How To Find Deals In Real Estate Investing (Part 2)

Last time we looked a few traditional, tried and true methods for finding investment grade real estate. Today we will investigate how to use the internet to your advantage.

What The Internet Can Do For You

Even as you make contacts within your local community of real estate investors, lawyers and lenders you still need to actively look for property on your own.  Obviously, the internet is a great place to find product.  You just have to know how to cut through the endless supply of information to get at the specific stuff that you want. We will go through some smart search parameters below.

I spend an hour or two each Sunday morning going through various websites looking for product.  It shouldn’t take too much time, nor should you be spending too much time each week looking for product. You should do your searches on a regular basis. Over time this really helps you to see what average prices are for your particular type of property in your area.

Knowing this will allow you to spot deals easier and also will alert you to whether prices are moving up, down or remaining the same. Most weeks I don’t find anything that interests me but every once in a while you find a real deal.  When that happens, act fast.

Over time, mixed in amongst the dozens of ads, you will start to see a few of the same properties come up again and again.  These are properties that are having a hard time finding a new owner.

Maybe an offer favourable to you would be in order.  You only start to notice these trends if you search on a routine basis.  For example, there has been an apartment building for sale by owner on kijiji, continuously, for the past two years.

The price has not been reduced in all of that time.  Every few weeks I give the guy a call and we talk.  He has not moved off his price yet but one day he might and when he does I will be in a position to make a move.  He has my number.

Multiple Listing Service (MLS)

Every major city or area will have an MLS website sponsored by the local realtors. A lot of people dismiss the MLS system, saying that all of the good properties get bought before they wind up on MLS. That is true to a degree (and you want to be on the contact list of the realtors / lawyers that get those types of deals) but not entirely true. You just have to know what to look for:

  • I look for stuff that has been on the market for a long, long time (i.e. Days On Market (DOM) over 180 days)
  • I want properties that are larger than 1,100 sq ft (I find smaller than that and the potential profit isn’t high enough)
  • I prefer properties with 3 or more bedrooms; these are easier to rent or sell when you are done renovating
  • If you are looking to rent instead of flip, search for properties that have a detached garage vs. no garage or an attached garage; this allows you to get extra income from the garage rental
  • I tend to look for properties that are well below market; In the geographical area that you are searching in, you will see what the average price is for the particular type of property you want; set the maximum price value in the search criteria to $20,000 to $50,000 less than that average; this will eliminate most of the properties in the area and leave those that are less expensive for some reason; your job is to then find out why those other properties are less money
  • I also look for code words within the script. If I am looking for something to renovate I look for words like “handyman’s special”, “TLC”, “fixer upper”, “needs maintenance”, “needs work”, “needs love”, “lots of potential”, “as is where is”.
  • If I am looking for a foreclosure I look for words like “foreclosure” (duh), “must be accompanied by Schedule A”, “not open to employees of X bank” (substitute the name of a bank), “as is where is”, “court ordered sale”, “judicial sale”
  • If fixing up grow ops is your thing look for “former grow op”, “unable to gain access”, “needs remediation”, “health services”, “condemned” or some of the same code words as we saw in the ‘foreclosure’ section above
  • When older property owners pass away their kids will typically just put the family home up for sale. These homes can be good to renovate because typically the person that passed lived in the home for decades and probably didn’t do a major renovation.  Look for “estate sale”, “Power of Attorney” or “probate”; also look for “well kept” or “lovingly maintained” or “character home” which is realtor speak for “this thing hasn’t ever been renovated and still has that funky orange 70’s shag carpet”
  • Remember that when a realtor writes the script for a listing they will try to spin the verbage and show things in the best light. Get familiar with common realtor speak and use that to find properties
  • A realtor who works well with computers can actually do an advanced search looking for these specific things. Specific searches can be hooked up to the internet now, through your realtor, so you can have a website available only to you that already has a preset search set up.

o   For example, you can be anywhere in the world, go on a special website and see all of the estate sales in a specific part of your home city, on the market for more than x days, within a certain price range and larger than a minimum square footage

  • Look for property incorrectly put in the wrong section of MLS; for example quite often properties that are really old get put in the ‘land’ section of the commercial MLS; the realtor thinks the building is a knock down and worth land value only.

o   I found a 95 year old boarding house in the land section which turned out to be one of my best fix and flips ever.

o   I also found a fourplex in the commercial section when it should have been in the residential section; the realtor had never sold a fourplex before and thought that anything over a duplex was commercial property; the trouble with that was that people looking for fourplexes wouldn’t be looking in the commercial section and people looking for apartment buildings would flip past a fourplex; the property sat for months before I found it.

Kijiji

Websites like Kijiji (or other for sale by owner sites) are also a good place to look but, again, you have to know how to dig down and pick out what you want.  Kijiji asks you for 3 things when you search: the search word, the category and the area:

  • I use ‘real estate’ as the category. Enter the city, town, county or other geographical area that makes sense.
  • To further slim down the search I will also put a minimum / maximum price range
  • Then for the search word I will put ‘sale’ and then add a second word. If you don’t put ‘sale’ then you will get the ads showing property for rent as well.  You want to find just the stuff for sale.  For example:
  • If you are looking for duplexes, tri-plexes or four plexes then put ‘sale plex’.
  • You can also combine ‘sale’ with any of the words listed above in the MLS section
  • If you are trying to find apartment buildings put ‘sale apartment’ (you will get all of the individual condos and apartments for sale too but you need to sift through and find those instances where the entire building is for sale) or put ‘sale building’ (same thing here, you will see a lot of ads for people who are selling land to build on but find those ads that have a building for sale) or put ‘sale multi’ for multi family property or ‘sale rentals’
  • A lot of investors try to buy with great terms; search for “sale ‘no qualifying’” or ‘sale assumable’ or “sale ‘seller financed’”
  • You can try ‘sale commercial’ or ‘sale industrial’ or ‘sale invest’ if you are more commercially oriented
  • Single out the for sale by owners by entering ‘sale owner’ or ‘sale FSBO’ in the search space

Commercial Brokers

If you are looking for commercial or industrial buildings, raw land or multi-family apartments then you should look at the specific websites for the larger commercial real estate companies.

When a regular realtor gets a listing for a single family home or duplex they will try to sell it quickly to people they know.  If that is unsuccessful then they will put it on MLS.  For commercial properties, commercial realtors are less apt to stick the property on MLS, instead they will market it privately through their own individual, corporate website.

Your Own Website

Finally, if you are good at driving traffic to a website then set up your own site advertising the type of property you are looking for and how you go about purchasing your deals.

Summary

The information today and last week is a quick run down of how I have been able to locate property for sale. I hope it helps you. I have owned almost 80 properties with 240 doors in the past 15 years and these tricks have allowed me to find some gems that others overlooked.

 

Read more about this in Comparing Real Estate Strategies.



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