How We Found Our Investment Properties in 2017

4 tips for finding your next real estate investment property

After funding questions, the second most frequent question we hear is, “How do you find your properties in a competitive market?” Below, I reveal four of our not-so-secret ways of finding properties that are flip-worthy and full of profit potential. These methods are the top ways that we found our properties in 2017, and we plan to use similar tactics to source our real estate investments this year.

The Multiple Listing Service (MLS) – 38%

Yes, the MLS is still valuable! I constantly hear, “there are no good deals on the MLS anymore.” And while technological upgrades to the MLS systems have made researching and evaluating properties much easier, there are still deals to be found. For us, the trick is to confidently make reasonable offers and explain our case — even when the offer is sometimes 25% below the list price.

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The scenario we look for resembles this:

  • A realtor aggressively looks for listings and makes an overly optimistic estimate of a property’s sale price in order to get the listing.
  • After a while, the property remains on the market with no offers except the “insulting and lowball” offer we submitted with detailed backup.
  • Soon, the death by a thousand cuts begins. We watch and wait to make our move. The listing realtor is under pressure from the seller and starts lowering the price to make a sale. After the price drop(s), we reach out to let them know we are still interested. By this time, other realtors following the price decrease alerts are wary of the property. They have seen the price drop multiple times and are unsure what price represents good value. But we do. We already did our homework and submitted a fair offer at the price we want!
  • We often get a call shortly after that our offer is approaching reasonable. The listing agent asks if we will come up to a certain price. Now the real negotiations begin and we can stand firm on the price or flex a bit depending on the season, market changes and so on.

This works best with estates and institutional sellers, like mortgage companies or banks. Often because there are multiple parties (heirs who want the inheritance or bank distressed asset committees) who want to see a property sold. It takes patience and organization, but resulted in some of our best purchases last year.

Brought By a Realtor Before Listing on MLS/Off Market – 31%

Not all sellers want to list their property, have showings and deal with open houses. In this case, they will find a realtor who uses their connections to sell the property.

This path is taken by sellers for a number of reasons:

  • They are embarrassed by the property’s condition and want a simple, fair and quick solution.
  • They need a flexible transaction, like selling the property and leasing it back for a month or two, while their new home is being built.
  • A health situation creates a need for a quick close. The seller often needs the proceeds from the home’s equity to pay for a move into a retirement community or assisted living home.
  • There is an estate situation where the heirs live out of state. They need an easy solution for repairs and cleaning out the house and do not have the relationships or time to deal with the property.

In these cases, a realtor will approach people, like me, who they trust and have a relationship with to share the opportunity. These relationships take time to build, but can be done easily with a little time and a few lunches. After a property or two, it’s even easier because you’ve created a good reputation and earned the realtor’s trust as a fair and ethical house flipper.

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Non-Realtor Referrals – 19%

Word of mouth is a tried and true tactic for many businesses and house flipping and real estate investing is no exception.

Referrals come from a wide variety of sources:

  • Estate, elder law, divorce or bankruptcy attorneys
  • Senior care specialists
  • Mortgage or bank professionals
  • Past sellers

The old saying “it takes a lifetime to build a reputation and just a minute to ruin one” is so true with referral networks. The referring source is trying to help in what is probably a tough situation. At the same time, they are accepting a certain level of responsibility by recommending you. The small things make all the difference so be sure to go the extra mile (help move a senior citizen to their new community, allow the single mom an extra week to close, etc.) when you have the opportunity to do so. It will come back to you eventually.

Wholesalers – 12%

We receive leads on roughly a property a day, from wholesalers, and buy very few of them. Wholesaler opportunities vary by market and there are some good deals available. If you can build a solid relationship with a trustworthy wholesaler and get first crack at some properties, it could pay off well for you. However, be wary of wholesaling groups who broadcast their properties to a wide list and sell to the first offer. They are betting on a long line of buyers, many that they will do business with just once. All too often we see both novice and veteran flippers get burned.

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The Bottom Line

No matter the approach you take, it is essential to do your homework and always be prepared to move quickly when an opportunity presents itself. There are likely folks out there who have had success with yellow letters, pink postcards, fake legal notices and ringless voicemail, but we have not. In our business, relationships and substance have always won over the “get rich quick” methods. Persistence, patience and building a strong reputation by doing the right thing and treating people fairly are our most reliable tools for finding viable properties to fix and flip. 

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