Finding off-market properties and getting a good deal is absolutely key to being successful in real estate investing.
The market is hot. And overpriced.
We are near or at the top of a real estate cycle.
This mean most cities are saturated with investors bidding up the prices of all types of real estate investments.
How can you be successful as a real estate investor in an environment like this?
Find ways to contact motivated sellers that aren’t currently listing their properties for sale.
Finding Great Deals on Real Estate
Here are the top ways to find off-market deals:
- Directly contact owners – voice call, text, or mail
- Driving for dollars
- Short Sales
- Auctions / Foreclosures
- Tax Liens and Tax Deeds
- Networking (Investors, Property Managers, Contractors)
We’ll go through each one-by-one.
Through these methods, you find a way to not pay full price on the multiple listing service (MLS) like everyone else.
You buy at wholesale from motivated sellers.
Wholesale vs. Retail
When a property goes for sale on the MLS, the whole world sees it at the same time. This late in the market cycle, there are people that are willing to overpay for investment property.
The chance of buying a good investment property off the MLS is low because you will pay retail, or what the market price currently is.
If you want to make money in real estate, you need to buy at wholesale, or at a discount price typical for off-market properties from motivated sellers.
What is a Motivated Seller?
A motivated seller has a reason to sell quickly.
They don’t want to or can’t list the property with a real estate agent.
The reasons for this can be numerous, but some common reasons are:
- Don’t want to bother with renovations and salespeople
- The property was inherited, and no one wants to deal with it
- Financial trouble
- The list goes on…
If your seller is not motivated, and you will run into this with off-market properties, they will want to get retail price for their property. Let them know you only buy at a discount, exchange contact info with them, and move on.
They may become motivated sellers in the future.
Here’s the full list:
Directly Contact Owners
This is probably the most effective method.
The way to make it more effective is to pick owners that have a high likelihood of being motivated sellers.
Here are factors that make finding motivated sellers more likely:
- Past retirement age
- Have their mortgages paid off / nearly paid off
- Having problems managing their property
- Divorce / legal problems / death in the family
Directly contacting owners allows you to check if someone may be ready to sell their property, but for some reason hasn’t gotten around to taking the actions necessary to do so.
A lot of times they don’t want to fix the house up. Either they don’t have the budget, the know-how, or the time.
Tell them you’ll take care of that.
There are several ways to contact a buyer. You can either call them, text them, or mail them a letter. The best thing to do is all three.
It is also important to continue contacting the owners of the properties you want to buy periodically. Contacting them quarterly might be a good starting point. You may contact them 3 or 4 times unsuccessfully before they decide to call you wanting to sell.
Also, they may put your phone number and letter away, and sometime in the future they want to sell, and think of you first.
You can find the owner of most properties for free through county websites. It’s often through the tax assessor and recorders websites. Try using this website to find it in your location
You may find situations where the owner of the property is an LLC. This happens some in single family, but is very common in multi-family.
It is easy to look up the owners of LLCs for free.
In most states you can look up LLC information online buy going to the secretary of state website. From there, navigate to information about LLCs, and you will usually be able to find some type of online search function.
There are four states where you can have anonymous LLCs. This means the state does not require the LLC owners or members to provide their identity. In this case, you may have trouble finding the owner.
Anonymous LLC states are: Wyoming, Delaware, New Mexico, and Nevada.
I want an anonymous LLC!
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Driving for Dollars
Driving for dollars, or even walking for dollars, is also one of the most effective methods of finding good off-market real estate to buy. This is where you drive or walk around neighborhoods and find property that appears to be neglected. Maybe they are obviously vacant, the grass is overgrown, or they appear to be in disrepair.
You’ll be able to use the tax assessors website to look up the owner’s information just like above. Another really interesting way of seeing who owns what property in a neighborhood is using an app called Landglide. It has a free trial, and after that you have to pay for it.
I don’t make money for recommending Landglide, I just think it’s a great app for serious real estate investors. It shows on a map who owns what property. Pretty impressive.
Pro tip: Take pictures of the properties you’re interested in with the GPS turned on for your phone. This allows you to see on a map where the picture was taken.
What is a wholesaler?
They are an expert at doing exactly what I’m showing you in this article. They find off-market deals from motivated sellers. They do it for a living.
