Difficulty Finding Properties to Wholesale in Sacramento, CA
Harry CasePro Member
Investor · Citrus Heights, CA · Member since 2015 · 6 posts · 2 votesDifficulty Finding Properties to Wholesale in Sacramento, CA
Most Popular Reply
Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes
9yHey @Harry Case! Great question!
The internet and TV has lead to the massive spread of information regarding real estate investing in the last 5-10 years. With TV shows like Flip or Flop, Flip This House, and Property Brothers more and more people are convincing themselves that they can rehab a property. This has lead to increased competition for deals, naturally for higher prices. Looking for deals on the MLS as a wholesaler is going to be a complete waste of your time. Even as a rehabber.
In order to find success nowadays, you have to be willing to go the extra mile and do what other wholesalers won't. That's the only way to spread yourself from the pack. Here are a few examples that I can think of:
- Preforeclosures: There are roughly 200 preforeclosures per month in Sacramento County. This gives you more leads than you can likely handle, especially if you go back and pull all the people who defaulted last month and the month before that. Go straight to the owner's house and knock on the door. Foreclosure usually happens because of death, illness, job loss or divorce and cripples the homeowner's ability to make mortgage payments. They might be in a tight bind and be willing to sell the property below market value, and you can make your money in between.
- Vacant/Non-Owner Occupied: If a home is sitting vacant the owner may be willing to sell it quickly just to get rid of it. They could have moved away, inherited, or just not care about it anymore or aren't willing to rent it. You can door knock with these too (but you'll have to do it at the tax mailing address) or you could simply send a letter. At that point it's merely a numbers game. Talk to enough homeowners and you'll soon find someone willing to sell at a wholesale price, especially if the owner lives out of state.
- Driving for Dollars: The last method is to simply drive around and look for homes in disrepair... things like uncut grass, broken down cars in the driveway, or properties that could really use a fresh coat of paint. These indicate that the owner doesn't have the money to fix these problems, and that might mean they are in a situation where selling their home might solve a lot of money problems for them. You can either send them a letter, or go up and knock.
Now, you may or may not have been aware of all these strategies, but what's really important is that the point I'm emphasizing is HUSTLE. Not that you aren't doing that already, I don't know, but what I do know is that doing the above activities 40 hours a week will practically guarantee you success.
While other wholesalers are relaxing at home and waiting for a deal to fall into their lap, you'll be out making things happen. I'm a firm believer that if you want success, you have to go out and get it, and the only real way I see having success with wholesaling nowadays is to get out their and meet property seller's face-to-face.
31 Replies
- Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes9y
Hey @Harry Case! Great question!
The internet and TV has lead to the massive spread of information regarding real estate investing in the last 5-10 years. With TV shows like Flip or Flop, Flip This House, and Property Brothers more and more people are convincing themselves that they can rehab a property. This has lead to increased competition for deals, naturally for higher prices. Looking for deals on the MLS as a wholesaler is going to be a complete waste of your time. Even as a rehabber.
In order to find success nowadays, you have to be willing to go the extra mile and do what other wholesalers won't. That's the only way to spread yourself from the pack. Here are a few examples that I can think of:
- Preforeclosures: There are roughly 200 preforeclosures per month in Sacramento County. This gives you more leads than you can likely handle, especially if you go back and pull all the people who defaulted last month and the month before that. Go straight to the owner's house and knock on the door. Foreclosure usually happens because of death, illness, job loss or divorce and cripples the homeowner's ability to make mortgage payments. They might be in a tight bind and be willing to sell the property below market value, and you can make your money in between.
- Vacant/Non-Owner Occupied: If a home is sitting vacant the owner may be willing to sell it quickly just to get rid of it. They could have moved away, inherited, or just not care about it anymore or aren't willing to rent it. You can door knock with these too (but you'll have to do it at the tax mailing address) or you could simply send a letter. At that point it's merely a numbers game. Talk to enough homeowners and you'll soon find someone willing to sell at a wholesale price, especially if the owner lives out of state.
