So you have spent countless hours and even days sorting out what type of properties you will invest in. You then researched MSAs and then specific markets, built your team and now are looking to find a deal that will work for you. But how? Today we will discuss a few ideas of where potential deals can come from. This is by far not an exhaustive list. That would take a few hundred pages. This is meant to get you thinking. Let the creative juices flow. Nothing is crazy give it a try.
In no specific order:
Word of Mouth:
We all have that friend that knows everything about ____________ fill in the blank. Automobiles, history, how to fix something, etc. So much that when someone asks you “I’m thinking of putting an addition on my house. Do you know anyone that could take on such a job?” You immediately say “Yeah I do. Joe knows everything there is about framing. He even took a trip to Alaska to visit the hammer Museum. Yes there really is a museum based on man’s first tool.
I want you to become THE Real Estate Guy. Let’s say you decide on MHP’s then you should become “The Mobile Home Park Guy” tax leins then you should become “The Tax Lien Guy” flipping then you should become “The Flipping Guy”. Everyone should know what you do so when someone asks them they immediately say your name. This really is the number one way to find deals and it takes a lot of work. Every time you meet someone, every time they ask what you do, have a great one liner. My response “I teach Private Lenders how to get higher rates of returns then they could anywhere else.” This then peaks their curiosity and they start asking “how high?” or “what’s private lending?” BOOM! I go into what private lending is and how to make money doing it. So right now before you go any further create your line. Maybe “I help families enjoy their down time”, “I help home owners avoid bankruptcy”, “I help clean up communities”, “I teach people how to retire early”. Find what works for you and then use it every chance you get. This is a slow process but once built it is as strong as steel.
Driving for Dollars:
After picking your market, drive it. Drive every square inch of it. Now some are you are saying “My market is New York City. Do you really want me to drive the entire city?” Yes! Yes I do. One block at a time. If it were me though I would pick an area to focus on and get to know it inside and out, then branch out from there. So maybe you start in Maspeth then work your way through Middle Village and over to Woodhaven. Regardless of your market you will drive and get to know all the properties. This gets you market research, word of mouth because you will stop and talk to people and you will find prospective properties. When I drive I make two list. Those properties that are a bit run down and I can add some value and those that meet my size criteria (5+ unit multifamily) but are in “great” shape. I will then do one of two things cold call or pass the list off to my broker. By the way this is a great strategy to use in new markets where you are meeting brokers. Introduce yourself hand them the list and tell them if you can get them to sell now or in the future give me a buzz. This along with a credibility book is a one two punch. Not many investors are doing these things, so when you do you stand out.
Driving for dollars could also be walking for dollars, running for dollars, bike riding for dollars, etc. The key is you get out there and put boots on the ground in the most literal sense. Nothing beats actual real recon.
Everyone has cruised the MLS looking for properties. The MLS is good for getting a sense of the market. Finding brokers in an unknown market by keeping track of how many properties each one has listed. And yes, sometimes you will even find a deal. For the most part though the best deals are found with the most work and going to Zillow or Realtor or Trulia doesn’t take much brain power.
The one golden nugget I will give you is this. Pay attention to two numbers. Square feet and Bedrooms. Any 2 bdrm house that is greater than 1000Sqft is something you should pay attention to. Hmmmm Why? You ask. There could be an opportunity to turn it into 3 bdrms and some serious value. Make sure to do it legally through local zoning. But it could be as easy as adding a closet to an extra room. This is primarily for single family homes. Keep in mind that some SFR can be converted into a duplex which is another similar but much more involved process. Some can even be turned into a commercial storefront and an apartment.
For larger properties and to identify brokers that are listing the most properties find the websites dedicated to such properties and then visit them at least weekly, bi- or tri- weekly is much better. Sites like CIMLS.com or Mobilehomeparkstore.com and even loopnet.com. Visit these sites to get an idea of what your area is trading at, who the players are and what’s available.
Up until now we have talked about what I consider the obvious. If you have read just one book or article you probable have some familiarization with the previous mention routes. Now we are going to start getting a bit creative. Remember the sky is the limit. If you have an idea, test it. If it works keep it. If it doesn’t then tweak it or drop it. Things like two four ladies that always go for a morning walk. Or that guy you see every Saturday morning riding with his kids.
Building code violations:
Properties with code violations could be a gold mine. The owner could be motivated to sell for many different reasons and cleaning up the codes gets you two things. One a property at a discounted price and two into the good graces of the town. Go to the town and tell them what you are doing. Ask them for those properties that cause them the biggest headaches. The seller gets rid of a headache, you gain a property and the town gets one less problem to worry about.
Nursing Homes and Retirement House’s:
Some of you are thinking Nah man don’t go there that’s just cold. Praying on the elderly. You are in the scarcity mindset. Think more about abundance. Lots of the folks entering these facilities have properties they no longer need and/or can take care of. Identifying them and working with the owners to purchase the property could actually be relieving them of a huge burden and lots of stress. You are just making people aware of what you do and how you can HELP (yes I meant to yell). It’s about listening and helping. Flyers on bulletin boards and talking with staff works here.
Public Service Personnel:
This includes Mail carriers, UPS drivers, Fed-Ex, Police, Fire, Ambulance, Taxi drivers, Newspaper boys (do kids still do this?), pet walkers, the people that are covered under this heading is endless. Just think of anyone and everyone who travels around your area on a regular basis. Engage them in conversation. By far my best source here is the mail carrier. They touch each and every property. Walk pass them, talk about them, see them and are friendly with many of the residents and owners. The wealth of knowledge is well worth the time spent with them. As you become friendly with them invite them to lunch at the dinner. I had a rental property off the beaten path once along the river. During the warmer months the mail carrier would take lunch in the yard or on the porch overlooking the river. It was just something that happened. It cost me nothing and he very much enjoyed the peaceful spot away from the hustle and bustle of town.
Attorney’s and CPAs:
Talk with local Attorney’s and CPA’s about the service you provide. They often have clients that are looking to liquidate their holdings. Divorce, Probate, Real Estate, Commercial, landlord/tenant and on and on goes the list.
Landlord Tenant Court:
Evictions can be long drawn out emotional experiences. If a landlord is going through such an experience he may be thinking to himself “This property is such a problem” “Why did I ever become a landlord” again attack from the genuine position of helping. I recently came across a property that sold for a 70% discount just because the landlord didn’t want to deal with a tenant that wasn’t paying. Help someone solve their problem and that’s where the biggest deltas are going to be.
Here is a list of over 65 potential ways of sourcing a deal. It all depends on your creativity and what you are looking for. Ask fellow investors what they do. Think about different scenarios that would cause the owner to want to sell. Then find ways to access that information.
I will leave you with this reminder. When using any or all of these strategies do so from an abundance mindset. From one of helping and caring. You are there to help owners liquidate properties that they no longer want or need. Properties that are causing them some kind of stress for some unknown reason. Identifying that reason is part of your job. If you and can identify it you can solve it and that’s the super-secret to making money
P.S Trade Shows:
Here is a bonus thought for you to act on. Attend trade shows. No, not real estate ones, you want deals not partners. Trade shows that attorney’s would attend. Ones that property managers attend, plumbers, electricians, insurance agents. Spread your tentacles far and wide. How many investors are looking for deals at a mold remediation company. There’s a problem you could solve for an owner eh!.
Now go find your deal!