Finding Good Deals in Real Estate
by Dan Auito
A thriving real estate investor or retailer solves a lot of other people’s
problems; that’s how you become successful. The more knowledge, ability,
experience, contacts, and resources you have, the more solutions you can begin
to offer people in solving their problems. In addition to this, you will be
ahead of the pack if you can get people calling or coming to you with their
specific problem first. That means you have to advertise the fact that you are
in a position to help while being fair, trustworthy, and accurate in making
quick decisions before the competition tries to persuade these people first.
For the above reason alone — competition — you will need to understand
marketing. That means deciding on what you are going to specialize in,
developing a method to define your target audience, and then attracting them
with a well-written message using the different types of media to get the word
out. That last paragraph brings up a good point: What exactly do you want to
specialize in? Following are some categories from which to choose:
- Condos, vacation property
- Single-family homes
- Apartments for one to four families (residential duplex, triplex, fourplex)
- Commercial— hotels/motels, strip malls, office complexes, mobile home parks,
storage units, parking lots, garages, restaurants, stores, apartments for five
or more families, and so forth
- Industrial—factories, refineries, manufacturing plants, and so forth
- Farms—commercial, industrial, or agricultural, depending on zoning
- Raw land—lots, vacation, recreational, sub-dividable residential, commercial,
industrial, agricultural, and special purpose
- Special purpose—churches, schools, hospitals, power plants, theaters, sports
arenas, golf courses, marinas, and so forth
Here are some examples of how you might go about finding some good deals:
Look at
bulletin boards, local papers and small independent publications. This goes for
every publication you get. Make sure you get one of the first copies off the
press. Go to the facility that houses the presses and get your copy before the
ink has a chance to dry. Let no one beat you to the punch.
Better yet, advertise yourself and get people who are thinking about selling to
call you before they actually tell the world through an ad.
Look at the legal section of the newspapers. Contact heirs and attorneys, and
sales in the garage or estate sale sections. Also, 20 percent of people who have
garage sales are planning on moving soon. Ask about their house or their
neighbor’s homes. Always keep your antenna up! Your odds of success increase
when you choose large population centers and remain in the market constantly on
the lookout for your type of deal.
Look for vacant houses that are run down, fire damaged, or abandoned, with city
notices evident. Talk to the neighbors of these homes. They usually know who
owns it and what is going on. They have an interest in seeing it restored to
beauty. It sure is a shame you can’t look in the mailbox to see who is receiving
mail at the property in question—wouldn’t that be easy? Walk up to a property
and look in a window to confirm that it is indeed vacant—but don’t endanger
yourself by getting bit or shot! Use common sense. Contact out-of-state owners
through property records or by letter and/or phone. Leave your cards on the
door.
OREO stands for Other Real Estate Owned. Make friends with your local lenders
and let them know you are the one to call when they have a foreclosure looming
or in progress. Hint: If you prequalify with lenders beforehand, they may call
you sooner.
Watch the local paper for foreclosure auctions, tax sales, and HUD and VA listed
properties. Note: Auctions held in bad weather where the property absolutely
must be sold are your best chance to limit competition and get property at
rock-bottom prices. Because there is no low limit on what can be accepted (no
reserve) you may win big.
Real estate agents are going to try to sell you something! When you approach
them be very specific with them and tell them to call only if they have an
absolute steal. Ask agents to give you those expired listings since they
couldn’t sell them. Suggest a 2 percent commission if they will assist with
closing the paperwork after you make the deal with the seller on your own.
Don’t be so selective. If the property is an absolute steal, lock it up and sell
it to somebody who does like to work with that type of real estate. Get the
option and hand it off to another buyer. Look for distressed sellers in addition
to distressed property.
Post fliers everywhere—colleges, Laundromats, shopping centers, bowling alleys,
public bulletin boards, churches, local businesses, wherever large numbers of
people congregate. Give them a chance to give you a lead on a hot deal. (For
example, print up cards that say “I pay $500 to you at closing if I buy a house
that you told me about! Do you know anyone who is selling property? Please call
[your name] at 555-1212.”) Print quality business cards.
Join organizations of all types. The sky is the limit. There are so many—just
pick the ones that you would be interested in truly being a member in and let it
be known you pay bounties for consummated (closed) deals.
When you use headhunters, leave out no one. Property managers, moving companies,
relocation services, neighbors, landlords, tenants, the mailman, the paper boy,
gardeners, landscapers, service technicians, pest control people, friends,
acquaintances, relatives, and other investors. You name it!
Everyone should know they can make $500 if you end up buying a property they
tell you about. Enlist your army! Give each of your soldier’s stacks of your
cards for exponential growth.
A special note: Water, gas, and electric company personnel who shut off utility
meters can be very good bird dogs when it comes to finding property that is in
trouble or vacant. Make sure they have your cards.
Have at least 10,000 business cards printed with your offer of the $500 bounty
and hand them out in stacks to everyone you can.
As you grow, you might consider TV, radio, phone books, billboards, street
benches, bumper stickers, and bigger commissions. Use your imagination.
Put up signs telling people you buy real estate.
Make multiple lowball offers on overpriced properties and walk away. Don’t
deposit earnest money but they may stew on your offer and call you a month later
accepting your deal. Leave the offer with them.
Older people should not be left out. They are very valuable informants. They
know everything and need people to talk to! Listen to them. Go to free seminars
on real estate. Do this not only to learn about real estate but also to capture
names and circulate among real estate–minded people. Once you have their names,
call your own club meeting and network to prosperity. Find your mentor here.
Go to where people are buying those “by owner” signs. Ask them what they are
selling. Follow them home and get the first look! Be first or lose the deal.
Try offering 15 percent less than what you intend on paying. You never know;
they may accept it. If they don’t, you can still negotiate up to 15 percent more
and get it for what you originally were willing to pay. If it’s any higher, walk
away but leave the offer on the table (the offer stands).
Make your offer easy for the seller to understand. Get the option to buy but use
a contingency to protect yourself. Iron out the details later but lock it up
now!
Buy from sellers who tend not to care: seized, foreclosed, tax sales,
corporations, nonprofits, disinterested heirs, probate attorneys, and private
auctions.
Try just helping someone to sell his or her property even if you don’t want it.
Be a friend and offer to help for nothing in return. You will be amazed at what
happens when you sincerely try to help with no thought in mind of making money.
This is a magic bullet in disguise.Those are some of the basics of advertising
and finding the opportunities to buy real estate below market. The old saying
goes: You make your profit when you buy, not when you sell. (20 percent off
retail, minimum).
Bio:
Dan Auito is a dual-licensed real estate agent and appraisal
assistant. In addition to being a 20-year veteran of the United States Coast
Guard, Dan has also founded a non-profit drug prevention corporation, a real
estate consulting group and is the author of “Magic Bullets in Real Estate.”
Dan lives with his wife Kimberly and their two children, Brandon and Briana, on
the emerald isle of Kodiak Island, Alaska.