Investing in real estate can be a rewarding way to build wealth and secure financial stability. Finding the right investment property to purchase is one of the first critical steps. Here's a guide on how to identify and secure properties.
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1. Understand the Market
Before diving into property hunting, it’s essential to understand the local real estate market. Research trends, property values, and demand in various neighborhoods. Tools like Zillow.com, Redfin, Realtor.com, and Propstream can provide valuable insights.
Pay attention to:
Home Prices: Research the average selling and rental prices in your target area. In my opinion, it is better to understand your local market first before venturing into other cities and states to purchase properties.
Demand: Seek properties that you feel will rent/sale quickly or areas that have potential for growth.
2. Get your purchasing power in order
Establish a clear budget that includes not just the purchase price but also renovation costs, holding costs (mortgage/interest payments, insurance, fees, taxes, etc.) and a buffer for unexpected expenses. Determine the top go to bankers in your area and make an effort to meet them to discuss your financing options. Get pre-approved for a loan to strengthen your position when making offers. Of course cash is always king. As you buy more properties you will start to build equity in your properties that you can use to purchase more properties.
3. Leverage Online Platforms
Use online platforms to find investment property to purchase.
MLS Listings - The Multiple Listing Service is a comprehensive resource that realtors use to post their property listings. Although this is a comprehensive resource, it will rarely be a place to find a great property to purchase at great prices. Off market properties are ideal.
FSBO (For Sale by owner websites) - One popular example is fsbo.com
Paid advertisements - Although these can become costly they do work with time and consistency. These can be pay-per-click(PPC) & social media ads for example.
LinkedIn and BiggerPockets - These communities often share tips, potential deals, and networking opportunities. Engaging with like-minded investors can lead to discovering property not listed on traditional platforms.
4. Network with Real Estate Agents and Wholesalers
Building relationships with local real estate agents and wholesalers can give you access to off-market deals. Agents often have insider knowledge about properties before they hit the market and can give you a leg up on a property available for purchase. Wholesalers are a very valuable resource in finding a distressed property and can offer them to investors at a discount. Both should be in your contacts. The more you purchase investment property from either of these resources, the more they will reach out to you before anyone else.
5. Attend Real Estate Auctions
Real estate auctions can be a goldmine for finding properties to flip. These auctions include foreclosed homes, bank-owned properties, and government-seized assets. Auctions require due diligence—research the properties beforehand and understand the auction process to avoid overbidding. Foreclosure.com, Auction.com, & RealtyTrac are a few websites that provide access to these type of properties and can often be bought at a discount. Also contact your local tax assessor to determine when, where, or if one will be held near you.
6. Bootstrap Marketing Campaigns
You can also find investment property to purchase through:
Direct Mail Campaigns: When I first started purchasing properties, I went straight down the tax assessors website and sent every person a letter asking if they wanted to sell their property. Send letters to homeowners in targeted neighborhoods expressing interest in buying their property. Consistency is key. At times you will need to contact a potential seller multiple times (letters, calls, texts, etc. ) before they respond. Develop a system and track how often you will contact them using each method.
Bandit Signs: Place signs in strategic locations advertising that you buy houses. Check with your local city laws & regulations on where and if signs can be placed. Some cities offer hefty fines if laws are not adhered to.
Networking: Connect with other investors, contractors, and property managers who might know of potential deals.
7. Drive for Dollars
Drive through neighborhoods looking for distressed properties, overgrown lawns, boarded properties, neglected exteriors, or "For Sale by Owner" signs. I have bought several like this and can lead to lucrative finds. Note the addresses and follow up with direct mail or a door-knock to express your interest. A visit to the tax assessors website can provide the owner's name & address. A quick internet search can yield the phone#.
8. Utilize Social Media and Online Forums
Join real estate investment groups on platforms like Facebook & Instagram. Typically these platforms all have investor groups that you can join/follow. At times, investors may unload some of their properties and you want to be in the know when that happens. You can also periodically make a post yourself to see if anyone is interested in selling their property. In this business you have to sometimes be bold and step out of your comfort zone to achieve what you want.
In addition to investor groups, you should join/follow Estate Sale groups. Obviously someone is deceased (or other reasons) and their belongings are being sold. One of those items just may be real property. I try on a regular to attend estate sales to leave my business card and speak with the potential seller/estate sale organizer. These organizers have first hand knowledge about what's going on with the property and can provide you with valuable details that could lead to a purchase.
9. Evaluate the Property
Once you find a potential property to purchase, evaluate it thoroughly:
Inspect the Property: Of course you can do it yourself but if you want to know everything that could possibly lead to added renovation costs, a home inspector is the way to go. If you go this route, be mindful not to hire one until you are under contract with the seller (or strongly believe that you plan on purchasing it if everything checks out). Typically there is a due diligence period that allows you to further inspect the property. If you find something during the inspection period that is a deal breaker you typically have a way out of the contract.
Run the Numbers: There are all types of online property investment calculators that are a quick way to determine if a property is a good buy or not. Ensure the deal meets your profit goals after considering all costs.
10. Make an Offer
When you’re confident in a investment property’s potential, make a competitive offer. Be prepared to negotiate and move quickly as good deals can attract multiple offers. As previously mentioned, having pre-approved financing or cash on hand can strengthen your offer. Of course cash is king. Am I saying that cash is the only way to purchase? Absolutely not. Cash offers can close a lot quicker (something most sellers like) compared to someone who has to use bank financing. I started with bank financing and lost deals to other investors who paid cash. Eventually I was able to use the equity in my other houses and establish lines of credit to purchase more property quicker.
Conclusion
Finding investment property to purchase requires a blend of market knowledge, strategic networking, and thorough evaluation. By leveraging various resources and maintaining a disciplined approach, you can uncover deals that promise profitable returns. Happy Investing!
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The information in this article are the opinions of the writer. Before investing in real estate, conduct extensive research and perform due diligence.
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