Savvy investors know that finding properties with the highest return on investment potential often means researching and scoping out off-market deals. If you’ve been thinking about joining the ranks of investors taking advantage of hot fix and flip markets across the country and aren’t confident you know where to find the best deals or don’t know where to start, you’ve found the right resource.
I’ve curated some of my favorite hacks used by real estate agents to help you find the best off-market deals in your market. While this certainly isn’t an exhaustive list, you’ll gain the insider’s view you need to get started in your search.
Getting Started: What Defines an “Off-Market” Property?
While the majority of sellers use a local real estate agent and the local Multiple Listing Service (MLS) to list and advertise their property to a wide pool of potential buyers and investors, this is not the only method of presenting a property for sale.
It is not uncommon for owners to market their properties off-market, making the decision to keep the sale of their property private for one reason or another. Sometimes called a “pocket listing,” an agent may represent the seller and their property, but they are not actively marketing the property online or within the MLS.
Off-market properties can also be in pre-foreclosure and not yet advertised publicly, or they can simply be a property that an investor is considering selling, but hasn’t made any grand efforts to do so.
While the definition for “off-market” property varies widely, one thing remains the same—these are generally hot deals that investors are actively seeking out. Finding an off-market deal can mean less competition and a quick sale.
But if they’re not advertised publicly, how can you find hot off-market properties?
How to Find Off-Market Properties
At this point, it’s important to note that finding off-market properties takes time—and sometimes money—in order to find the best deals. Most importantly, however, it’s about finding a strategy that works for you, implementing it, and staying focused on your goals. The best fix and flip property deals require your patience, diligence and research.
With that said, here’s a few of the best hacks for sniffing out these great property deals.
#1: Perform Direct Marketing
It’s not uncommon for investors to send out direct mail and postcards or to advertise in local newspapers that they are looking to purchase fix and flip residential properties. Sometimes homeowners aren’t ready to sell until they’re presented with an opportunity or offer. And we’ve all seen the signs: “I Buy Homes for Cash!”
If you’re ready to implement this strategy, be sure to have a solid plan, and research the best advertising venues to ensure you have a good return on investment.
#2: Network With Estate Attorneys
Estates are a great source for investors, as they usually have issues or creditors that need to be paid quickly or want to move the property off their books. Networking with estate attorneys can clue you into properties that may be becoming available in the near future.
Join local networking groups like BNI (Business Network International) or the Rotary Club and talk about your investment work. You want to be top-of-mind when potential off-market properties come up.
#3: Examine Public Records
Short sale and foreclosure opportunities are typically a matter of public record, and staying current with these records can tip you off to properties that may come up at auction. Watch the local newspaper, browse your local and state government websites, and keep websites like the HUD Home Store bookmarked, which will alert you to up-and-coming properties.
This leads us to our next point…
#4: Browse Auctions
If you plan on purchasing investment properties at auction, it’s important to stay up-to-date on auction information and to act quickly. Take part in traditional courthouse auctions, browse auction websites, and if you see a property that’s a good fit, confirm the auction status, location, and bidding procedure and then get ready to act. Online, Auction.com is a great resource for investors seeking out foreclosure, short sale, bank owned, and income-producing properties.
When it comes to auction day, be sure to have thoroughly researched the neighborhood and the property, and set a budget that you’re comfortable with. You won’t land a good deal if you get overzealous in your bidding. And you’ll only know where to stop if you’ve done your research in advance.
#5: Make Friends With Wholesalers
A real estate wholesaler essentially puts a property—typically a distressed property—under contract and then assigns or resells the property to another investor within just days of purchasing the property. Networking with wholesalers is a great way to find investment deals; just keep in mind that they’re acting as “middlemen,” and you’re likely not getting the same deal you’d get if you went direct to the source.
To find real estate wholesalers, consider using LinkedIn to network, and don’t hesitate to let your intentions be known in the real estate community. Oftentimes your agent will know of the wholesalers you should be connecting with.
#6: Chat With Local Builders
Local builders and tradesmen can be great resources for learning about properties where the owner or investor did not have enough money to finish the job. We’ve all heard the unfortunate stories of those who for whatever reason weren’t able to see their project to fruition, and these can offer great opportunities for savvy investors to swoop in, finish the deal, and turn a profit.
Take the time to network with local builders, contractors, and tradesman, and make sure your intentions are known. They’ll think of you the next time they hear of a project that might need saving.
Are Off-Market Properties Right for You?
Fix and flip investors can find great success and return on investment by having first access to off-market properties. However, off-market real estate has its risks, so hiring or consulting with a real estate professional can give you the confidence you need to move forward—particularly with your first few transactions.
Investors: Have you successfully used the methods above? What tips would you add to this list?
Be sure to leave your thoughts below!