You are looking for property to buy, rehab and flip. You may be asking how you find a home to buy that is cheap so you can make money to rehab and flip. There are several ways to find homes to buy that are in distress. You definitely want a homeowner and property in distress because of the more work the more potential for profit. This assumes you have an idea of what you are doing.
Targeted area in your city
You really need to pick a targeted area in the city you live in to look for homes. You should become the expert in that area with everyone knowing you buy homes all cash. Staying in one area also helps you understand the home values and how much you can get for homes after rehabbing it.
You need to connect with all local business owners including real estate agents. Connect with mortgage brokers, real estate agents, real estate brokers, appraisers, inspectors, sellers, and bankers. The more contacts you know that are aware you flip homes the best chance they contact you first for the deal.
Here are the top ways to find distressed homes
Real estate agents
Real estate agents working in the area you want to flip will know what is out there in the market. They are also the first ones to get deals brought to them, not all the time but enough to make connecting a priority.
You need to get a list of all agents in your area that you will be buying homes. You can look at a site like Realtor.com to find agents local to your area.
You will get properties where the owners have not done well managing the property. The property needs a bunch of repairs because the owner has not kept up with maintenance. This type of property may fetch a really low price because the owner just wants to get rid of it with the headaches.
How do you find distressed properties? You can drive the area you are looking to buy and stop at homes that look in disrepair. You can leave a flyer or business card to see if they will call you.
The MLS system is a great way to find properties in bad shape. You can have a realtor set it up to pull listings every day on handyman specials. Once the listings hit your email then you can look at them online and decide if you need to see the home with the realtor.
You have probably seen the yard signs that say, “All Cash for Your Home Call 888-888-8888.” Or another popular one, “We Buy Homes All Cash 555-555-5555.” We have used these and they do work if you put them at busy intersections. The issue is that people will stop by your yard sign and rip them down. They do not last long after you put them up on street corners. One call may turn out to be a great deal so it is often times worth it.
We use to get a ladder and put it 15 feet up on the telephone poles so people could not rip them down unless they bring a ladder.
We talked about the MLS when finding handyman specials. This is such a good tool to find homes. I used it to find the bank-owned home I live in now. I had automatic updates coming to me every day once in the morning and once in the evening. The parameters were anything that said bank-owned, foreclosure, handyman special, needs repairs or priced to sell. I would get the listings and when I saw this house I live in now drop 20% in price and the actual ARV was low I pounced on the home. I have lived in this house for 8 years and have almost $200,000 in equity because I set up MLS to send me updates of new listings with homes in distress.
Realtors can send you the deals if you treat them right. You should have a few key realtors that you work with on all your deals. If you really want to save in the long run then become your own real estate agent.
We would work with agents to bring us deals and if we closed on that deal we would give them the opportunity to sell it after we rehabbed it.
It is also great to network with loan officers, title companies, brokers, real estate lawyers, and accountants. These people can help you find a deal because they are doing real estate business. Just being in the industry makes it so they know and see many deals that may be good for you.
This is a great place to find seller ready to get rid of the property. Most of the time the property needs to be sold before the assets of the estate can be settled with all the relatives involved. You know they are motivated to sell quickly to get everything in the estate settled.
Relatives just see this as a quick deal so they can get the cash. They are willing to sell at a lower price so the transaction can be done quickly. If they just waited a few more months and sold the property the correct way and for full price. Other peoples mistakes are the reason you can get good deals at estate sales.
Properties that are vacant have something wrong with them or the owner just is done with the property. The holding of a vacant property can be expensive so owners are usually ready to sell. Properties that are vacant are subject to vandalism. They will steal your copper pipes and electrical wire to take to the scrap yard.
Banks will also have an inventory of vacant properties. A foreclosure or the owner just quit paying the mortgage and moves not telling the bank. These properties will sit awhile so the repairs start to rise as the property sits longer and longer. The house I currently live in was a bank owned and sat vacant for two years before we bought at a huge discount.
Bank owned properties
This will basically be the same as vacant properties. If a property is bank owned that usually means the property is vacant. Bank owned you can find on the MLS or just do a search online to look for great deals.
Wells Fargo has an REO site dedicated to the properties they own. You can check out at REO Wells Fargo.
To find more real estate deals you can also try out the BirdDogBot.
Foreclosed homes are basically bank owned once the bank legally gets the property back from the homeowner. There can be a few problems with buying a house that was in foreclosure.
- The homeowner did not want the bank to take their home so they may have really trashed the house to get back at the bank. You may not know all the issues with the home until you buy.
- Water damage due to the house being vacant.
- Vandalism from just being vacant like graffiti on the walls, house inside was trashed or maybe the windows were broken
- Furnace and AC unit was stolen.
- Just make sure you make a thorough inspection to know the costs to rehab the home. If you can buy properties for the right price any repairs can be done to bring the house back to prime standard.
To buy foreclosed properties you can check out this foreclosure site. They offer lists of homes in your area that are bank-owned, foreclosed, HUD homes and distressed homes.
This is a whole host of people that life has hit them hard and they are struggling. Maybe they lost their job, got a divorce, have huge medical bills or something else bad happened. The sad thing is they cannot pay the mortgage so they need to sell. Many need to sell quickly to take care of the dire issues going on in their lives. I know this is tough but you are probably helping them by relieving them of the debt so they can take care of the stress in their life.
You may be asking what is an absentee owner. It is someone that owns real estate but does not live in the area of the property they own. Many of these are rentals that are owned by someone that lives in a different state. Usually, they have property management companies to take care of their properties. That does not always work out and some owners struggle taking care of rentals when they live so far away. The absentee owner is that perfect target to pick up homes at a discount. They may just want to get out and sell the home to someone local. That is where you come in to buy it at a great deal.
How do you find absentee owners? You can buy lists and then send postcards to them asking if you can buy there home all cash. I just got one of these not too long ago and called it to sell one of my homes. They bought it for 2 weeks for all cash.
You can connect with lawyers that specialize in divorce. Many times in a divorce couples have to sell the home to divide up the assets. Usually, this is a good time to get a discount on a home with a couple that needs to sell fast.
Buying property from a wholesaler is a good way to find homes. These people will do all the marketing and legwork to find deals and pass them on. They will find a deal and probably send it to you in an email list you signed up for with them. If a house looks good to contact the wholesaler and work with them to buy the home. They get a small commission based on the price they negotiate with the homeowner and the price they sell to you. The difference is usually under $5,000 and if the numbers are right for you it does not matter what they make. Getting a steady flow of properties to flip is what is key for you/
Real estate investment group
You can join local real estate investing groups to meet other investors in the area. This is also a great place to buy and sell properties. You can find investors always looking to sell. Network with as many people at these meetings as possible to understand how seasoned investors do real estate deals.
You can buy homes at auctions for really good prices. To get great deals it all depends on how many people are bidding against you. Many auctions you are buying without seeing the home so that is a big risk. Just make sure you buy low enough no matter how much is needed for repairs.
I had a guy I knew through a friend and a neighbor bought his house at auction so the guy took out all the new carpet he put in, removed all the new plumbing he had updated, took out all the new bathroom fixtures and removed anything he had put in new in last five years. I am not trying to scare you from buying just be prepared. Many people get upset when they lose a home they put a bunch of work and money into it.
The key to any successful flipping business is to have a steady stream of distressed homes to buy. You need to keep the leads coming in and making offers on homes to keep making money. Once you find the marketing that works for you just set up a system and follow it. The better your system is the more homes you can flip in a year. I know some real estate investors that flip 4 homes a year and some that do 50 homes a year.