The Six Best Sources for How to Find High Quality Real Estate Investments
It can be challenging to find high quality investment properties when beginning your career as real estate investor. Therefore, when embarking on your new adventure and source of wealth, it’s essential to scour every possible lead source, including your community and the web for referral sources of good real estate acquisition deals. With active and persistent networking and studying the market, it is possible to find great investment opportunities in a relatively short time.
Where you direct your energies and intention is where results will follow…the law of attraction plays an important role in discovering properties, new relationships and wealth. We recommend exploring these sources for locating great deals.
When beginning your hunt for valuable investment properties to acquire, the following sources are a good place to start.
1) Find a Real Estate Agent that Specializes in Investment Property
When someone decides to purchase a home, the obvious first stop is a real estate agent. Not only do they know the market and the community, but they are able to help navigate the legal processes involved with closing the sale.
For the investor, a Realtor can still be a valuable associate. However, don’t go to the same agent who sold you your $500k suburban home at market. He or she may know what a middle-upper class family is looking for, but won’t be able to help you find that bargain investment property.
Rather, when looking for great investment opportunities, find an agent who focuses exclusively on investment properties. This is an agent who scours the MLS database for properties that are well below their value. They know when a $50k remodel will increase the value of a home by $200k and can tell you what neighborhoods are up-and-coming (emerging), and where to find rentals that add cash flow to your portfolio.
The prospective agent you want to hire should have these qualities:
- Driven (often has deep circles around their eyes)
- High energy (very busy usually = very successful)
- Pushy (tells you what to do)
- Clear and precise (not ambiguous)
- Prefer that the agent be a single parent
Even though it is critical to find a high quality real estate agent that you can work with, don’t stop there. There are many other places where you can find hidden gems:
Wholesalers, also known as flippers, are generally individuals or small companies that contract distressed properties at a discount, and then pass on that property to an investor for a fee.
These are the people who put up signs saying “Get cash for your home”. They place ads online, send out flyers, and put up signs to attract people who may be close to foreclosing on their property.
Once they find a potential property, they usually offer just enough to pay off the mortgage. This means that the buyer acquires any equity that the seller has already invested into the property – such as a down payment or several years of consistent mortgage payment.
Although selling your property through a wholesaler isn’t usually a great financial decision, people who find themselves near foreclosure aren’t usually the most savvy investors to start with. Nonetheless, by purchasing their property you are able to get a great price on a quality investment while allowing the seller to keep their credit rating clean. We prefer dealing with the wholesaler that has already acquired the asset rather than from the borrower direct. Wholesalers want to know that you can close and expect 100% performance. This cannot be stressed enough.
A great source for meeting wholesalers is the “For Investors By Investors (FIBI)” group based out of Southern California. Visit Meetup to discover and sign up for their next event. Here you will be in touch with others JUST LIKE YOU who are aching to get into real estate. The group is highly collaborative and have members from all walks of life who share their investment knowledge as well as their investment properties. We know the founders of this fantastic group. Call us if you want a personal introduction.
3) Acquisition Companies
If you have a high enough net worth to work with professional acquisition companies, than you are well on your way to finding valuable, high quality real estate investment properties.
Because these companies only work with real estate investors, the properties that they list are usually good deals. And even though these sales aren’t open to the general public, don’t expect a property to be available for more than 24-48 hours. These properties are priced for a quick sale.
Just because a property is listed by an acquisition company doesn’t mean it is automatically a great deal. Although there will be a larger portion of high quality properties, it is still essential to do your own due diligence and verify that the property is one that you can make money on.
Property auctions have been going on for years. And now, with Auction.com, you have direct access to thousands of property auctions taking place all across the country.
Most auctions consist of bank-owned, foreclosed properties. The goal is to sell these properties as quickly as possible, for the best price possible. Therefore, you will need to either have cash on hand, or the ability to access your capital very quickly. It usually isn’t possible to have a 30 day close on these properties.
Because of the nature of auctions, your ability to acquire the property at a discount is based on the number and quality of other bidders. Heavy traffic properties will likely sell for close to the listing price. However, it is not unheard of for a bidder to win a property for 50% or less of the actual value.
Ultimately, auctions are like shopping at discount clothing stores. If you go there looking for something particular, you probably won’t find it. However, if you visit frequently, with an open mind, you will undoubtedly find some great pieces. Your ambition is to learn which objective the asset serves you: cash flow or equity accumulation…
5) Investors Exiting the Market
Another source to find high quality RE investments is through private investors ready to exit the market.
There are many reasons why an investor would want to exit the market: It could be due to retirement, a move, money for kids, or even a need for capital elsewhere. Regardless of the reason, private investors are a great place to find good deals on property.
Even though these savvy investors could earn more by selling off their portfolio one by one, many of them are alright with offering a good price to someone else building their own investment portfolio. After all, we all like to help people with similar interests to our own. This is true, especially where communication and dialogue is friendly and purposeful.
Just make sure that you have cash on hand and can make the purchase immediately. Anyone looking to exit the market is going to want a fast and painless transaction. Although investors exiting the market can be difficult to come across, there are several strategies for finding these individuals.
First, get business cards describing what you want or what you do. Then start telling friends, family, and strangers that you are in the market for investment properties. Create the mantra. Let the Law of Attraction work in your favor. Next, frequent websites like Craigslist, where frugal investors would be able to sell their properties without paying for a real estate agent. Running an ad that says “I pay cash” can yield fantastic results. And finally, make an effort to connect with other investors. In some ways, this should be all consuming…
The real estate investment world is a tight community, and even the most aggressive investors are happy to share deals that they need to pass on due to lack of time or capital.
6) Participate with Experienced Investors
Finally, one of the most convenient and effective ways to start investing is by working with experienced investors who buy as well as sell. We prefer this method over all others and have plenty of great referrals for you.
Not only can a veteran investor provide you with an education, they can help ensure that you make money during the process. Your money combined with their sources for finding deals and doing the work is a great combination. Experienced investors are usually hard to get a hold of but are available to make deals with. We know many since several are clients who use our lines of credit or other financing sources…feel free to call for a referral…
And Finally . . .
Debtcraft is best known for providing investment opportunities to real estate investors who are eager to learn about note acquisitions, trust deed lending and syndications. We do not specifically provide financing for flip investors (unless the loan requests are over $250,000 and are in California).
Debtcraft manages two very successful real estate funds, delivering predictable and healthy yields. Our large-scale property investments allow us to offer a healthy return, while giving our investors the freedom to let their money work for them.
Our most successful clients keep much of their net worth in real estate. With a bit of patience and a willingness to learn, you can certainly find high quality investment properties and develop your own real estate empire over time.