In fact, their most common method is using the two methods I already discussed above. (directly contacting the seller and driving for dollars)
But they aren’t planning on buying these properties.
They want to sell them to investors.
They will make a deal with the seller to put the property under contract for a low price, and then find a buyer who will pay a little (or a lot) more. They then pocket the difference without ever buying the house themselves.
They are a middleman.
Am I allowed to say middleman?
I used to be very skeptical of buying from wholesalers, but if you find one who is good at their job, they are worth the markup they get.
Remember, most people that say they are wholesalers are wannabes. They haven’t done very many deals and don’t know a lot of investors.
A real wholesaler is the opposite. They do many deals every month, and have lots of cash buyers on speed dial.
How do you find wholesalers?
- Call the bandit signs. They say “We buy ugly houses” or something to that effect. Let them know what kind of house your looking to buy.
- Check the internet for websites that buy houses in your area fast for cash. These are probably wholesalers.
- Check Craigslist and Facebook marketplace for their advertisements
- Look for them hanging out at real estate investor association (REIA) meetings and their online groups.
A short sale is when the bank agrees to sell the house for less than will be needed to pay off the loan.
Short sales can be a great way to find deals, but they aren’t what they used to be.
A short sale opportunity exists when the following two factors exist:
- The owners are way behind on payments and can’t catch up
- The house has depreciated in value, and the loan is higher than the value of the house
This scenario was far more common after the last real estate crash, and much less common now because prices in most places have raised enough to get most people out of situations where the house is worth substantially less than the loan.
Cool stat: In February 2010, short sales accounted for 17% of all residential real estate sales. In 2016, by contrast, they comprised 5.5 percent of home sales.
I have bought a few houses this way, and I was able to do so at a substantial discount.
Short sales are found on the MLS, and you may see them on Trulia or Zillow. You could also work with a real estate agent who specializes in them.
Keep in mind, the approval process for a short sale is long and tedious. It can take anywhere from a month to six months or more to get a deal approved from the lender.
I once made an offer on a house that was a short sale, and I bought two other houses before I found out six months later the deal was finally accepted. It ended up being a good deal.
Also, you won’t be able to negotiate the price once it’s accepted, unless you want to start the entire waiting process over again.
Auctions / Foreclosures
You can buy properties that have went into foreclosure. This means that the bank or some other entity has taken possession of the home from the owner because payments weren’t being made.
Here are three popular websites for foreclosure auctions:
I’ve used all of these, and successfully purchased from two of them.
One reason this can be a good place to get deals is the process is hard to navigate. It’s more complicated and requires filling out extra forms and jumping through additional hoops.
You have to do work some investors aren’t willing to do. That can pay off.
The websites sometimes have a separate short sale section.
Tax Liens and Tax Deeds
Tax liens and tax deeds are very interesting.
This is the method that counties use to ensure they eventually get their property taxes.
Tax Lien States
In some states, they sell tax lien certificates for the property to the highest bidder. This does not mean you own the house. You own a lien on the house for the amount of the taxes due plus interest.
If the homeowner doesn’t pay you those taxes and interest in the specified amount of time allotted, you get to foreclose on the property and take possession. This usually means you would get the property at a deep discount.
You might get interest, and you might get a cheap property. Lots of uncertainty, but certainly some opportunity. Interest can be as high as 24% in some states.
Be sure you understand the rules for right of redemption. The previous owner may have the ability to get the house back from you should they be able to come up with the money within a certain timeframe after you foreclose on it.
Tax Deed States
In tax deed states, it is much more straightforward. You are actually buying the deed. This means when you win the auction for the property, you buy it and own it. In most states this means the previous owner does not have the ability to take the property back.
In certain states, there are redeemable deeds, which mean you buy the property, but the previous homeowner has a period of time he/she can buy it back from you. If you made substantial improvements to the property to bring it up to livable standards, they may have to reimburse you for those.
I just scratched the surface on this. There is lots more to know. My buddy Seth at Retipster wrote a great article if you are interested in this, or in understanding what the rules are in your state.
Networking in General
This section and the next few are about networking with groups of people somehow related to the real estate industry.
The logic is the same.
You want as many people as possible to know who you are, what you are already doing with real estate, and what you are looking for.
It helps a lot if you can make it clear that you are ready to buy given the right opportunity.
