As someone interested in starting or growing their rental portfolio, have you ever wondered how to find investment properties to buy?
A friend of our’s recently asked this question on Facebook that we thought other Investors may find interesting and valuable.
To keep this simple, let’s take a look at the options, specifically for finding residential investment properties.
Let’s dig in.
On-Market Deals vs Off-Market Deals
So the first thing to note is that we need to think about this through the lens of what’s “on the market” and what’s not yet listed (or “off-market”); as this will change how you go about generating your leads.
Simply put, when something is “on the market” is has been listed by an agent, the Owner or possibly a bank in some capacity. In other words, it’s publicly available for purchase.
The opposite is true of an “off market” deal. It’s not yet available to the public for purchase.
Find Investment Properties Through Listing Sites
So to answer Michael’s question specifically, there are a number of tools to find “on-market” deals. These really can be summed up into what I would call “listing sites”.
While this list certainly isn’t conclusive, here are some of the common listing sites that you can quickly use to spot potential deals.
As most properties are listed by a real estate agent, they’ll likely first be listed on the multiple listing service; better known as the MLS. From there, they tend to find their way on to a number of other listing sites.
Choosing MLS Alert Criteria
To set up MLS alerts, you’ll need to work with a Realtor; as they’ll have access to the system that you won’t have. However, any reputable Realtor should be willing to do this for you at no cost.
The trick to getting meaningful alerts from the MLS isn’t in having a friend who is a Realtor but instead in the criteria you provide them with.
My 2 cent here is that you should set your criteria up in a way that it alerts you when there is a value add opportunity.
So instead of trying to find 3 bedroom properties for a great price, look for a large 2 bedroom that you could convert to a 3 bedroom.
You’ll need to identify the potential “value add” opportunities you’ll want to target in your location, but you get the idea.
With sites like Zillow and Trulia, you’ll likely end up seeing a lot of properties that are already listed on the MLS.
However, you may luck up and find some listings that are for sale by owner (FSBO).
Choosing Alert Criteria
On these sites, I’d suggest you set up alerts targeting FSBO opportunities.
So with a site like Zillow, it’s pretty straight forward once you’ve logged in:
- Set up your filter to include only properties that are for sale by owner. Include any of the other criteria you may have.
- Save the search and make sure that you are set up to receive the email notifications.
As you may suspect, Craigslist will be a bit hit or miss; as the data isn’t always great.
However, if you’re willing to put in the work, you may luck up and find a good deal that isn’t listed any where else.
Similar to Zillow, you can set up a search to receive email notifications.
Lastly, whether you want to believe it or not, the newspaper can some times be a source of potential properties to acquire.
As with Craigslist, if you’re willing to put in the work to read the newspaper each week, you could luck up and find an investment property that other Investors missed.
Finding Off Market Investment Properties
As you become a more experienced real estate investor, you’ll realize that you can increase your odds (and returns) if you set up a system for targeting deals not yet publicly listed any where.
The goal here is to be able to identify motivated sellers and send them through a funnel that ends with you being able to purchase their property and them being happy about it.
Setting Up Your Funnel
Before you go about trying to identify motivated sellers, you should first consider what you are going to do when you find them.
There are obviously a million ways you could do this and, ultimately, you’ll need to dig in to figure out your ideal system. However, below are a few options for context. Whatever you do, don’t over complicate this. Just keep it simple at first so you can make progress.
- Lead > Call/Text
- Lead > Landing Page > Call
- Lead > Landing Page > Email Drip Campaign
- Lead > Landing Page > Text Campaign
Generating Seller Leads via Networking Groups and Referrals
Probably the easiest way to start generating seller leads is to do so via formal and informal networking groups.
There are a ton of different groups you can join; some more formal than others. Find one that makes sense for you.
Here are a few for context.
- Local meetups
- Online forums like Facebook groups
- Word of mouth
Regardless of which groups you participate in, you need to be trying to drive traffic back to your funnel in an appropriate way.
For example, let’s assume you take the simplest approach and just start telling your friends that you’re looking to buy investment properties. It would be pretty easy to set up a landing page and tell people “Hey – I’m looking to buy investment properties in town. If you have any friends who you think may need to sell their homes quickly, please feel free to send them to my site.”
The key here is to make your site so valuable for the seller that people don’t mind referring their friends to your site.
Generating Seller Leads with Outbound marketing
There are two outbound marketing methods I’d point you to consider:
- Direct Mail
- Online Ads
As with any ad, a successful direct mail campaign is really going to be a combination of a few things:
- The quality of your list.
- The quality of your offer.
- The timing of your offer.
When developing a list to target, you really want to look for data that suggest the property will need to be sold in the near future.
Use publicly available data to find the following situations and create a different list for each scenario:
- Absentee owners – Absentee owners are those who own a property but don’t live in it. The easiest way to find these individuals is to export data from the property appraiser and sort by name. The goal here is to try to find Owners who struggle to manage their own properties.
- Evictions – Unless you employ a quality property management company, chances are you don’t like dealing with evictions. Again, use publicly available information to try to find properties with recent evictions.
- Probates – Probates can happen some times when the Owner passes away. In these scenarios, the family is usually left dealing with the property and may be more interested in selling it than keeping it.
- Pre-foreclosures – When someone stops making their payments, the bank will start the foreclosure process. If you can catch the Owner before foreclosure happens, you may be able to work a deal that make every one happy.
- Divorces – People get divorced. When that happens, property tends to be sold. If you can get to the Owners before they list it, you stand a chance at arranging a better deal.
- Tax Delinquent – As you can imagine, if someone stops paying their taxes, there is probably a good indication that the property is under distressed.
Once you have your segmented lists, you can now reverse engineer the offer to make it appropriate for the seller. If you’re sending the lead back to a landing page, consider setting up a separate page for each segment so you can really customize your message to that particular segment.
Send out your mail pieces and track performance.
Tweak and repeat.
As with a direct mail campaign, you’ll increase the odds of your online ad campaign succeeding if you can create very specific and timely offers to people.
The challenge with advertising on platforms like Facebook or Google is that you’re going to find it difficult to target segments like you did with direct mail.
For example, it’s not likely that you can target all recent divorcees in Facebook. It’s just not going to happen.
For that reason, you may want to try what’s called retargeting and use online advertising as a supporting effort around your direct mail campaigns.
It could look something like this:
- You send out a mail piece to your pre-foreclosure list that sends them to a specific landing page where you prompt them to schedule a call with you.
- After not submitting their information on your landing page, the distressed Owner then receives an ad on Facebook which offers to also pay for their moving expenses if they end up selling you their property.
The goal of the retargeting ads are, essentially, to follow back up with the potential lead and see if you can sweeten the deal in a meaningful way.
As you can see, there are a lot of different options and strategies you could put in place when it comes to finding investment properties to buy.
My hope is that this article has at least given you some ideas on how to start making progress.
I’d encourage you to start small and work your way into what works.
Just do us a favor and make sure you share with us what you learn as you go!