650: How to Find Below Market Properties

SHOW NOTES FOR EPISODE 650: HOW TO FIND BELOW MARKET PROPERTIES

One key strategy for real estate investing success is finding good investment properties that are priced under market value.  However, in today’s sellers market, finding these “diamonds in the rough” can be challenging.  In today’s podcast episode, Bill shares some tried and true strategies that will help you both identify and acquire these properties.

Finding below market value homes for sale is entirely possible.  How can that be true when rising property prices have become a common trend in the US housing market?  Well, the best way to answer that question is to reveal to some of the most effective ways real estate investors are finding these investment properties!

First, here are some of the more obvious places to look for great deals:

5 Obvious Sources

1. Motivated Sellers

Motivated sellers are your best bet when it comes to finding below market value homes for sale. A motivated seller is merely a real estate investor or a homeowner who is selling his/her property with urgency. In other words, they are trying to get rid of the property as soon as possible.

In every housing market, there are motivated sellers. Yes, even in the US housing market. Why? Because their circumstances are usually personal and not tied to real estate market trends.

The trick comes in finding motivated sellers. One way is to work with county officials to get data on tax delinquents in the location of your choice. The property owners that make it onto these lists will be a great source for the best real estate deals in the market. This real estate investment strategy isn’t known to many and some simply won’t put in the effort it takes to get this list. So you won’t be competing for these investment properties even in the tightest seller’s market!

2. Real Estate Websites

Another excellent place for buying an investment property that is below market value in the US housing market 2019 is real estate websites. Even current market trends are no match for technology! If below market value homes for sale are out there, online real estate investment tools will find them!

3. Spread the Word

This is a more traditional way of finding below market value homes for sale, but it’s still effective in 2019. So, why don’t you ask people around or even post on social media? You’ll be amazed at what you can find on these platforms. You might even find a motivated seller this way.

4. Go for Foreclosures

Buying a foreclosed home is a great choice for below market value homes for sale. While it’s true foreclosure activity is down in the US housing market, there are still cities where you can find this type of investment property. Check out places like Houston, Detroit, Minneapolis-St. Paul, Milwaukee, and Austin- all of these housing markets saw a rise in foreclosure starts at the end of 2018. You can also check foreclosure websites or local banks.

5.  Work with a Real Estate Agent

The last way to find below market value homes for sale is to work with a real estate agent. A dedicated agent will find you the best real estate deals in any market. In addition to this, a real estate agent with killer negotiation skills will be able to lower the listing price and maybe even create BMV properties were there weren’t before.

Here are a few obvious and more creative places to look for great deals

20 More Creative Sources

1. Broker Pocket Listings

• Still the number one source of good deals
• Most common
• Tougher for newbies today
  • You need to find brokers who will still work with newbies
  • Maybe target small, boutique brokers — not franchises
• Once you buy and are successful, pocket listings come easier because brokers know you can close and they are more apt to “invest” in you
• You should still be building relationships
  • Find your top markets and start contacting brokers that are selling typyes of properties you seek (look in loopnet.com)

2. Wholesalers

• They’re doing the leg work (direct mail/calls, etc.) to find off-market opportunities
• They charge fees ranging from 3-5%
• Where do you find wholesalers: com, ConnectedInvestors.com, Facebook Groups, LinkedInand ask for referrals from other investors
• Keep in mind that they’re acting as “middlemen,” and you’re likely to get the same deal you’d get if you went direct to the source.

3. Facebook Groups

• Do FB groups search in your area of interest:
  • Real estate investors
  • Multifamily
  • Small multis

4. Direct Mail

• Get lists through ListSource.com or ProspectNow.com
• Mail to your target market
• Sort by criteria

• • Out-of-state owners
  • 10 plus years of ownership
  • Tax liens
  • Past due mortgages

• Write compelling letter with email and phone response (Answer your phone or get VA!)

5. Cold Calling

• Obtain list first (see above)
• Hire skip tracer to identify owners – Lexus/Nexus& TLO
• Call and text!

6. Craigslist

• Regularly scan (or hire VAsto scan)
• You can also place an ad that you are looking to buy

7. eBay

• Regularly scan eBay real estate listings for sale(or hire VAs to scan)
• Commercial real estate for sale

8. For-Rent Ads

• Best for smaller properties
• Call to track down owner

9. Health Violations

• Check county/city records

10. Real Estate Portals

• Realtor.com, Zillow.com, Trulia.com, Redfin.com
• Especially good for multis – friends ask Realtor friend to list because they don’t know commercial brokers

11. Loopnet

• FSBOs
  • Not necessarily off-market
  • But still “direct to seller”
  • Owner-financed properties
• Here is the link to find Loopnet properties taken off-market: http://www.loopnet.com/Apartment-Buildings-Sold/

12. Property Managers

• Contact PM companies that handle the types of properties matching your criteria
• Ask if they know properties that may be distressed on going on the market soon (they’ll probably want you to keep them as PM) or may want broker fee

13. Appraisers/Inspectors

• Sellers may have property appraised or inspected prior to sale

14. Auctions

• Good for distressed or foreclosed properties
• com, Bid4Assets.com

15. Google Mapping for Dollars

• Online cruising or mapping for dollars
• Identity top neighborhoods in your target market
• Make sure you know the date of the picture
• Cruise B class neighborhood f class properties

16. Apartment Vendors

• Electricians, carpet installers, roofers, plumbers, HVAC professionals, pool repairmen, lawn care professionals, etc.
• Also appraisers and inspectors
• People involved in the servicing of apartment communities may likely have insider information on communities that are being neglected.

17. Eviction Records

• Check city/county records for properties with many evictions

18. Old Listings

• MLS or LoopNet.com over 6 months old
• The older the listing the more likely sellers will be to negotiate
• If you don’t have access to the MLS (Multiple Listing Service), you can sometime get access through realtor friends or just look at other real estate portals like Realtor.com, Trulia, etc and get the age of the listing as well.

19. Real Estate Investors

• Regularly connect with other investors by phone, REI club or Meet-ups, etc. or set up coffee meeting during the week
• Let them know your criteria
• Ask if there are projects they turned down but may meet your criteria

20. Foreclosures

• Both single family and apartments
• Bank Websites
• Here are special links to help you find foreclosed apartments
  • https://www.biggerpockets.com/renewsblog/2009/09/16/find-apartment-building-foreclosures/
  • https://www.biggerpockets.com/rei/bank-owned-reo/
  • https://budgeting.thenest.com/buy-foreclosed-apartment-complex-29987.html
  • https://www.bankforeclosuressale.com/apartment-foreclosures.php
  • http://www.loopnet.com/bank-owned-properties-for-sale/

In Summary

If you plan to implement any of these strategies, you’ll need to develop a strategic plan that plugs the above strategies into your daily schedule:  Here are some examples of what that would look like:

• Identify markets
• Hire VAs or bird dogs
• Purchase mailing lists
• Mail to top 3 markets every 30-60 days
• Set your schedule to call 50 people on target list per week (obtain good scripts)
• Meet with people in your target twice a week for coffee
• Make 10 network phone calls per week
• Send 20-50 emails a week
• 30-60 minutes of online research per day
• Plug in to your schedule

Well, that’s it for today!

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