I just picked up another house here in the Dallas-Fort Worth market that I think would make for an interesting case study to share with all of you.
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Oftentimes when I have an appointment scheduled for the day, I will take a stack of comps with me to filter through to help arrive at an ARV for the subject property. When I get there early, I always take the time to physically drive the comps, even in neighborhoods where I regularly flip houses. Not only does this help me make more confident offers, but it also occasionally nets additional deals for me, as was the case this week.
Driving for Dollars in Dallas
While driving comps, one thing I keep an eye out for within the neighborhood are any houses that are in a state of neglect or disrepair. This might include tall grass, boarded up or busted windows, mailboxes stuffed to the brim, newspapers piled up on the lawn, etc. Essentially, this is exactly the same as driving for dollars.
Typically, when I go driving for dollars, it is a concentrated effort where that is all that I am focusing on, but there is no reason you can’t do it in between appointments or when you are out driving comps, as was the case for me.
As I was driving the comps, I found a road that went to a dead end with no outlet. This was where I found this lead. The neighborhood overall was in decent shape, but I could tell that whatever house I looked at in this area would likely need foundation work (the streets themselves were busted up and patched over, which is usually a sign that the houses too will need some structural work).
And here is what I saw from the street:
Does that look like a prospect to you? After doing this for long enough, vacant houses start to jump out at you. Now, I have to admit, with this particular house, it’s a little more subtle that it’s vacant — it probably wouldn’t strike most of you as vacant right away. It might be hard to see from the picture, but the lawn is a bit overgrown, the curtains are peeled back and you can see there is no furniture inside, and there is a pile of newspapers by the front door. What I do at this point is take a picture with my phone to use in a mailer later if I don’t have any luck in the field finding information for the owner. Luckily, that was not the case for this house. If you have read my driving for dollars guide, you won’t be surprised what I did with it next.
Meeting with the Neighbors
After taking the picture, I exited my car and took with me some clear tape and a yellow notepad and pen that I always carry with me. On the notepad, I just left a simple message for anyone who might come by to check on the property. It just stated my name, that I buy houses for cash as is, and that I would appreciate giving me a call — that’s it. I then took the note and taped it in a few different spots, usually the front door and garage. This kind of seems silly, but it has a high response rate in my experience. It may not be immediate, but when people return to the house for whatever reason (check up on it, clean it out, etc.), I usually get a call off these notes.
The next thing I do if the neighborhood isn’t too unsafe is start knocking on neighbors’ doors and asking around if they have any information on who lives in the subject property or information on the owners. And this is where I had success for this case study. I went to each house in the cul-de-sac (about five houses), and most of the people were not home. One neighbor answered the door but didn’t have a clue what was going on with the vacant house. The second to last house where I knocked, the neighbor came out and started to spill the beans — another fun fact, there was a real estate agent sign in his yard showing his home was for sale.
Why is this method so effective? People hate having trashy, unkempt houses sitting next door to them. If they ever want to put their house up for sale, the vacant, beaten up house next door is going to drive down their home’s desirability in the eyes of buyers.
The neighbor started to tell me about how he was getting negative feedback from the buyers at this point because of the vacant house next door, and it was actively causing him lost offers. Again, the picture is kind of small; it doesn’t do this beaten up house justice. The paint was peeling off the front, there were busted windows on the side, the backyard fence was completely wrecked and overgrown, it was visible from inside the neighbor’s house, etc. I told him that I was a real estate investor and interested in buying the house and fixing it up, and it made him so excited. So he began to open up about the property and what had been going on with it.
Apparently, the property had been leased out for a bit, but the previous tenants were evicted and trashed the property in the process. Not only that, but apparently the landlord had been deferring basic structural maintenance for a while now. He told me that when the owners had dropped by on more than one occasion to keep an eye on the house, he had gone out to talk with them and express his frustrations.
He had all the information that I needed, and he provided me with not one but two phone numbers (the husband and wife owners) and one email address. In the follow up blog post, I will write about the initial phone call contacts with the owners, as well as the appointment itself, making the offers and the final numbers, in the upcoming weeks (it’s still under contract but set to close soon).
Until then, wish me luck.
Investors: Have you found any deals lately by driving for dollars?
Leave your comments below!