Finding wholesale investor deals, ideas and strategies.
Like many beginning real estate investors, I started out my investing career focusing solely on finding foreclosure deals here in the Southern California market in 2005. It just so happened that this was when forelcosures were at a historic low. Now don't get me wrong, times have dramitically changed and seeking foreclosure deals is a tried and true strategy. If you want to pursue this avenue, you will likely need to subscribe to a local forecloure data service to get a list of foreclosures in your area. The idea is that you will find a "foreclosure deal" by either contacting the homeowner and purchasing their property prior to the foreclosure sale or attempting to buy the property at the sale.
My strategy was the pre-foreclosure angle. I would literally door-knock homeowners and talk to them about their situation and how I could offer to help them avoid a potential foreclosure. The most common scenario was a homeowner that wanted to avoid losing their home to foreclosure and was willing to take cash for a portion of their equity to "walk away".
The problems I found with this approach were numerous :
* A lot of competition - I was not the only one knocking on their door
* Speed - I always found other investors got to them before me and got the deal
* Uncooperative and hostile homeowners - Wouldn't you be if every one was banging on your door?
* Hard sell - I found approaching homeowners in foreclosure is a very aggressive tactic and requires a thick skin
* Inefficient - Home owners are often not home when you visit, requiring multiple return trips until you get them
What I discovered is that going after foreclosures is just ONE strategy of many to find deals. Most begining investors need to incorporate multiple strategies in order to create enough deal leads from motivated sellers to sustan their business. One of these "other" strategies" is to search online classified ads for words like "owner financing", "owner will carry", "must sell", "make offer", "any offer considered", "handyman special", "needs work", "investor special" and so forth to identify distressed sellers in your area.
In addition, you can also advertise your services to potential sellers by placing a classified ad in the newspaper. One tried and true technique is simply placing an ad that says "I BUY HOUSES FOR CASH" with your phone number. The phone will start ringing immediately and you might get as many as 3-5 calls per day. I personally found that having motivated sellers contacting me was much more effective. When owners called me, I felt like I was in the drivers' seat solving their problem.
In addition to classified ads, you can use many other marketing tools to create incoming seller leads
Car Magnets - We Buy Houses For Cash and your contact info
Yard Signs - We Buy Houses For Cash and your phone number
Postcards - Mailed to your target area or zip code
Letters - Mailed to your target area or zip code (I like list of tax defaulted owners, or out of state owners)
Attorneys - Contact local probate, foreclosure, bankruptcy and real estate attorneys
REIA - Go to meetings held by your local Real Estate Investment Club and network with buyers and wholesalers
Bird dogs - Hire other people to do all of the above and pay them a percentage on the deal or pay them by the house
Once you have sellers contacting you, you have control and can decide which deals are worth pursuing and which are not. You won't be dealing with hostile homeowners, but rather with people seeking your help. Be honest and sympathetic to their needs and let them know up-front when you cannot help them. Never let them think that you will buy their home if you will not.
Bottom line, implementing any of the ideas above will mean spending some money on advertising and marketing. Distressed sellers will not find you if you don't advertise. Most beginners don't want to make this investment but it can mean the difference between finding a deal and not finding a deal. If you made $5,000 on an assignment fee that would pay for a few years worth of all of the above advertising. If you are serious about being a real estate investor then you need be prepared to spend a little bit of money advertising yourself. As you begin to close deals, you can increase your marketing budget so that more potential distressed sellers are aware of your services..
If you have a wholesale deal or find a property in the Southern California market and don't know what to do, call me. If I can buy it from you, I will be happy to pay you a finders fee or pay your commissiion if you are a licensed agent. If you are an investor looking for discounted rented and rehabbed income properties with strong cashflow and equity, let me know. I have built relationships with many wholesalers across the county.
AGENTS, Get your Full Commission, just bring me a deal, and you make the offer for me.
Happy Investing,
Doug Carver
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