- Driving for Dollars: The last method is to simply drive around and look for homes in disrepair... things like uncut grass, broken down cars in the driveway, or properties that could really use a fresh coat of paint. These indicate that the owner doesn't have the money to fix these problems, and that might mean they are in a situation where selling their home might solve a lot of money problems for them. You can either send them a letter, or go up and knock.
Now, you may or may not have been aware of all these strategies, but what's really important is that the point I'm emphasizing is HUSTLE. Not that you aren't doing that already, I don't know, but what I do know is that doing the above activities 40 hours a week will practically guarantee you success.
While other wholesalers are relaxing at home and waiting for a deal to fall into their lap, you'll be out making things happen. I'm a firm believer that if you want success, you have to go out and get it, and the only real way I see having success with wholesaling nowadays is to get out their and meet property seller's face-to-face.
- 9yTarl YarberPro MemberFlipper/Rehabber · Seattle, WA · Member since 2014 · 415 posts · 401 votes
Originally posted by @Wes Blackwell:
Now, you may or may not have been aware of all these strategies, but what's really important is that the point I'm emphasizing is HUSTLE. Not that you aren't doing that already, I don't know, but what I do know is that doing the above activities 40 hours will practically guarantee you success. While other wholesalers are relaxing at home and waiting for a deal to fall into their lap, you'll be out making things happen. I'm a firm believer that if you want success, you have to go out and get it, and the only real way I see having success with wholesaling nowadays is to get out their and meet property seller's face-to-face.
Im originally from Sacramento, so this post title attracted me to read it. Wes, i couldnt agree with you more based on your last statement, great feedback that anyone in this business should hear.
- 9yGordon CuffePro MemberInvestor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
@harry
@Harry Caseone other way is to mail out 3000 letters / postcards to older homes where the owner has owned for a long time. You will get a low response rate like less than 1% but even a half percent gets you 15 phone calls and one of those can be a good deal. Most so called wholesalers don't spend the money on marketing and so they struggle to find deals. I have been there.
- Investor · Citrus Heights, CA · Member since 2015 · 6 posts · 2 votes9y
Tarl,
Interesting that you're from Sacramento and are now living in Seattle. I'm from
Seattle and living in the Sacramento area. We're looking to move to Olympia in the not so distant future. - Investor · Citrus Heights, CA · Member since 2015 · 6 posts · 2 votes9y
Thanks to everyone who replied so quickly. With regard to Vacant/Non-Owner Occupied houses. What's the best way to locate those?
- Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes9y
@Harry Case -- to find non-owner occupied properties, you can either team up with a real estate agent who can pull that sort of information for you, or you can use a service like Property Radar to pull this kind of information yourself. Lastly, you could try working with Direct Mail Service Provider that can put together a mailing list for you.
- Real Estate Agent · Carmel, CA · Member since 2015 · 193 posts · 128 votes9y
As I Realtor, I can do a "farm" at my local title company that will give me a whole list like that. An easy way to find those properties is to compare mailing address to physical address. A big mismatch is likely an absentee owner.
I don't know the policies of your local title company if they will allow "normal" people do that farms though...
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
@Greg Hamer, is that how you call it? "farm" as in... "Hi! I would like to do a farm search." I have heard of that but didn't know what it was called and what to ask for when walking into a Title company.
Do some title companies not let non-agents get those lists?
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
@Harry Case good luck in finding your deals! Next year I want to find my first deal and it will be around that area as anything else closer in the Bay Area is ridiculous price-wise! Who knows, maybe I'll need one of yours! Good luck!
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
@Wes Blackwell how is PropertyRadar compared to RealtyTrac? Would you recommend one over the other? I love your advice on finding deals! Thank you so much for sharing that info!
- Real Estate Agent · Carmel, CA · Member since 2015 · 193 posts · 128 votes9y
pretty much. I just ask for a farm of XYZ. If I sell a house, or buy a house, i get a farm of the surrounding streets and send out a postcard with "just sold at xyz for $$$" to other prospects.
