How to Find an Investment Property
To take a house, make it beautiful and sell it for a huge profit can look easy on paper. But the truth is, everything worth doing takes hard work. The process of rehabbing and flipping a house can be tough, but we’re here to help make the process as painless as possible for you, all while helping educate you for future deals! The road to success always begins with the first step: in this case, it would be finding the perfect property.
Finding a fantastic rehab deal can be like searching for a needle in a haystack. However, we’re the ones to give you the metal detector to speed up the process. We have unlimited resources when it comes to finding good properties, but for now, we can give you our popular 10 Step Process for finding excellent deals. The first 5 steps have to do with where to look, the last 5 steps focus on networking options.
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1. Scour the Neighborhoods
As we all know, with real estate deals it’s all about location, location, location. So, go check out locations first! Make a list of the neighborhoods which have good selling records, or are popular when it comes to attracting buyers. Then, check out each of the neighborhoods and see if any homes are for sale or even foreclosing. If you’re feeling particularly ambitious, you can even go door-to-door asking for referrals or making offers.
2. Search the MLS
Though the MLS may not be the best option for your property search, it is an option. The upside to the MLS is that homes found there generally need fewer repairs and may have less competition than houses found through auction sites. However, the downside to searching the MLS is that it is very competitive and the houses there are more expensive than you’ll find anywhere else. The name of the game in flipping success is high margins. If you have to spend a lot on the purchase price, you won’t get a large margin when reselling.
3. Bank Foreclosures
There are several advantages when it comes to searching foreclosure listings for deals:
- They’re sold at below-market price.
- They involve less risk and less competition.
- Foreclosures are usually clear of any liens which may have been recorded against the property.
- They seek to be sold quickly, which speeds up the overall process of getting a resale check into your pocket.
Remember that every foreclosure is different (some come with major discounts, others do not), so it’s important to do your homework beforehand on how long it’s been sitting on the market, the area around the property and how much rehab would be involved. Some of the best foreclosure listing sites are RealtyTrac, Foreclosure.com and Re/Max.
4. Short Sales
Buying a short sale home is different from buying a foreclosure; in a foreclosure, the bank has already seized the property. However, with a short sale, the seller is looking to sell the house before it goes into foreclosure. As with foreclosures, short sales are bargain-priced, but you must be willing to accept the property as-is. Buying a short sale is particularly favorable if you already have a lender and down payment ready to go. Once you get your financing approved, your hard money lender can even recommend properties to you.
At real estate auctions, fantastic deals can be found for incredibly low prices. However, if you choose to go this route, make sure you walk in prepared. It’s important to research the properties up for auction ahead of time: are the properties in good locations? How much can the properties go for while maintaining a good margin of resale profit? Also, it’s essential to ask yourself how much the maximum bid should be on each property while still maintaining a potential resale profit. Once you determine the numbers, stick to them. Auctions can get heated – don’t let the stakes or your emotions get the best of you.
6. Networking and Word of Mouth
To find great deals, you have to get yourself out there and let it be known that you’re in the market for excellent rehab opportunities. Many good deals can be found through word of mouth: particularly social media. There are endless examples out there of people who found incredible deals through the “friend of a friend who knew your friend’s college roommate and just so happens to know of a property.”
7. Real Estate Groups
This is an excellent way to network and gather information on finding new properties. Attend a few meetings of local real estate investment groups: not only will they have vital information regarding where to find good deals, they can also provide terrific advice on hard money lenders and contractors for rehab work.
8. Contact Wholesalers and Lenders
Real estate wholesaling is similar to flipping except that the time frame is much shorter and no repairs are made to the home before the wholesaler sells it. If there’s anyone to be in touch with who knows about quick time frames, it’s wholesalers. They would know about location hot spots and can give you good tips in general about which properties would be good to flip. Hard money lenders are also a good resource: not only can they give you some good tips about where to find good deals, but often they will have a list of buyers that you can use to your advantage.
9. Browse the Local Paper/Other Listings
Believe it or not, people still do advertise their homes for sale in local newspapers. In the “open house” ads, you’ll find most of the information up front, such as where and for what price. Other ad listings online, such as Craigslist, can also be good sources of information.
10. Real Estate Attorneys
This may seem like an odd resource, but the people to get to know when looking for potential properties are probate, divorce, bankruptcy and real estate attorneys. These attorneys are working with families or individuals going through liquidation processes and can give you some good information regarding real estate deals which may not have even hit the market yet. This will give you a leg up on the competition. Plus, those who are going through liquidation are usually very motivated sellers. You can use their desire for a quick sale to your advantage by buying the property at a discounted price.
In addition to this 10 Step process, we have a wide variety of other tools available to you to help you get started finding ideal properties to flip. For example, you can take advantage of our Guaranteed 90-Day Finder, which helps investors find profitable properties in 90 days or less, all while learning valuable finding strategies. You can also take advantage of our Guaranteed Finding Starter System, which is a proven, step-by-step, comprehensive system which teaches how to find and value properties.