You’ve discovered the world of real estate investing and realized that you can make tens (or hundreds) of thousands of dollars in profit from each flip – once you know what you’re doing, of course!
There’s only one problem. You have no idea where to find that first flip.
Have no fear, the team at ABL wants you to get involved with real estate investing and make money on smart deals. Once you find the perfect property, we’ll even help fund the purchase and rehab! But first things first: how to discover the deal.
Work With A Real Estate Agent
Hiring or partnering with a real estate agent provides many benefits to real estate investors, not the least of which is making it much easier to find properties.
Not only do real estate agents typically keep tabs on the houses for sale in an area – and are able to tell investors which houses are undervalued and could be flipped for a profit – but they also have access to something called the Multiple Listing Service, or the MLS.
The MLS is an enormous database of home listings, which is exactly what you need access to. Maybe you’re thinking that there’s no need to partner with a real estate agent – you’re smart, you can figure out how to handle a database on your own. And while we have no doubt you’re right, only licensed agents and brokers have access to the MLS, so you really do need to partner with a realtor to navigate it.
Alternatively, you can check out a For Sale By Owner, or FSBO, site to see properties that have been listed without an agent. We still advise that you consult with a real estate agent when purchasing a house this way, because even though houses that are listed on FSBO sites tend to sell for less, having a realtor check out the property before you purchase can give you an idea of whether or not the price is right.
Take To The Streets
While probably not the most efficient method of finding a property, if you’re the kind of person who likes the scenic route, you can keep your eyes peeled for homes with potential in desirable neighborhoods. This is often referred to as driving for dollars.
The benefit with this method is that you can develop your own first impression of the property and the neighborhood it’s in. When you’re scrolling through pages of listings online, you get a very limited view of what the house is and what it’s potential may be, especially if you don’t know the area very well. By discovering for-sale properties the old fashioned way, you are going to get a much better sense of how a listing compares to its neighbors. When you find a house that is much lower quality than those around it, you may have stumbled upon a good flip.
The cons of this method are that it takes a lot of time, you’re likely to miss some of the best properties if you’re driving aimlessly, and you can’t quickly and easily look into the numbers like you can with an online listing. One hybrid search method is to first use online databases to locate cheap properties in good neighborhoods, then use that list to guide your route.
Buy From A Wholesaler
The way wholesalers make money is very similar to the way fix and flippers make money – the main difference being that wholesalers don’t actually fix anything.
Wholesalers tend to be individuals who have a good sense of what properties would work well for a fix and flip. They know which areas are desirable, they know how much different lots are worth, and they buy listings that have investment potential. Instead of putting the time and energy into actually flipping them, though, they just mark them up and sell them again so that someone else can flip them for a profit.
Now, this is not the most cost-efficient way to flip a house: if you had found these listings first, then you would have been able to make $10,000 or $30,000 more (since wholesalers do just add several thousand dollars to the price). However, if you’re just getting into the business, taking on that cost may be worth it to find your first few properties. Just be careful that the wholesaler hasn’t marked up the price too high for you to make a profit. Always, always, always run the numbers before you buy anything. This method is quicker and less risky in the sense that you know the properties have potential, but you should never assume that the wholesaler is pricing the property so that you’ll still be able to make a tidy profit. Wholesalers aren’t your fairy godmothers – they’re in this business for the money, just like you are.
Go To Auctions
Auctions are competitive, fast-paced events where you will be exposed to many properties at once. If you are a master of property evaluation and an expert at knowing when to bid and when to butt out, they can be an incredible way to acquire assets quickly. However, we recommend that you find a few flips more organically prior to jumping into these races. It might even be smart to attend a few auctions without buying anything – or at least keep tabs on them online – so that you can get a feel for how things go before you’re actually looking to buy.
If you’re ready to take the plunge, there are multiple avenues for purchasing through auctions:
Online Auctions
Buy property from the comfort of your own home! With most major auctions, you can search by the exact location you are looking to buy. This can be as general as a state or as specific as a property address.
Here are some of the bigger sites:
There are plenty more that you can discover with a simple Google search. While the big sites may have the greatest quantity of inventory, you may want to check out local auctions to try and get better deals.
Find A Local Sale
Sites like PropertyShark will let you look for upcoming Pre-Foreclosure, Foreclosure, or REO Bank Owned properties that are being auctioned off near you. You can find the date, time, and location of the auction, as well as details about the property so you know exactly what you’re getting into. You can also look up auction companies in your area or contact the local Sheriff’s office that most likely handles the process.
Check The Paper
When a bank forecloses on a property, they post a notice in the newspaper. You can find lists of real estate sales and auctions in the public notice section of the paper.
Remember, you don’t need to stick to just one of these methods. The best chance you have of finding the perfect deal is to look into all of them and figure out which one works best for you. If you’re too busy to bother with searching through lots of listings and figuring out which ones are prime for renovating, a wholesaler may be right. On the other hand, if you don’t trust anyone but yourself and like to really understand the market in the area you’re buying, you might like to use a realtor and the MLS to compare lots of listings at once.
Once you’ve found the property that you’re going to transform, give us a call – we’d love to help you fund it.