In a competitive real estate market, trying to find and close on a good deal on an investment property can be nearly impossible. If you’re looking for a way to acquire property without competing with dozens of other people, you may need to think outside the box.
4 ways to buy off-market property
It’s a great time to be a seller. If you are selling a home in today’s market, you are likely to benefit from significant price appreciation, high levels of demand and a sense of extreme leverage. But on the other hand, it is difficult to become a buyer. Inventory is low in many markets, and prices seem a bit inflated.
But do you know what is even more difficult? Being an investor looking for smart investments. You make your money when you buy, which means paying more in a seller-friendly market will destroy the investment from the outset.
If you’re looking to invest in property in today’s market, you can’t afford to browse listings on Zillow – or even the listings that hit the MLS. You need to find potential deals that haven’t hit the market yet.
For those who have never looked into this option, the notion of buying off-market assets sounds foreign. But it is not as impossible as it seems. Here are some strategies and techniques you can use.
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1. Mass Mailing
You don’t know until you ask. This is the unofficial mantra of many investors who chase off-market properties.
While it’s not free—it will cost you both time and money—sending mass mailings to homeowners is one way to find and qualify leads. You simply find a neighborhood or area of town you are interested in and mail letters/fliers to the homeowners to let them know you are interested in possibly buying their home. Less than 5 percent of homeowners will respond (and only a fraction of these will actually be interested in what you have to say), but it can sometimes create a great opportunity.
The key is to work with the right printing partner to make material costs as cheap as possible. You will also need to design and write your letters well. You want to grab the homeowner’s attention without sounding desperate or gimmicky. Professionalism is key.
2. Inside Information From Real Estate Agents
Investing in real estate without the help of a real estate agent is tempting. After all, that 3 percent commission could cost you thousands of dollars over the years. But when it comes to buying off-market properties, an agent is worth its weight in gold.
Real estate agents have their fingers on the pulse of the local market. He has connections that allow him to know when a listing will reach the market (before it is actually public knowledge). This can give you a significant leg up.
3. Telltale Signs of Neglect
A popular strategy among real estate investors is to drive around and physically look for homes that show signs of neglect or disrepair. In many cases, the homeowner is overwhelmed and would be happy to sell the property before it becomes an even greater burden. While you will have to exercise some discipline in how you approach these individuals, driving for dollars can yield good results.
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4. Look for Receptive Sellers
The condition of the property itself is not the only telling factor. You can also view ownership details and past listing activity to find owners who are more likely to have their offers considered.
Realtor Devon Thoresby writes, “An offer to buy a home that’s sold over the years isn’t going to garner much interest from an owner who’s enjoying the space.” “You’re most likely to get interest from homeowners who previously listed their home with an agent but took it off the market before selling it.”
Small details like this are what you need to be on the lookout for. Think like a homeowner and consider any factors that may indicate a desire to sell. You will need more and more leverage.
think outside the box
These aren’t the only methods for buying off-market property as an investment, but they are the preferred strategies that savvy investors use to find good deals in seller-friendly markets. Think about them and consider applying some of the principles discussed in this article.
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What are some methods that have worked for you?
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Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