I don't know what the policies of a title company are. I've never asked. I get them for free, but maybe non-realtors have to pay for it? It is all public information, so technically it is free to get, but the Ttitle companies put it in a useful format. You're gonna have to find out by calling them. :)
- Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes9y
@Patrick Boutin -- Your best bet to find a title company that will do this for you is to get a recommendation from another investor nearby who is already doing it. Title companies are more likely to work with agents like Greg and I since we are very likely to bring them lots of business.
As for Property Radar vs. Realty Trac, my advice would be to try both and see which one you like best. They're both currently offering a free trial, so you've got nothing to lose.
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
@Greg Hamer that makes sense! yes I will have to do that. Should I locate title companies close to the area I am thinking of or does it not matter where they are located?
@Wes Blackwell, that also makes sense about how title companies work. Thanks for the advice. Also, I did notice the free trial and will test them. - Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes9ySacramento is pretty hot and sellers are usually quite educated. There are deals out there but they usually require a value add play. Either adding square footage to an existing functionally obsolete 2/1 or 3/1 or splitting off a double lot. The 45 day lipstick rehabs don't exist from what I can see... ambitious homeowners are looking for sweat equity so they bid it up. There are ways to find distressed owners with equity, I talk to them everyday, but few of them are willing to give a large chunk of their equity away when they can just list it and sell it on MLS in a few weeks.
- O'Fallon, IL · Member since 2016 · 14 posts · 14 votes9y
"Wholesaling" is next to impossible in hot markets. If Sacremento is anything like Toronto it makes no sense for a seller not to list their property for sale on the market which may explain why you are having a hard time finding deals.
- Investor · Truckee, CA · Member since 2013 · 546 posts · 445 votes9y
@Patrick Boutin - We like to separate FARM's from leads as follows:
FARM (Focused Area Real estate Marketing) - this is a term that has been around for ever in the real estate agent circles. The basic idea is to pick an "area" of focus that you want to own/dominate by doing consistent marketing over a long period of time. Has great "farming" references in that it's an area you cultivate and harvest over time. While originally this tended to just be simple geographic area like a city, zipcode or subdivision, you can now get quite a bit more sophisticated. One of the most popular for investors is absentee owners with equity (title co's won't give you equity in CA). But you can get way more specific then that and focus by price range, beds, baths, year built, lender name, length of ownership, etc. The key to a FARM though is that is a list you are going to mail, door knock, call, etc over a long period of time. I know investors who get calls that go something like this "my dad just died, and we've been getting your postcards for 5 years and you are the only one we'd trust to buy our house quickly". Not that your only deals will come 5 years from now, just that it shows how you can build a dominate business over time.
LEADS - we use this term for any list that might result in a motivated sellers right now. Preforeclosure is probably the best known list on this front, but there are lots of others: delinquent taxes, code enforcement, negative equity, probate, unlawful detainers, etc. Typically for each of these you need some level of expertise. For example with preforeclosure in CA, you better be aware of Civil Code 1695 and use the contracts it requires. Here you aren't building a business over time like farming, but instead finding folks in need right now where you can hopefully get a deal done quickly.
Lists from the title companies in CA aren't that great. Senate Bill 133 really limited what title co's could provide real estate agents, and while those limitations technically don't apply to investors, most title co's are only in the business of providing lists to agents, so for all practical purposes the lists are very limited. Also, like most list providers, their lists are out of date the minute you get them. Far better to have a list that is continually, automatically, updated for you.
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
That is awesome information @Sean OToole!
I did know of LEADS but not FARM and you explain it beautifully.
I noticed your aren't exactly unbiased :) which is OK! (totally mean in a good way)
I appreciate the very thorough explanation and will definitely check out PropertyRadar!
Again, thanks a lot! - Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
Also as a quick advice and FYI, @Sean OToole on your site. I was checking out your coverage page and noticed that as you scroll down it becomes hard to read the table because the header disappears.
You may want to do a "persisten header" (similar to this page when you scroll down) so that the table header remains visible even as scrolling down. It will help visitors read the table and understand what kind of coverage you provide for the areas that they are interested in.
Your IT team team should be able to do that fairly easily!
