Off market property- how to?
Just moved to Dallas. TX and interested in buying off-market properties. Is anyone able to clarify the process once I have an address? Below is my attempt at a procedure, and would really appreciate any corrections!
1) Find address (property in which I can add value to and cash flow)
2) Determine owner of property via county records.
3) Utilize a skiptrace to find contact information for said owner.
4) Call owner and ideally make an agreement to buy property using any strategy that fits the property. (i.e. cash offer, conventional mortgage, seller financing, wholesale, Subject-to (which I am mostly unfamiliar with), short-sale (which I am also fairly unfamiliar with), etc.)
5) Approach title company to purchase said property with terms agreed upon with buyer.
- Not sure if one can use an agent for an off-market property.
6) Ensure financing (i.e contact lender)
7) Write up contract (including financing terms, options fee, earnest money, etc.).
- Not sure if an agent, title company or I write this up with example documentation online.
8) Sign said contract with seller.
9) Celebrate and get to work!
Again, thank you to anyone who is able to correct/ clarify things here!
Hey Josh, as a process-oriented person, I can appreciate what you're trying to do here. I think you've captured most of the important points. A few thoughts:
- Your first step should be to identify the exact market(s) you want to invest in. You need to become an expert in these markets. It's best to visit lots of properties to understand what your money buys you in different neighborhoods. You will also need to be able to estimate rehab costs with a good level of accuracy. An investor-friendly real estate agent can be a huge help here. If you're friendly with a contractor, even better.
- Finding an address (your step 1) is really more about creating a funnel that generates lots of property leads. You can do this in numerous ways for off-market properties. For example, I've had success running a direct mailing campaign. Other investors purchase lists (properties with absentee owners, etc.), use DealMachine, or use other marketing options like social media or billboards.
- You should make every effort to have financing lined up well in advance of speaking with the property owner and making an offer. The best investors have multiple financing pathways available to them (bank, hard money, private lender, etc.).
- You need to have a contractor ready to go before you close on the deal. You also need to have a game plan for paying for the work - are you borrowing to do the rehab or paying out of pocket? As a new investor, you're going to be competing for the best contractors with other market participants. Contractors aren't going to do you any favors until you bring a higher volume of work.
