I have run the numbers to the best of my ability. It seems that the only way to really make money in this industry is to purchase the property at a price well below market value. If I purchase a property thru a real estate agent, at or below asking price, my realistic return on investment is approximately 5.5%. That is a good return but I imagine that the seasoned investors make much more money by purchasing properties thru an alternate supply chain.
So, the next question is how does one find property at a discounted price? I have made a short list below but I really don’t know if some of these are the same and what else is out there. Does this make sense? Can someone please direct me to a good book, article, webcast, that can educate me on where to begin?
Listings of real estate at or below market value
County Tax Lien sales?
I am willing to work hard but I don’t know the first step in working SMART (infinitely more valuable). Any time spent on a reply is appreciated.
First you need to Identify Your Target Market
• Who am I marketing to?
• Are you marketing to the right people?
• What type of properties do you want to buy?
• Where do you want to buy?
• Who are your ideal customers?
Demographic list examples. Homeowners:
With Equity – Age 50+, owned 10+ years (33% of homes have no mortgage).
In distress – Pre-foreclosure, 60/90 day late, Bankruptcy, Divorce, Tax delinquent
With Distressed Property – Excessive Repairs, Deferred Maintenance, Fire/Flood, Ugly, vacant, or condemned homes
Out of Area – Landlords by choice, Forced into LandlordingL, vacant, probate
With a house for Sale – In-house follow up list, expired listings, FSBO’s, Other Investors, REO’s.
Ways to Find Motivated Sellers
Signs – bandit, at stores, billboard, Signs on your Vehicle
Door to door – post it notes, flyers, door hangers, door knocking
Ads – newspaper, magazines, Yellow Pages ad
Direct mail – letters, postcards, EDDM
Social media – blogs, FB, Twitter, +1, YouTube, etc
Online Ads – Craigslist, Backpage, etc
SEO for search engines
Pay Per Click
Thank you for the tips. What I am looking for is a list of the options to purchase a home via a non-traditional channel?
Here are a couple sources that I can think of but I don’t understand how they work.
County Sheriff Sale?
Township Sheriff Sale? Auction.com sale (bank owned)?
Are there any other opportunities to get a home at a discount?
If you are just starting out like you say, and you are willing to put for the work, but you don’t know where to start. I suggest doing probate. I get about 4 properties a year doing this and can get a great equitable stand on the properties. The next one I’m scheduled to close is worth 122k and I’m picking it up at 78.5k and I plan on renting it out around $1200/mo. I will easily cash flow approx. $550-$650/mo on this deal.
The great part about probate is there aren’t many people doing this, who knows, you might be the only one in your area. Also, it gets the ball rolling and allows you to learn the ins and outs of real estate on researching, marketing, inspecting, making offers, and hopefully getting those offers accepted.
Thank you for the response to my post. My strategy is to buy residential property and rent it out for the long-term.
Thank you for the response to my post. I am willing to do the leg work and research. I think that I would actually enjoy it very much. When you say, “doing probate”, what does that mean exactly? Can you recommend a book or site that would explain the process to me?
I did my own search and found and e-how article, http://www.ehow.com/how_5106619_purchase-real-estate-probate.html. Do you agree with this process? It appears that I basically look thru the newspaper obituaries and then head down to the courthouse to see if they have a will and if any real estate is listed as property. Is this your method?
Um, sort of… I don’t look through the obituaries or anything like that. Basically, you just go to your county courthouse to the public records. There you need to figure out how they list probate cases. For example, in my city, they list them like this: 12pr01874. So what you do is you go and look up the most recent probate cases. Once you figured out the courthouse system on case numbers for probate, then just look up case by case and see if they have real property. If they do, jot down the executor and send them a letter telling them you would like to make them an offer on the property at “so and so” address.