Posted over 7 years ago

8 Effective Ways to Find Real Estate Deals

Man looking at a house with a magnifying glass

Finding good deals is one of the most important parts of being a successful real estate investor. Without a good deal, it’s almost impossible to make a profit on a property. It can also be one of the most difficult parts of real estate investing.

Good deals are often tough to find. There are a lot of people out there looking for deals, so you have to deal with a lot of competition. Also, you’ll deal with a lot of sellers who overvalue their property, making it an unattractive investment.

How do you get around these issues? Here are 8 effective ways to find deals.

1. MLS

The MLS, or Multiple Listing Service, is probably the most common place to look for deals. Only licensed real estate agents/brokers have access to the MLS, so you’ll have to find one who can help you. The MLS has millions of properties listed, so there’s a lot to choose from. The problem, though, is that it’s the most common place for people to look. This makes it very difficult to find good deals.

A great way to avoid this problem is to ask an investor-friendly real estate agent/broker for a list of properties that meet your criteria that have been listed on the MLS for over 30 days. The longer the property stays on the market, the more likely buyers may think something might be wrong with it. This can cause the listing to be stale, and most buyers tend to avoid these properties. If the seller is motivated enough, there may be an opportunity for a great deal to be negotiated.

Real estate agents/brokers can also read the listing agent’s remarks for each property, which is not available to the public. A great agent can find hidden opportunities in those remarks.

2. Direct Mail

Direct mail is another common method used to find deals. Direct mail involves mailing out a large quantity of letters to property owners to see if they’re interested in selling their property to you. It’s easy to acquire a targeted mailing list for specific criteria that you’re looking for. This means you’ll be going directly after your target market.

Direct mail is a numbers game. The more letters you send out, the more likely you are to find a deal. The percentage of people that reply to your letter will be very low, but you only need a few responses in order to make it worth your time. This method can be expensive, so make sure you have enough capital up front in order to successfully execute a direct mail campaign.

Also, make sure you give your campaign enough time before you give up. It usually takes multiple letters in order for someone to reply to you.

3. Driving for Dollars

Driving for dollars is exactly what it sounds like. You get in your car and start driving around looking for deals. Look for properties that aren’t being well kept. This can be an opportunity to find a motivated seller. You can also use it as a negotiation tool to lower the price of the property.

Another thing to look for is For Sale By Owner (FSBO) signs. This means that the owner is not using an agent to help them sell their property. Many of these property owners aren’t as familiar with their market and the actual value of their property as an agent/broker would be. This gives you an opportunity to find great deals.

Now, I don’t advise you to try to rip off the owner. Real estate is a relationship business, and you want to develop strong relationships with everyone you do business with. Try to make deals that benefit both parties. This will build your network and can help you find your next deal.

Speaking of networking...

4. Network

Networking is far and away the best way to find deals. Most really successful investors rely completely on their network to bring them their deals. They don’t have to worry about finding deals anymore because the deals come to them.

Also, these are the best deals because they are usually off-market properties. This means that there is way less (sometimes zero) competition for these properties. This helps you avoid bidding wars with other buyers which raise the price of the property.

Building your real estate network can take time. Developing strong relationships and building trust can take years, but it’s completely worth it. Join real estate investment clubs, talk with local brokers/agents, and connect with any family members who might also invest in real estate. Try to let everyone know that you’re looking for deals. Who knows, you might find out that your uncle has a great property that he’s been trying to sell.

I also highly recommend becoming an active member at BiggerPockets.com. This website is an amazing resource for any real estate investor. If you aren’t a member yet, please go to their site and sign up as soon as possible.

5. Wholesalers

A wholesaler is a person who connects sellers with buyers. They look for good deals and then put the property under contract and resell it to another buyer. The wholesaler makes money on the spread between the price the seller is selling for and the price the buyer will pay for it. This means that the wholesaler has to find great deals in order to make it worth their time.

Using a wholesaler to find deals cuts into your profits, but it saves you a lot of time. You no longer need to search for deals yourself and you can focus your time on other things. You can also continue to use them for finding more deals. Developing a relationship with a good wholesaler can be very profitable.

6. Lien Sales

Lien sales involve properties that have unpaid debts. These are properties where the owner isn’t able to make their tax payments. A lien can then placed on the property by the city or county until these taxes are paid. These liens are then sold at auctions to the highest bidder.

Investing in liens is a much different approach to real estate investing, but it can be a great way to find good deals. There is usually tough competition from investment funds and other real estate investors, so make sure you have a good understanding of tax liens before investing.

7. Publications with Classifieds

Another place to look for real estate deals are publications with classifieds. Real estate classifieds are a quick and easy way to look for properties. Most publications have many search capabilities, enabling you to look only at properties that match your criteria. This makes it easy to narrow down the properties that you might be interested in.

There are now a multitude of online real estate websites available. Some of the most common online real estate classifieds are Zillow, Trulia, and Realtor.com. These websites are very easy to navigate and make it much easier to find properties. You don’t need a real estate license to gain access, which means anyone can use them.

This also means that there is a lot of competition on these sites. This makes it difficult to find good deals on these publications. You’ll usually need to look at hundreds of properties before finding a good deal here, but it can be worth it.

8. Online Marketing

Online marketing can be an effective way to find deals. This is becoming a much more popular tool for real estate investors. Online marketing involves posting ads online and/or having a website to source deals. The goal is to find sellers and have them contact you about selling their property.

One good example of online marketing is WeBuyHouses.com. This is a website where property owners can go to quickly sell their home. There are many other examples of real estate investors using similar methods.

Online marketing can generate a lot of leads, often with a small amount of capital and time required. Online ads are simple to make, and creating a website has become much easier than it used to be. I think that any real estate investor who is in it for the long term should use some form of online marketing.