Hi BP Community!
I just got an opportunity through another agent at my office, where she passed over an investor to me and my husband. He is looking to buy in Rhode Island and wants to know if there are any liens on the property (if any) and if they are assumable, along with the mortgage. He is looking to buy 5-10 properties a month and he is located in DC.
I have not gotten a response yet as this just came through, but I would like to try and prepare the best I can. So I have a few questions..
I have been hearing that off market properties are the way to go when working with investors, but what does that actually mean? Are these wholesalers?
How can I get in contact with people who are selling homes off the market? Where do I look?
Thanks! I am a brand new agent and hungry to learn!
Off market deals refer to deals that are not listed. It can mean a multitude of things. Off market deals can be the best way to find deals as long as you do it the correct way. In terms of finding these deals there are a plethora of strategies. Look into driving for dollars, sending yellow letters, looking for out of state owners, checking local courts for back taxes, and the many other strategies. Your looking for motivated sellers who don’t know they are motivated just yet!
Lissette, I'm going to Private Message you now. I work with a few Wholesalers who have new off market deals very often!
@Lissette Deleon an "off-market" property is one that has not been listed for sale in the MLS.
To find an off-market property, you need to farm the area and find the deals. These are homes that are not listed for sale though it may include for-sale-by-owner homes. You have to locate people willing and able to sell below market. Sometimes it will be an owner with a lot of equity in the home that gets excited when they hear someone is willing to pay them 5x what they bought the house for, not knowing that the house is worth 7x what they bought it for. Other times it may be an owner that is divorcing and they just want to unload it quickly. Or someone just inherited the home when their relative passed away and they don't know what to do with it. You can also find investment property with Landlords that are older and tired of dealing with tenants and maintenance. These properties can be picked up cheap, fixed up, and then rented at market rate for a good return.
Those are just some of the examples. Since you are a new agent and have no investment experience, I highly recommend you start doing a lot of reading or find an agent with investor experience to mentor you. Most investors I know are intelligent enough to know whether you know what you're doing.
Lissette if you're acting as an agent and not a buyer, you'll probably just want look on the MLS.
If your buyer is insisting on an off-market deal, then your best bet is to look at FSBOs, where the owner is often willing to pay 2.5-3% for your bringing the buyer.
However if you go that route you should definitely work with your broker as FSBOs are a bit of a niche. The more normal scenario is for agents to try to convert them to regular listings.
Also I've heard some agents say that working with FSBO owners is very frustrating, one who's a good friend told me "it's twice the work for half the money", because you have to do everything the buyer's and seller's agent would do, but you're not getting paid for all of that.
Off market deals are good if you can get them, but they take time and persistence to find and negotiate. The chances of your being able to do so in your investor client's timeline are very small, never mind also finding a property that meets their needs.
Others may feel differently, but in this case I think you should use the MLS to its fullest capabilities, set up precise searches for your client to find exactly what they need.
As far as liens on the property, that comes up in the title search but it's never a bad idea to check ahead of time (i.e., as early as possible). I use ripropinfo.com for that, starting at the assessor link for the town to get the owner name(s) and then the land evidence link to look up any liens.
@Lissette Deleon I forgot to mention a very important technique. As a REALTOR, you have the opportunity to network with hundreds of other REALTORS. They have their ears to the ground and are constantly looking for deals but many deals will not suit their buyers so you can ask them to bring them to you.
For example, I told other agents I was looking for investment property. One agent overheard me and mentioned she had a hoarder house for sale "really cheap". The owners didn't want to list it for sale because they were too embarrassed. So I spoke with the owners, promised discretion, and bought the property below market. After repairs, I tripled the value of the home and have great renters.
Network, network, network!
@Lissette Deleon congratulations on hooking a big fish! What an exciting way to start out in Real Estate.
Your primary goal now is to provide value to this investor's team. This can be done in a number of ways.
First, you need to complete a needs analysis with the investor to find out what he is looking for, AND IF that is atainable in your market. Set expectations. Don't be afraid to cut him loose if his expectations are unreasonable. So often, we get so excited at the prospect of working with a client, that we can spin our wheels looking for something that doesn't exist. Early on in my career, I had an investor approach me who wanted 10% cap properties in AZ with 100% CLTV with Seller Financing/Conventional loan on multi-family. He said he would buy anything I found. That was AWESOME....until I dove into the inventory, and discovered that in my market, that was like asking for someone to give me a free sports car. I had to sit down with him and manage expectations. We ended up doing a few deals together, but it was an expensive lesson learned early on in my career.
Next, put the word out in your office (at office meetings, office intranet, etc), and around Realtor networking groups that you need any pocket listings or off market deals that fit your investor's criteria, and define for them what that is.
Next, go fishing! Search tax records for properties that meet your investor's criteria, do your research on them to assess whether the numbers would work for your investor, then reach out to the owner of those properties to ask if they are interested in selling. You don't have to wait for a property to become available, go seek out the opportunities yourself.
Go to a trustee sale and network with the bidders there. Most likely, there will be wholesalers there. You will want to network with them in the event that they acquire something that would work for your investor.
Of course, the MLS plays a role in your search. Just because it's listed doesn't mean that it couldn't be a good deal. ANY deal can be a good one at the right price. Work the numbers to suit your investor, and see what kind of offer that equates to. Does it makes sense to submit that offer? If so, then do it.
Lastly, make sure you are checking in with your investor often, and giving him a status update on what you are doing, and what you have found. Send him deals that you have already evaluated to meet his criteria, so that he can work the numbers too.
In the meantime, ask for solid referrals around your office for insurance agents, home inspectors, handymen, roofers, and other contractors that may be of use to your investor once he acquires properties. By helping him build a solid team, you increase your value to him.
Best of luck to you!
Hi @Lissette Deleon The best way to find these off market deals is old fashioned networking. Yes, some wholesalers in the area get some deals, but many of them are recycling the same deals that they do not even have a contract on in the first place. I have found that simply talking to people works best, and that will eventually lead to word of mouth referral. Just an example, I put 1 SFH under contract in Cranston this week. That person and I had a peripherally friendly relationship, and when it came time to sell the house, he called me first. No solicitation, just working your network.
There are assumable mortgages on the market? The loans for many years all now have a due clause that says the balance of loan is due at escrow. If they are talking about seller finance that is a different story.
Before you get excited about 5-10 transactions a month and potential commission generated, you need the investor to produce 1. Proof of funds including his bank statement, 2. His credit report, 3. Track record on flipping. 4. His references like lender etc.
Most can possibly produce 1. He has to put fair amount of cash his self often like 50% down and 50% from hard money lender Those hesitate to produce 2 and 3, take a grain of salt as not serious investors. Any internet banks letter is not good enough. Sign an agency relationship agreement before your potential pocket listing become his property without paying you. Often these folks are working with 10 realtors at same time. I suspect that agent who introduced you to him sees he is not really what he claimed. The reward can be there but if he can not perform 1, 2, and 3. Work on easier deals .
@Brandon Ingegneri , Thank you for your feedback. I am currently working on the relationship aspect of things. I know those take time to build, and considering that I am pretty new to RI, its almost like starting from scratch. I do have some ideas where I can potentially get some homes under my belt, but have not tried them yet.
@Sam Shueh , I didn't think mortgages were assumable, but everything is a learning experience! The agent that passed him over to me and my husband thinks its too much work, as real estate is her retirement career. I will get on the phone with him later today and see whether or not what he is looking for is doable.
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