When people are in the market for a new property, they are either looking for an investment property or an excellent residential property. But investing and locating an ideal residential project can be a complicated process if you aren’t familiar with the process.
Your first step is finding a great property. Various methods can help you in finding a better residential property, including searching on the MLS (although not my favorite), using local classifieds, attending networking events, sending out advertising flyers, or just driving through a neighborhood searching for FRBO, FSBO, or vacant properties.
Here’s a short video I shot about finding good residential properties:
That’s a good starting point, but let’s dive a little deeper.
5 Strategies to Find Good Residential Properties
Here I’m going to cover the details of the 5 strategies I use to find good residential projects. Please keep in mind that this is not an exhaustive list but they are the most useful strategies I have used myself.
MLS is the most basic real estate research tool which is used by almost everyone. It provides you with various listings from multiple brokers. This database is enormous because it covers all the majority real estate listing websites. However, there are significant drawbacks to relying on the MLS to find deals. There is a lot of demand and very little supply. Millions of people use this database, which makes it difficult for you to get early access into the listing.
As I mentioned in the video, the MLS can be hard…however it’s possible to still find deals. You’re just going to have to be a little more targeted about it. Here’s how I do it:
- Talk to 100 real estate agents in your area. This is a “flood the market” type of deal here. You offer an agent $250 if they bring you a deal that you get under contract. Many agents might agree to your deal…but then never think about it again. That’s why you need to talk to so many.
- Target old listings on the MLS. Stop browsing the brand new listings. There’s too much competition on there. However, if you can find a property that’s been on the MLS for several months, the owner might be ready to take a big discount.
The Good Old Newspaper Listings
Even if you have zero knowledge about real estate investments, you can start simple by keeping an eye on the Classified section of the newspaper. It is an old school way to scoop out good residential projects. It’s not the most effective way to find deals, but it’s cheap, easy, and you can at least get your feet wet.
If you know how to make connections and then leverage those connections, you can do almost anything in this world. The real estate market is not an exception. All you have to do is simply talk to people who are involved in the real estate investment market.
I’d suggest finding other investors via real estate clubs or networking events that are both in-person and virtual. You might think you’re simply meeting the competition, but often relationships like these lead to the best deals. For example, maybe someone would like to partner with you on a deal, or you meet a wholesaler who’ll send you their next deal.
In addition, you can make it known to your social circles that you’re looking to buy properties. I’ve worn shirts and hats that say “I Buy Houses” that have sparked conversations. I mention it casually to people I talk to when the topic of my job comes up. Or, you can use social media for this.
You can write a status like this:
“I am glad to let you guys know that I am looking to invest in good residential projects. I would appreciate it if you would let me know of anyone who might be interested in offloading a property or if you know people who invest in real estate.”
I understand that this process feels a bit weird but trust me, it works like a charm. Just imagine, without investing anything, getting to know about exclusive listings that aren’t available on the internet. You will be surprised to get listings from people who you haven’t talked to for decades.
Marketing Your Needs
If you can afford to invest in some outbound marketing, you can manage to get a lot of leads for real estate investments. You can promote yourself in a way that you are on the lookout for some good residential projects using postcards, flyers, bandit signs, Facebook ads, etc.
The “Driving for Dollars” Technique
This strategy literally is just you driving around neighborhoods and keeping an eye out for opportunity.
One of the things you’re looking for are distressed or vacant properties. Look for the telltale signs, like overgrown landscape, boarded up windows, stuffed mailbox, newspapers piling up outside, etc.. These indicate an owner who lives elsewhere and might rather move on from the property than pay close attention to it.
Another thing to look for are For Rent By Owner signs. I like to tell my students to never, EVER pass by one of these signs without calling the number on it. Rental owners often get frustrated with properties and move on from them. They might not be interested in selling that one, but they likely have other properties that they may wish to sell you.
My Favorite Strategy
These are all the solutions which are already known by experts. But here’s my secret formula to where to find suitable residential properties. As you’ve figured out by now, that’s probably not going to include properties on the MLS. Once a property goes on the MLS, millions of people, including other investors, can see it and prepare offers.
I am not saying that the traditional ways don’t work, but since everyone is doing the same thing, you need to do something to stand out. So, the key to finding good residential properties is going after off-market properties. But that’s going to require doing some marketing and sales skills, which means you want to see properties that have two things.
- Motivation – You find sellers that have a reason to move on from a property and are willing to do so at a discount.
- Equity – If an owner has equity in a property, they are more likely to take a discounted offer.
One of my secret tricks is that I like to use the Investor’s Edge software. This software pulls data from over 160 million properties across the US and lets you sort by a variety of factors. You can pull lists in minutes that include:
- Vacant Properties
- Non-Occupied Properties
- Properties with liens
- Properties with equity
Generally, people look at various factors before buying a residential property such as location, neighborhood, area, condition, and rate per square foot. A misconception I see in real estate investing is thinking that finding properties is the easy part. I can tell you that understanding the process is easy. All you have to do is find something that needs work, at a discount, then fix it up, sell it for profit, or you can turn into a rental or wholesale the property.
It might be simple to explain, but it’s anything but easy to find a decent residential property. It is the primary job of a real estate investor. This is where a lot of people get mixed up and make mistakes because they will think they’ll just delegate success to a real estate agent, but the reality is that doesn’t work. Occasionally a wholesaler can find a property for you. But, that’s not something you want to bank on.