It’s easy to say you want to get into real estate, but it takes a lot more than that. You need to have an idea of what you’re doing, you need to go and shake hands, and you need to know how to find the best rental properties to buy in your area.
There are many ways to find the best rental properties to buy, but I’ve listed the 12 that have best related to beginner and intermediate investors.
The MLS, (Multi-Listing Service) is the primary source for real estate agents and investors to find their next deal (or to sell one).
Zillow, Loopnet, and other sites are good for the basics, but the MLS will give you a better detailed description of the property, it will show you the history of transactions with the property, and show you a great foundation to determine if you want to pursue the property or not.
The downside to using the MLS is that you need a real estate license to have access to it. So you will either need to take a prelicensing course, or bring in an agent. (Which costs you nothing)
How do you get the best deals using the MLS?
- Find a Great Agent
- Set Up Automatic Alerts
- Quickly Screen Out The Duds
- Be Faster Than The Rest
- Look for Hidden Value-Add Opportunities
- Make Lots of Offers
- Look for Old Listings
- Focus on Distressed Properties
- Make a Clean Offer
- Work At All Hours
For a detailed article on finding deals using the MLS, check out a recent article we did about it.
Direct Mail Marketing
Marketing using mail is neglected by almost all rental property investors, but is taken advantage of by most flippers and wholesalers. There is a lot to be gained from direct mail marketing, at a very low cost.
The basics of direct mail marketing go like this:
Find properties that may be for sale, and mail the owner a letter saying you would like to make a deal on the property. You can send the same letter to everyone you find.
Wholesalers and flippers typically send hundreds, even thousands of these letters every month.
Let’s say you send 100 letters in a month, which is just 3-4 a day. If 5% respond, that is 5 people that are willing to sell you their property at a deal! You only need one deal to go through for the cost of stamps to be worth it.
What is so special about direct mail marketing? You get access to off-market deals, which oftentimes yields better deals and better returns for investors.
Driving for Dollars
Driving for dollars falls under a similar line as direct mail marketing, it just takes more time. You will probably need to drive for dollars, or hire someone else to drive, in order for you to secure the best off-market deals.
Driving for dollars simply means that you drive around your town, city, or wherever you want to drive, and look for abandoned or vacant properties. Look for things like overgrown grass, a building that looks badly taken care of, these are great indicators that you may have a deal on your hands!
At this point, you can either mail the owner, or you can try and find their number online and call them. If it appears that they don’t care about the property, they likely don’t, and will be willing to sell it for 30%, 40%, even 50% under market value.
Use a Wholesaler
Direct mail marketing and driving for dollars are great ways to find deals, but what if someone else did it for you? For free?
Yes, for free. Wholesalers will go out and find off-market deals at amazing discounts, and will put them under contract for you. Then you can buy the property at a 20-30% discount, free-of-charge.
Essentially, if you choose to drive for dollars and use mail to market your services, you will be wholesaling for yourself. There will be no need for a wholesaler if you are doing it yourself. But if you would like someone else to find the deal, and you just walk in and buy it, then you may be interested in finding a wholesaler in your area that you can trust.
So if it’s free, what’s in it for the wholesaler?
The wholesaler doesn’t have to put any money down, they just give their time and find deals. They may put a property under contract that is at a 40% discount, and give you a 30% discount. You get 30% under market value, and they take home 10% of the property’s price.
So if there was a property worth $100,000 that someone wanted to get rid of, the wholesaler would put it under contract at a price of $60,000, and then they would sell it to you before the due diligence date. You would buy it for a 30% discount, ($70,000) and the deal would be done!
The seller would walk away with $70,000 and no longer have the burden of a property he doesn’t care about, you saved $30,000 on the property, and the wholesaler got $10,000. They found the deal, bought it for $60,000, sold it to you for $70,000 before they were required to pay.
Using a wholesaler can literally mean tens of thousands of dollars in your pocket, they are great resources to have if you don’t have time to do all of the deal-finding yourself.
Evictions are stressful, time-intensive, expensive, and something that nobody wants to deal with, landlord or tenant.
So if you make a trip to your local county administration office and look at the public records, you can find all of the recent eviction notices. A lot of buyers will be ready to sell when you make an offer, because their emotions will be high and they will be ready to be done.
So always consider properties undergoing evictions as potential deals.
The best way to find the best deals in the community is to know the community.
If you become a reputable investor in your community, lenders will call you, brokers will call you, agents will call you, wholesalers will call you, and so on.
Focus on meeting people and shaking hands. The more people you network with, the more people you have that will give you access to incredible deals. A network is one of the most important parts of real estate investing.
Look at Courthouse Properties
Courthouse properties are foreclosures that are owned by the county, and oftentimes sell far below their market value. Depending on the county you are in, it can be very competitive, so keep an eye out for great deals at the courthouse!
You can make a bid on a property at the courthouse, and if nobody else makes a bid within 10 days, the property is yours!
This is the time-tested strategy that many people still use today. Have you ever seen those signs, “Will buy houses for cash!”, or “Will buy properties as-is!”? These guys are typically wholesalers, but you can use it to find great properties the same way wholesalers do.
Set a billboard, or put up a sign on a property you have access to. Let people know what you want to do, and what you can do for them.
Use a Real Estate Agent
If you don’t have a real estate license, you won’t have access to the MLS without a real estate agent. That is one reason why you should use an agent when you’re trying to find great deals.
Another reason, which is probably the main reason, is that agents know the market! They spend time in the market, day-in and day-out. They know the trends, they know the good neighborhoods, they know where and how to find the deals.
Not to mention, using an agent to find deals is completely FREE. You don’t pay anything for an agent, and you don’t even pay the commission. If you buy a property, then the seller typically pays the commission.
If you find a good agent, they can be one of your greatest allies.
The BiggerPockets marketplace is one of the most popular sources that people use to find wholesale deals or rental properties. A lot of wholesalers have BiggerPockets as their primary buyer, because people will invest virtually!
So when wholesalers find a good deal, they will put it under contract, and put it on the BiggerPockets marketplace for tens of thousands of people to see. So if you get on there and watch, you can snap up a deal fairly easily!
It used to be common to use classified ads in the newspaper to find good deals. While the newspaper may not be as popular as they used to be, classified ads are still a great tool to broadcast your goals— finding a deal.
Where should you put ads up? How about the future of business? The internet! Craigslist is one of the most popular resources for real estate deals, or deals of any kind.
Create a Website
Have you ever seen a website dedicated to buying and selling homes? You could have one too, and it isn’t hard to set up. You can set one up in 15 minutes using a website builder like Wix.
By optimizing your site, you can rank locally, and gain access to a bigger network, which gives you access to more deals.
12 Strategies to Find the Best Rental Properties to Buy
Most of the information in this article was provided by Brandon Turner in his book, The Book on Rental Property Investing.
The Book on Rental Property Investing is widely regarded as the best overall guide for real estate investing. The book covers a wide range of topics, from financing, to analyzing deals, to finding deals, to managing, and more.
Brandon Turner, author of the book, is the VP of Growth for BiggerPockets and has amassed a real estate portfolio of around 300 rental units since he began 13 years ago. He has turned his time towards helping others through podcasts, books, lessons, Youtube, and BiggerPockets.