Week 4: What are the best ways to find deals?
Finding deals is how you become a successful real estate investor. The more awesome deals you can find, the more money you can make. There are different ways to make money with those deals, but you almost always make the money when you buy, not when you sell. I have been successful because I have multiple ways I get deals. I am also flexible and always looking for new options.
Goals for this module:
- Decide if you should get your real estate license if you do not already have it
- How to find an awesome real estate agent if you are not one yourself
- Learn how to buy from the MLS, even if people tell you it is impossible
- Learn what auction sites to watch and how to use them
- Learn the tricks to getting good deals on HUD homes
- Learn the tricks to buying short sales and REOs
- Get an introduction to buying off market properties (more in a later module)
1. What is the best way to find awesome deals?
If you are in this course you most likely have purchased more than a couple of properties. You have found ways you like to buy properties and ways you are comfortable buying properties. Remember that getting stuck in your comfort zone can really hinder your business. When I started out buying flips with my father we always bought from the trustee sale. It was a given that you bought flips there and we didn’t even look anywhere else. After the sales at the trustee started to dry up I suggested we use the MLS. He was very concerned about buying from the MLS, because he did think there were good deals there and he did not want to buy houses that investors he currently worked with may be interested in buying.
I managed to convince him to start buying from the MLS and that it was okay for us to buy properties there. Most of the investors he worked with had moved on to getting their own real estate licenses and did not use him much anyway unless he sent them a deal. We started buying from the MLS and everything changed for the better! More deals, more profit margins and we eventually stopped buying from the trustee sales. It was a good thing we adapted, because prices have risen so much at the trustee sales that I could make no money with them now. Even if you have a decent way to buy houses remember there are always new and better ways to do things.
The first task for this module is to write down how you bought your last five houses. Then ask yourself if you got a good enough deal on those houses to meet you investing goals.
2. Should you get your real estate license?
Getting great deals from the MLS is my forte. Without a real estate license there is no way I could get as many deals as I do. Not only do I get more deals because I am an agent, but I make more money because I save real estate commissions.
The next task is to analyze your current real estate agent:
- How fast can they show you houses?
- How fast can the write offers?
- How fast do they respond to your calls or emails?
- Do you trust them?
- Do they send you deals?
If they do not do well at one or more of these tasks you may need a new agent. Or you may want to become a real estate agent yourself. If you want to buy or sell more than two houses a year I think it is definitely worth it to become an agent. Below are some more articles on being an agent.
- Why You Should Become a Real Estate Agent if You Want to Invest in Rental Properties
- How Hard is it to Become a Real Estate Agent?
- How Much Money do Real Estate Agents Make?
Here is an awesome article on how to find a great real estate agent.
The final task for this section is to write out the pros and cons of becoming a real estate agent if you are not one already. Then figure how much money you would make in the next year as an agent because of additional deals you could get and money you would save on commissions.
3. How to buy houses from the MLS
Most investors I talk to online say you can’t get good deals from the MLS. Many of those investors are also selling systems on how to find off market properties and use other methods to find great deals. You can use other methods to find great deals; I use other methods. Sometimes the best way to do things is the simplest way, but you have to do that simple thing better than everyone else.
I buy almost everything from the MLS and I have 11 flips right now. I bought 5 rentals in 2015 and I want to buy 12 in 2016. I will use other methods to find properties, but most of my deals come from the MLS. The reason I like the MLS is that is where there are the most properties for sale and I know everyone who lists there home on the MLS wants to sell it. I just have to be able to find the diamonds on the rough that are awesome deals. This video below shows you exactly how I do it.
Here is even more information on how I negotiate deals on the MLS and decide which properties I will make offers on
For even more information on buying from the MLS check out these articles:
Are you using the MLS right now? If you are not why aren’t you using it? The MLS is a goldmine for deals, but you must be fast, smart and know how to write offers.
4. How to Buy HUD homes
HUD home can be an awesome way to get a great deal, but I cannot buy them. I am a HUD listing agent and prohibited from purchasing HUD home. However, I know how the system works and I know how to get a great deal on them.
Here some articles with more in-depth information on the HUD process:
Go to hudhomestore.com to see what houses are available in your market. Make sure the real estate agent you are using is registered to sell HUD homes.
5. How to buy from Auction
Auctions are another great source for buying properties below market value. There are many different auctions sites and many different ways auction properties are marketed. Here are the main sites I watch:
Here is a video on buying from HUBZU
Here is a video on buying from Homesearch and Auction.com
Buying from auctions can be risky. You are buying site unseen in some cases, most of the time you have no chance of getting your earnest money back and you may be buying occupied homes. You have to be a very savvy buyer to purchase homes from the auction sites. Just because a home is for sale in an auction does not mean it is a good deal. I have stopped buying from our local trustee sale because prices are so high. I can get a better deal from the MLS.
6. Direct marketing
Direct marketing will have it’s own module, but for now know that it involves a lot of work whether it is driving for dollars, Direct mail campaigns or other methods. It is also important to know that a direct mail campaign is not easy to set up and it is probably best to try other methods to find deals first.
Wholesalers are a great tool to find cheap properties. Usually you need to have cash and be able to close very quickly with a wholesaler. Many people are taught that wholesaling is the best way to start investing in real estate with no money and no experience. You will find many people call themselves wholesalers when they have no deals and no idea what they are doing. You will also find many who claim to have direct access to off-market REO properties, which is usually a bunch of BS. However, there are some awesome wholesalers who make a lot of money and do a ton of deals. I have relationships with many across the country.
The best places to find wholesalers?
- Local REI meetups
- Bigger Pockets
- Call the bandit signs you see, the letters you get and Craigslist ads you see for cash house buyers.
- Search online for “sell house quick for cash” and make sure you include your area.
Below is a list wholesaler contacts across the country who I know have real deals:
Indiana and Chicago area
847 436 6337 cell
614 701 1971
Rockford Ill and chicago
Direct: (801) 259-3487
704 999 4558
Florida Palm Beach area
Conclusion and final task for this module
There are a lot of ways to find great deals, but it is easy to forget some or get stuck in a comfort zone. I want you to write a plan for how you will search for great deals. For example:
- search MLS listings at least once a day
- search auction sites for new listings twice a week
- research trustee sales to see if there are opportunities.
- search for one new wholesaler every week
- search for aged HUD homes every day.
The auction sites do not have houses that pop up and are listed in one day. They give plenty of notice on their listings. HUD homes can pop up in one day and go under contract the next. MLS listings can pop up in one day and go under contract right away. Speed is so important when dealing with the MLS, so make sure you build habits that involve acting quickly!