Have you ever had a hard time finding good real estate investment deal? You’re not alone. It’s probably the toughest part of the real estate business. But there are some strategies and tricks that you can use to stay ahead of the competition.
Learning to invest in real estate while wading through markets both full of foreclosures and light on inventory will help a lot in experiencing the best of the market and the very worst.
The following tactics for locating deals can be utilized to finding your first or latest real estate investment deal.
Calling for Cash
One of the most common and easiest to do because it gives us the upper hand to potentially speak with the seller without costing us a dime. All we need to do is to do our research, time, effort and of course, a phone.
Once you have the property and contact information, call every single person selling or renting their property within your preferred distance or travel time and ask a few questions to try to gauge the sellers’ motivations.
If the seller seems to be experiencing financial pressure, either caused by the property or that could be fixed by selling the property, ask them to meet. At that meeting, begin your negotiations to purchase their property. Great investors are great at talking to sellers, and there is no better way to practice than by meeting with people for free.
Driving for Dollars
Driving around properties can be an interesting, yet effective, way to find off market deals. As the name suggests, investors actually drive in search of potential deals. The most common type of deals you will come across are either vacant or distressed properties, as these will be the easiest to spot. To find vacant or distressed commercial properties, simply keep an eye out for buildings with significant leasing available, no maintenance, or in bad shape. As you find potential leads, jot down the addresses for later.
The next step in driving for dollars is to search for the owners of properties in county records using the addresses you wrote down. Pro Tip: call the leasing agent to find out how much vacancy is on the building and if the owner would be interested in selling. When you get contact information, either a phone number or email, prepare a list of questions to ask. These should help you determine if it’s a worthwhile property, and if it might be a good investment. While it can be time consuming, driving for dollars is an entirely free strategy. Depending on the area in which you live, it could be a practical way to search for off market deals.
The advent of technology has shifted the marketing landscape away from more traditional strategies, but that does not mean those techniques aren’t still helpful. For example, direct mail remains one of the most effective ways to find real estate investment properties. There is something about receiving a letter in the mail that people still appreciate. If you have never executed a direct mail campaign, there are three main steps to follow: create a list of sellers, design and send your first letters, and follow up to increase your response rate.
Knowing that a small percentage will call you to talk more about the possibility, a small percentage of those will end up actually selling you their properties. The response rate is low, around 0.5%, but people who direct mail look at it another way – for every 1000 properties they mail to, they get 5 calls and probably may close one deal.
This is perhaps the most effective way to find your next commercial real estate investment. Real Estate Brokers tend to know the movers and shakers for a particular segment in the real estate industry and are therefore in the best position to know who is interested in selling and who is interested in buying. For example, if you are interested in acquiring an industrial property, knowing an industrial broker will not only help you in terms of knowing who is in a position to sell, but the broker will often have intimate knowledge of the property and the surrounding area as well. Cultivating a relationship with a Broker takes time, but can certainly have its pay offs as they can generate off market deals through their relationships alone.
To summarize, there is no better what to expand your reach in a given area than by diversifying your marketing efforts. Researching multiple strategies will ensure you know how to find real estate deals for your business.
No matter which strategy you choose, remember to consistently evaluate and improve your efforts. With the right marketing techniques and a strong mindset, there is no reason you can’t find a solid real estate investment.