- Real Estate Agent · Rocklin, CA · Member since 2014 · 166 posts · 71 votes9y
As an agent, I have done almost every sort of marketing possible to generate a viable lead. The highest return I've seen has come from door knocking. If you have the time, door knocking and speaking to potential sellers face to face is they way you will break through the competition.
Homeowners that are on any kind of list (pre-foreclosure, absentee, divorce, tax etc). receive 10-20 mailings a month and triple the amount of calls (if the number is listed).
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
That makes a lot of sense @Account Closed. I will have to keep it in mind. I am also considering further south in the Stockton area. Any ideas of the market?
- Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes9y
@Patrick Boutin -- Stockton may give a beginner a lot of trouble because a lot of the neighborhoods don't offer upside potential for distressed properties. Although, I do know some investors that can make it work, so if you decide to go out there get in touch with @Jake Leicht as he does a lot of investing in the area and perhaps guide you in the right direction and buy a deal from you.
But honestly, Alameda and Contra Costa county right where you are both have 200-250+ Notice of Defaults (preforeclosures) EACH every month. You've got 500 leads sitting right in your back yard... go get 'em! Avoid the trap of 'analysis paralysis' and just get out there and get to knocking! :-)
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Property radar is a great tool I can't see how anyone in CA who wants to score deals does not have that app on your phone... its ridiculously affordable.. @Wes Blackwell one must be aware of the anti equity stripping laws probably good to caveat that preforeclsoure advice.. there in Oregon you must be a licensed pre foreclosure person to even engage with helping folks in foreclosure..
@Account Closed every thing goes in circles in the 60s and 70s agents were like Mormon Missionaries they had a farm and they door knocked.. you got to know your neighborhood and neighbors you left magnets you left cooking receipes and who are these folks going to call .. ???
its just going full circle.. good on you to get out and meet your peeps
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
Thanks for sharing @Wes Blackwell. I am sure there are deals to be found in Contra Costa and Alameda however the entry price is daunting in my head and I feel more comfortable getting started with something closer to the 200k and under. It's easier to come up with the 20% down payment needed for something 100k to 200k than something closer to 300k or 400k. Specially if going the HML way.. I am working on getting my credit fixed up and saving up the money that I know I will need for down payment, reserves, etc... In the meantime, I am preparing myself and want to know people in the more affordable areas. Don't get me wrong, I would like to do things in my area and not have to drive 1 to 2 hours however I don't mind if it gives me peace of mind now that everything is so new. I will do things closer for sure however I don't know that for my first deals that's something I am ready to do. For sure I know I'll have to wait a little longer to amass more capital.
I will also keep in mind talking to Jake!
@Jay Hinrichs I have looked at Property Radar and it looks really good. I didn't think of their App so thanks for the tip!
What are these "equity stripping laws" you refer to? Is that something to be aware of here in California?
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Patrick Boutin yes Sean O'toole owner of property Radar up above on this thread mentioned it and cited the CA bill number you can look It up.
Oregon and Washington have very very strict ones.. To the point that even though I would qualify as a foreclosure consultant I no longer do this... I quit in 07 when the laws were enacted.. you absolutely do not want to run afoul of these.
Property Radar app is awesome you can use it out in the filed it will show in real time right on your phone which homes are owner occ or not.. its the most sophisticated Awesome thing I have ever seen in all my years In real estate I can't see how anyone on the West coast would not have this is they were serious about this industry... I have it and I don't really buy direct from homeowners I just like it because its so cool.. and I can instantly see who owns what ... etc etc.
and its like 50.00 a month for gosh sakes does not get better than that. and no I don't have any affilication with the company
- Hayward, CA · Member since 2016 · 100 posts · 15 votes9y
Thanks for clarifying that @Jay Hinrichs. I did re-read his Sean's post now and see it is Civil Code 1695 so now the "equity stripping laws" label is making more sense. I will look it up to know for sure but I am now guessing it has to do with ways to regulate how investors buy properties from homeowners by stripping the equity in order to buy at 50/60 cents on the dollar.
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