Driving for dollars is one of my favorite ways to find real estate investment properties. I know that it can be intimidating as it’s a lot of hard work, but in my experience is well worth the effort. New investors give up all too quickly on this method; they’ll try it out for a few days without success and think it doesn’t work. This is where, in my opinion, people miss the mark.
Driving for dollars works for investors who are willing to put the time into source multiple leads. It may take up to 6 months to close your first deal, but the amount of money saved by finding untapped properties in the market can give you the competitive edge you need to break into investing.
But let’s break this down into what driving for dollars is and isn’t. I’ll also include a few tips I’ve found to be helpful when looking for investment property leads. Let’s dive in.
What Does “Driving for Dollars” Mean?
First, let’s define what we’re talking about here. Driving for dollars is the art of driving through neighborhoods and attempting to find properties that need repair.
The hope is that since the property isn’t being kept in good condition, the owner may be interested in selling it. Hopefully, they’ll be interested in selling it to you, especially since you’re there offering to take the property as-is (or close to it). So rather than needing to spend the time, effort, and money to fix the place up, they can just unload the responsibility off to you.
How Does Driving for Dollars Work?
I am such an advocate of driving for dollars because it lets investors at any level enter the game.
Typically what happens is that professional real estate investors will drop hundreds of thousands of dollars a month buying list of properties that meet specific demographics. These lists give them information on properties that contain some combination of these traits:
- The property is owned by someone out-of-state (or even out of the country).
- The property is non-owner occupied, which could mean either a rental or completely empty.
- The building is on a multiple property zone.
- The building or property has been cited for zoning violations
- Divorce records indicate that this property may be up for sale soon.
Or any other number of factors; you’d be surprised at how detailed you can get with these lists when you have money to burn.
But if you don’t have tens or hundreds of thousands of dollars to drop on these lists, does that mean you’re not able to become an investor? Absolutely not! This is where driving for dollars comes into play – it levels the playing field by getting eyes on the ground.
By sourcing your own properties, you’re able to remove the gatekeepers who provide these lists, as well as drastically reducing your competition. If I find a property through the driving for dollars method that has a few problems, doesn’t look good, and isn’t on the list investors going after, then I might be the only one going after it. Since I’m not ending up in a bidding war with investors who have deep pockets, there’s a higher chance I’m able to negotiate a better deal.
What to Look For When Sourcing Potential Properties
Have I convinced you yet? Great! Before you hop in your car to go property scouting, let’s talk about what you should keep an eye out for that might mean a new lead for you.
The goal is to find properties in some sort of cosmetic disrepair. There can also be structural disrepair, of course, but if you’re just getting started, it’s best to keep it simple and focus on homes with cosmetic damage first.
A few things to look out for:
- Homes that have peeling paint on the exterior
- A broken-down garage
- High weeds or a severely unmowed lawn
- Outdated cosmetic features
- Broken down cars on the lawn
- Other unkempt landscaping that makes you think this home is not being cared for.
How Often Should I Drive for Dollars?
Driving for dollars is a numbers game – the more you do it, the better your chances will be to find a new investment property. But I won’t lie to you; it may take longer than you anticipate when you’re starting out.
I estimate that it will probably take you about 1,000 properties before you’re able to find the right one. The more properties you have to work from, the higher the likelihood you’ll find someone interested in selling.
Of course, this number will decrease as you become more comfortable cold pitching your offers to potential sellers, but I would say that it takes about three months on average to find and close a deal.
My rule of thumb is to spend about 15 hours a week sourcing leads. Ideally, you’ll want to be averaging a rate of 30 properties an hour. Try spending 2 hours every weekday finding leads, then spend the remaining 5-10 hours over the weekend reaching out to your leads.
The more you do this, the easier it will become. Believe me when I say: if you can do this consistently, then driving for dollars will work for you.
My Driving for Dollars Script
So what should you say once you’ve found a property and are ready to reach out? There are a few options, but feel free to steal my script (though you may be surprised at how simple it sounds).
“Hello there, I’m trying to find the owner of 123 Main Street. Is that you?”
If they say yes:
“Excellent! My name is Ryan, and I’m a real estate investor. I’m looking to buy a property in the area and wanted to know if you’re looking to sell. Are you interested in selling your home?”
To be transparent, most people here will then say “No.” If they do, don’t worry about it. This is all a numbers game, so the more outreach you do, the better the chance you’ll find your “Yes!”
If they say no:
“Oh, sorry about that. My name is Ryan, and I’m an investor looking to buy a property in the area. Do you have a property you’d be interested in selling or know someone else who does?”
A Few Tips to Make Driving for Dollars Work for You
The goal of driving for dollars is to get eyes on the ground and help small investors find properties that have slipped through the cracks. Here are a few tips to make this whole process even easier.
- Find zip codes where the most cash transactions are happening. This will help ensure that your sellers have equity and are not beholden to mortgages or are going through foreclosure.
- Look for zip codes that are in the median of prices. You want to find zip codes right in that sweet spot where the properties are neither super expensive nor super cheap. This helps remove the potential of running into second homes or properties that require more resources than you have available to flip for a profit.
- Drive the neighborhood. Get a feel for the area by seeing what’s around and what the neighbors are like. Feel free to get out and talk to neighbors you see going about their day. You’d be surprised by the information you find out by just striking up a conversation.
- Drive the same areas every six months. New potential properties become available all the time, don’t give up on an area if you’re not having luck. Give it about 3-6 months and head back. Our app can even store this information for you to have quick access to the records of where you’ve been.
- Skip trace to find contact info once you’ve found a potential property. Skip traces can give you information on the owner’s email, landlines, and cell phones.
- Send postcards if you have the money. Though not as direct, this can help you source properties you may have missed. If it’s not in your budget, don’t worry. Just focus on using skip traces and start reaching out.
Driving for dollars makes real estate investing available to everyone, not just the wealthy. It takes time and will add some miles to your odometer, but finding these untapped gems before they hit the MLS can mean the difference between landing a great deal or getting caught in an all-out bidding war. Give some of these tips a try and let us know in the comments what you’ve found works best for you.