Finding Bodies in Your Neighborhood
From Dave Ludena, Real Estate Rockstar…
I remember reading an article where someone fell and drowned in a river. In order to retrieve the body, the police dragged the riverbed to try to pull it up. You can imagine in doing so they pulled up all manner of goodies: shopping carts, shoes and probably several bodies… depending on where you live. (Dexter fan, anyone?)
It’s likely you have heard of finding properties by “Driving for Dollars,” where you look for vacant/distressed properties. But, that is only one of the bodies we want to drag from the riverbed of our target neighborhood. Why? Because that’s how the mere average investor does it.
Today, I’m going to show you how the Clever Investor (yeah, you) does it and leaves no bodies behind. Heck, if you are out there anyway, let’s make it really worth your time.
Our hit lists consist of:
- Bandit Signs
- Vacant/Distressed Houses
- Open Houses
- Houses currently being rehabbed
As we are driving INTO our target neighborhood, we are bound to see bandit signs. These “We buy Houses” signs can be a source of finding real cash buyers, but most likely you are going to speak to a wholesaler. That’s cool. I like other wholesalers… I can work with them.
Usually, you see a ton of these signs pop up (I call it “road rash”) when the guru circus comes to town, resulting in a flurry of new investors jumping onto the scene.
Don’t let this bother you. USE this to your advantage and leverage the leads that these wholesalers can bring to you… plus by putting them on your buyer’s list, you can leverage their buyer’s list if they end up bringing you a buyer. Make sure to jump on their list too. Their deals can be deals you can push to your buyers or see if they are willing to co-wholesale.
Vacant and Distressed Houses
This is like the actual body we are looking for. I’m looking for any house that just doesn’t fit the level of “pride of ownership” displayed on that street.
Any one or combination of the following puts a house on my list: Bad- or tired-looking roof, paint peeling, cracked stucco, ugly/dirty siding or exterior, overgrown landscaping, mail popping out of the mailbox.
I also look for an orange/red sticker on the door that usually is a code violation. I like to go driving a couple days after it snows. The house that hasn’t been shoveled may very well be vacant.
For Sale By and For Rent By Owners represent opportunity.
The FSBO is an obvious one, but may investors will just pass right by a FRBO sign without calling it. Big mistake. That landlord may very well be a reluctant landlord who may want to sell. They can also be an investor you can add to your buyer’s list or both.
I’ve had conversations with landlords where that one call led to multiple properties he wanted to sell. Landlords are like a box of chocolates. You never know what you may get. (Forrest Gump really meant to say it that way.)
I’m talking about FSBO open houses here. You can find these mostly on the weekends usually between 12-4pm. Be prepared with your business cards and contracts.
I like to break the ice and make them smile by saying “Wow… this is your lucky day. How did you know today was the day I needed to buy a house? (Or today was the day you were going to sell your house?)”
The other cool thing about this is that they have a list of people that have walked through the property. Guess what? Some of those folks are sellers. How about offering this seller some referral money if you end up buying one of those houses? Get that list.
As you drive through the neighborhood, there should be some rehabs happening. If not, you are swimming in the wrong neighborhoods. The very reason why you are there is because we know there is buyer demand.
So as you drive along and see a dumpster in the driveway, jump out of your car with a few business cards and ask to speak with the contractor in charge. Explain that you are an investor and you may have a project coming up and need a bid… is he interested in some work? Grab his card (or if he doesn’t have one, write his info on the back of yours). Ask him if the person he is doing the work for is an investor, and if so, does he have his info as you may have a few properties that you may want to sell to Mr. Investor, which may result in even more work for this contractor.
Ask the contractor if you can walk through the house quickly. I do this to see if this is a contractor I actually would want to use. How is the job site? Is it clean and organized or does it look like the aftermath of a frat party? Is the work good? Build some rapport and compliment him on the work.
When you leave, ask if he would like to earn some extra money by bird-dogging for you. These guys (and gals) are driving all over – so if they see a house that matches what I described earlier, and they text me the address and perhaps a picture, I will pay them $1,000 if I buy the property AND give him first dibs on doing the work…
Even if I end up wholesaling instead of rehabbing it, I will present the deal to my buyers with the scope of work already bid with a contractor who is ready to go, if they choose to use him. By the way, when I first started as investor, I found it really helpful to have a contractor walk through and bid the scope of work on my deal I just put under contract. It allowed me to learn to more accurately estimate repair costs.
So in the few minutes since you jumped out of your mobile office, you identified a potential cash buyer and contractor you can use for your wholesale bid/rehab project and a bird dog. Time well spent.
So there you have it. The Clever way to drag your ‘hood and collect them bodies wrapped in green dollars. Now go out there and kill it.
Have you tried any of these tips? Tell me how it turned out in the comments section below.