any questions you may have.

    [email protected]614-300-7535
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  • Joseph Bui
    Lender · Nationwide · Member since 2023 · 362 posts · 237 votes
    1y

    Hi Kyle, not sure what you mean by underground, but I'm based in Seattle and invest in mainly midwest markets (Detroit and Memphis) where I have 9 (soon to be 10) doors. I do a variety of strategies from BRRRR, to Turnkey, to flips. Big fan of these markets as there been great appreciation and cash flow. Happy to connect and knowledge share if you are interested.

    2Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    1y

    I don't know what an underground market it, but I would start with an area you are most familiar with. Maybe where you currently live or your hometown.

    0Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    1y

    My opinion is anyone that has to ask where/how to find off-market (underground) properties is better served by purchasing off the MLS.

    It is a rare off-market property that does not involve work and/or have risk items. Typically they are not eligible for traditional financing which implies other funding sources (HML, private Monet, self funded, etc).

    Someone that has to ask the question will typically be best served by having an agent represent them and hold their hand.   Granted it is unlikely to result in a home run, but it also is less likely to fail big and negatively affect prospects for years. 

    A base hit with virtually no risk is a fine place to start.  After a few base hits, you are better prepare to go for home runs.  

    Good luck

    3Reply
  • Jo Bradley
    Member since 2023 · 17 posts · 20 votes
    1y

    I have bought a few houses after reading the foreclosure notices in the legal section of the newspaper but mostly I find opportunities by just talking to people. I tell other investors that I am interested in buying new properties. I do not seek these people out to talk about this specifically, but bring it up in casual conversation. Sometimes they will contact me directly when they are getting closer to retirement and decide to downsize some of their holdings. Or they will tell me about other opportunities. For example a contractor I hired told me another investor had just offered him a bundle of five homes. He wasn’t interested but knew I might be. When I am fixing up houses I often get into conversations with the neighbors. I mention to them that I would be interested in their house if they ever think of selling it. I mention to the banker that if they come across anyone that is looking to sell they can give them my name. I generally chat with the electricians, plumbers, and flooring installers when they come to work on one of my properties and mention that I am looking for a house to buy. They usually know someone who is fixing up a house to sell it but hasn’t listed it yet. Also, I have a real estate agent that will call me as soon as he gets a listing and before the house is posted if it is something he thinks I will be interested in. Finally, I occasionally buy things for a rental on Facebook Marketplace. I rent homes unfinished for the most part but sometimes, if a space would look better with something extra, like a coffee bar or a patio table, I will pick one up. If the seller is getting rid of a lot of furniture I will ask if they are selling the house. I have come across multiple opportunities this way. It gets easier as time passes and more people learn you are an investor.  

    0Reply
  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    1y

    You don't need off-market deals to successfully invest in real estate. I could explain why, but I feel that @Dave Meyer and Dan Nelson do a great job on the podcast. 

    https://www.biggerpockets.com/blog/real-estate-1043

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  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    1y

    @Kyle Deboer if you reach out to 1000 owners, you can expect 30 to respond and 3 to be actually thinking about selling. Keep in touch with them and one might be willing to sell off-market. That does not mean they are selling to you or maybe change their mind altogether. So you really have to work for off-market deals. 

    But that's the nice thing about real estate, money, time and energy are interchangeable, you can substitute one for another.

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    1y
    Quote from @Kyle Deboer:

    Being a beginner, the only markets that I am really tapped into at the moment are all extremely mainstream (zillow, realtor, etc.) and I see everyone saying I should learn to tap into underground markets but I can't seem to find anyone explaining how... Can anyone help with this?


     I've never heard this term before. I suspect anyone telling you that you need to tap into underground markets is trying to sell you a marketing scheme of some sort. Or, they are a mouth-breather.

    1Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    1y

    I have never understood the obsession with finding 'off market' deals. Look for deals where there is value. Get good at finding value that others have may have missed. Be a considerate buyer. Make sure you don't chase deals where you can't perform. To find more deals: Develop a great business relationship with a stellar commercial agent and an mls agent that is a good negotiator. Develop a relationship with different types of commercial lenders so that you can expand the types of deals where you can perform. If you do a deal without an agent that has a fiduciary duty to you, make sure your attorney prepares the purchase contract. I generally avoid wholesalers because my experience has been that they are unwilling to use a standard purchase agreement that is fair to both the buyer and seller and they do 'shady' stuff.

    If you are a considerate buyer that demonstrates an ability to perform, off market deals will come to you through those people with whom you have developed good working relationships.

    (I am a fellow investor offering advice, I have nothing to sell and no pony in this race).

    1Reply
  • Celli Mowery
    Investor · Lexington, KY · Member since 2021 · 17 posts · 12 votes
    1y

    Agree with the statement good value is found in Ohio.  

    A little further from home you'll find some of the value you are looking for in Kentucky, another state that is supportive of manufacturing and in following the state Economic Development you'll see chomping at the bit for more manufacturing.  Lots of smaller towns up and down 75 are in need of housing.   

    I found great luck with properties appraising significantly higher than purchase in London, Kentucky.  The need for rentals is great, access to 75 is easy for the manufacturing companies north on the way to Lexington (Richmond, Berea).  Taxes are based off what you paid, and I've bought several in the 90-150k range that with rehabs are appraising in the 400-500k range.  I have a crew that travels from Lexington & am happy to connect & share a few available listings.  I have a list of renters as well.

    1Reply
  • Celli Mowery
    Investor · Lexington, KY · Member since 2021 · 17 posts · 12 votes
    1y
    Quote from @Dan H.:

    My opinion is anyone that has to ask where/how to find off-market (underground) properties is better served by purchasing off the MLS.

    It is a rare off-market property that does not involve work and/or have risk items. Typically they are not eligible for traditional financing which implies other funding sources (HML, private Monet, self funded, etc).

    Someone that has to ask the question will typically be best served by having an agent represent them and hold their hand.   Granted it is unlikely to result in a home run, but it also is less likely to fail big and negatively affect prospects for years. 

    A base hit with virtually no risk is a fine place to start.  After a few base hits, you are better prepare to go for home runs.  

    Good luck


    All this :) Of all the properties I purchased for my portfolio only 1 was truly "off market", 2 were foreclosures "on the steps" and the rest were on the MLS. Prior to getting my license, I had some great agents that were strong at negotiating. A good agent, who understands RE investing (and actually owns their own) is a great place to start

    1Reply
  • Rob Bergeron
    Real Estate Agent · Louisville, KY · Member since 2017 · 1k+ posts · 1k+ votes
    1y

    But, why? Buy in the midwest. Louisville is my market, it ducks. Great cashflow, great appreciation (probably going to appreciate 10% this year!), and low entry level price. Don't over think it! Invest in the midwest in the South! Happy to chat about whatever! 

    1Reply
  • Carsyn Childress
    Specialist · REI Nation LLC · Member since 2024 · 21 posts · 19 votes
    1y

    If you're referring to off-market properties, I agree with @Jimmy Lieu. There are numerous Facebook groups specifically focused on off-market deals tailored to particular areas and conditions. While you may need to sift through less serious inquiries, I’ve successfully secured some strong deals and valuable connections through these platforms.

    1Reply
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