My market is like a lot of other markets. We have an active investors group with a lot of educated folks that earn their living as real estate investors. There is a lot of competition for really good deals when buying investment properties.
Using the MLS
Many of these folks have alerts set up on their phones or computers that notify them once or twice daily when new listings come out on the MLS. In my area this is called the “hot list”. If a house hits the market that is really a great deal, it is not unusual to have two dozen offers on it in the matter of a few hours. When buying investment properties, I personally don’t like that much competition nor do I intend to get into a bidding war so I really don’t chase these houses. I like to go where there is much less competition. If I am searching on the MLS, I might look for houses with high DOM (days on the market) and ones that have big price reductions or discounts. If I can find a house that has gone past 90-120 DOM and one that needs a lot of repairs, there is a much better chance of putting a deal together not only with a bank but with someone trying to sell their own house.
Direct Mail Campaigns
One of my main sources of leads when buying investment properties, comes from my direct mail campaigns. I have done these for many years both in my real estate business and in my former business. There is a statistic that states that someone has to see your offer 9 times before they will buy. I don’t know if this is exactly the magic number for real estate, but I do know that success is in the follow up.
I think this is where many investors go wrong. They send out a letter or a postcard or two, and then they just quit. I run my direct mail campaigns for varying amounts of time. When I am mailing to persons with estates to settle, I generally mail to these people for about 16-18 months. About 50% of these houses that I purchase are bought after 1 year of mailing to the person settling the estate. For absentee owners, I have a continuous campaign going. The tough job is to keep the list “clean” and updated. Things change for these absentee owners. They may not want to sell now, but they may be in a completely different place a year or two from now. When doing direct mail campaigns for the purpose of buying investment properties, you will always need to tailor your campaign to the market or individuals you are targeting.
You should tell everyone you know or come in contact with about your business. Tell everyone that your business is buying investment properties. I often get leads from friends and acquaintances. Get out in you community and network. Join a local business group and be sure to attend your local REIA (Real Estate Investor Association) meetings. Most all large cities will have a REIA Group where you can network with like minded people. The more people that know what you do, the greater the chances you will be the one they call when someone needs to sell a house quickly.
If you missed Part 1 of “Making Offers” you can find it here….