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I miss the days back in 2010 when you could wake up every morning to a fresh set of new foreclosure listings on MLS that were actually worth buying. In a way, it made all of us lazy. We stopped driving around looking for abandoned houses, stopped going to county auctions, and we stopped all direct mail and phone calls.
Well MLS does not have much to offer for flipping anymore. Most bank owned properties are the same price as every other house on the market, and there aren’t that many of them. Also, most amateur flippers, and Realtors turned flippers, rely heavily on MLS. Because of this, that great deal that just hit the market already has five offers, driving the price up to the point where it’s no longer a great deal.
So where do I find properties?
There are a few avenues.
You could contact wholesalers like Networth Realty or Homewood Properties and get on their mailing list. They are going to offer you some better than MLS pricing, but it won’t be much better. If you find a small independent wholesaler, you can get even better pricing since they have a smaller email list of investors to market to. If you’re looking for wholesalers, I would check with your local hard money lenders. They usually keep a list. Just Google “hard money lenders dallas.”
You could drive around your target neighborhood looking for abandoned houses and jot their addresses down when you come across them. Look up the addresses on the county tax records website (i.e. Dallas is http://www.dallascad.org) and find out who owns the property. You could then use a service like intelius.com to find their phone number.
Really, driving around is the best when you’re first starting out. You will come across FSBOs and FRBOs (for rent by owner). FSBOs give you an opportunity to speak to the seller directly rather than an agent. When I see FSBO sign, I feel like a miner that just found a pocket of gold, no one else really knows about it because it has not been made public. As for the for rent by owner, the owner could be an accidental landlord. If you were relocated on short notice and were forced to lease your house because you did not want to deal with the sale, you just became an accidental landlord. Many times, these accidental landlords are willing to sell at below market to unload the burden.
Once your feet are wet and you’ve got the hang of flipping houses and you’re seriously looking to flip multiple houses per month, you can start doing some direct mailing. There are services that offer you all the addresses in a particular neighborhood in spreadsheet form. Most large brokerages like Keller Williams or Ebby Halliday Realtors can generate such lists for their agents (which is how I get my lists). The great thing about direct mail is that if you get too many people willing to sell you their house, you could sell those contracts off to other investors for a 3% to 5% fee. If you plan on coming this far, you really need to read Flip (www.flipthebook.com). There is even some great free material on the book’s website.
Good luck flipping! And watch out for my next post, “Direct mail done right.”