I think it also stands to common sense that banks, mortgage companies, and real estate agents are obvious people to network with as you get the word out what you’re looking for. I don’t feel the need to elaborate on the need to network with these categories of people.
When you start contacting owners, you might realize the same people’s names pop up a lot. They may use different LLC’s, but they’ll show up as an owner or as a registered agent of an LLC. You may also meet medium or larger investors at real estate meetups.
Reach out to these people in person, by phone, text, and mail and ask if you can buy them lunch or coffee and chat with them about the local real estate market.
Chances are, if they have property to sell, they are not motivated sellers, and they will sell at retail. That’s not a good deal for you.
They can, however, give you valuable advice about the market. They may become friends, allies, sounding boards, investing partners, and/or investors in your deals in the future.
They are a great source of referrals for EVERYTHING. Don’t push them. Let it come naturally.
I’ve found most investors very willing to meet with me and talk. It’s been surprising.
First of all, you want to meet all the property managers in your area anyway so you can assess how good they will do at managing your properties in the future. Ask them lots of questions about how their fee structures work and how they work with investors.
See my other article on 5 Secrets to Find the Best Property Manager
Property Managers see a lot of landlords. They may be aware of a landlord who is struggling and might want to sell.
They have insight into the financial lives of each of their landlords. They may know this landlord can’t afford or isn’t willing to make the necessary repairs.
Keep in mind, these properties might not just be single family homes, they could be multi-family!
Contractors and Builders
When you are out and about driving or walking for dollars, you might see contractors and/or builders working on homes.
Talk to them!
They have a lot of useful information.
For one thing, it’s a great place to get referrals. If I’m talking to a plumber, I’ll ask for referrals for a good handyman and HVAC guy.
They also spend a lot of time at big rehab projects. They might be aware of a situation where someone is in trouble or someone either needs to or might want to sell. Don’t forget to ask about this.
I’ve ran into contractors who were the owners doing the work themselves. Not unheard of by any means.
Obviously, people will advertise homes for sale on Craigslist. They might not want to list on the MLS, and might just be cheap and not willing to spend money to advertise the property through other channels.
This can work to your benefit.
But this isn’t what the best part of Craigslist is.
It’s not the properties for sale that you should be focused on, it’s the properties for rent!
Think about it.
Often, these are landlords that aren’t very sophisticated, don’t have the money or aren’t willing to advertise elsewhere, and may be having landlord troubles.
Contact them and ask them if they would consider selling the property.
Probate is the legal process following a homeowner’s death where the property (not necessary just real estate) either transfers ownership to someone or is sold.
Usually, an executor is appointed to handle all the affairs of the deceased as their property moves through the probate process.
Sometimes there is a will and sometimes not. With a will, the process can be much faster.
The probate process could be as short as six months, but could also drag into two or more years. It depends on how the state handles probate (each state is a little different), whether or not there was a will, and whether there is anyone challenging how things are happening.
If you don’t find some way of inserting yourself into the probate process for real estate, here is what will probably happen:
- Through the probate process, the executor in combination with probate attorneys finally arrive at the point where it is determined the house can be sold.
- The property will get appraised.
- It will be listed with a real estate agent like any other property.
- Once under contract, an official notice is mailed to the heirs giving them a chance to object to the sale. If not, then a court date is set where it is sold.
If you can somehow contact either the executor, the probate attorney, or a heir, you can offer to buy the property as-is without bothering with the process of putting money into the house for repairs and staging it for open houses, etc. You explain that they can just be done with it sooner and with less stress.
How to Find Probate Leads:
- Some counties sell a list of probate properties
- Local probate listings (court records, internet, newspaper)
- County records (public info)
- Ask the Probate court or probate office
- Contact Probate attorneys, especially the busiest ones
Tips for contacting family:
- Write professional letters to the executor or heirs
- Exercise compassion for the situation
- Hand write the envelope and have a real physical return address (no PO boxes)
This article is not enough info on this process. Do a lot more research on how probate works in your state before trying it.
These are the best ways I’m aware of to find off-market real estate. Once you find these deals, you want to focus on finding a motivated seller.
Then, you buy at wholesale, make great cash flow, and are able to sell the property at the retail price in the future!
Yay Real Estate!
Impossible to do this where you live now? Maybe you need work in a different market.
Read my article titled Long Distance Real Estate Investing Secrets
Rich on Money