How To Find The Best Real Estate Deals Month After Month
- By Richard Reichmann
- Published 07/11/2007
- Wealth
- Unrated
Richard Reichmann
Richard Reichmann is a widely recognized as a leading expert on Real Estate investing and pre-foreclosure Negotiating for well over 30 years. As a retired Real Estate Broker and present owner of Home Buyers and Nature Coast Properties of Florida Inc. he has bought and sold over 1,300 one to four family homes, his access to inside information is far reaching.
View all articles by Richard Reichmann
In almost every seminar I've ever attended, a lot of time has been devoted to teaching attendees how to find good deals.
Because deal-finding Is so crucial to one's investing success, I recently decided to look back and see which methods have generated the most deals and the best deals for me.
In reviewing the 150 properties I've bought or flipped over the last 5 years, I was surprised to find that many of the traditional sources of great deals haven't worked for me, while some less obvious methods have been great lead generators. I'd like to share with you the results of my little inventory.
Good: The Multiple Listing Service. The MLS is essentially a catalog of all the properties listed for sale by brokers. Needless to say, some of them are good deals for investors, and some aren't.
The trick is to ferret out which properties have motivated sellers without making offers on all of them. I've honed this skill through years of translating agent lingo like, Handyman's special looks bad, smells bad, has at least one major system that doesn't function needs TLC ugly, but not smelly, and everything works.
Why it works: Properties listed in the MLS are for sale. This may seem like an obvious statement, but some of the other methods touted as great ways to find deals involve locating owners, then finding out if they want to sell.
Properties in the MLS also have the advantage that all of the information about the property is pretty much laid out for you a major time saver. And, with the sophisticated, computerized access available to your agent.
It's a matter of a few keystrokes to view all of the properties that are handyman's specials, or bank owned, or in estate, or priced under a certain dollar figure whatever you'd like to concentrate on.
Another reasons that the MLS has worked so well for me is that I am generally in the market for really ugly properties. Coincidentally, these are the same properties that most agents prefer not to spend a lot of time with. In many cases, they're downright cooperative particularly when I'm offering all cash and a quick closing.
Bad: Direct mail to real estate agents.
In 1994, I had the brilliant idea that I might be able to find MLS-listed properties even faster if I simply let agents know what I was looking for. So I purchased 1,200 agent names from the Board of Realtors and generated a 3-part mailing send to every agent in town.
The theme of this campaign was this: if you, Ms. Agent, have a property listed that fits my criteria, I'll make an offer and you get to keep the entire commission. Out rolled my brilliant campaign all mailed first class, incidentally and in came the phone calls. All 7 of them.
That's right. The week after the first letters went out, we got 7 calls. We had already made offers on three of the properties; two were out of our price range; and two were overpriced listings about to expire.
The next mailing generated even more results about 15 calls all basically in the same categories. The final mailing, a postcard, received no notice at all. Basically, I wasted about $1400 on a campaign that generated absolutely nothing.
What went wrong: I still think that this idea has some merit, but if I do it again, I'll make some major changes. First, I'll target only the 200 or so agents who list the types of properties I buy.
Second, I'll do a better job of writing the letters, emphasizing how the agent and his seller would benefit from working with me.
Third, I'll make my campaign a continuous one throughout the year, testing different letters for response and mailing the best to the same agents over and over.
And lastly, I'll personalize the campaign by following up with a phone call to the 50 or so best prospects. Oh well,live and learn.
Good: Ads in the Yellow Pages. For 8 years, I've had an ad in the real estate section of the Yellow Pages. Each year, the ad has had some variation of the wording, I buy houses all cash.
This ad only generates 3-4 calls a month, but for some reason the quality of the calls is better than those that are generated by any other method I've ever used. The sellers tend to be motivated, cooperative, and have unlisted properties.
Why it's worked for me: I love that you deal with these ads once a year, then forget them. While they're pricey up to $3500 per year the phone company will generally bill you monthly for the cost. In addition, as one of the very few ads in the phonebook that promise to buy houses, I haven't got much competition.
Because deal-finding Is so crucial to one's investing success, I recently decided to look back and see which methods have generated the most deals and the best deals for me.
In reviewing the 150 properties I've bought or flipped over the last 5 years, I was surprised to find that many of the traditional sources of great deals haven't worked for me, while some less obvious methods have been great lead generators. I'd like to share with you the results of my little inventory.
Good: The Multiple Listing Service. The MLS is essentially a catalog of all the properties listed for sale by brokers. Needless to say, some of them are good deals for investors, and some aren't.
The trick is to ferret out which properties have motivated sellers without making offers on all of them. I've honed this skill through years of translating agent lingo like, Handyman's special looks bad, smells bad, has at least one major system that doesn't function needs TLC ugly, but not smelly, and everything works.
Why it works: Properties listed in the MLS are for sale. This may seem like an obvious statement, but some of the other methods touted as great ways to find deals involve locating owners, then finding out if they want to sell.
Properties in the MLS also have the advantage that all of the information about the property is pretty much laid out for you a major time saver. And, with the sophisticated, computerized access available to your agent.
It's a matter of a few keystrokes to view all of the properties that are handyman's specials, or bank owned, or in estate, or priced under a certain dollar figure whatever you'd like to concentrate on.
Another reasons that the MLS has worked so well for me is that I am generally in the market for really ugly properties. Coincidentally, these are the same properties that most agents prefer not to spend a lot of time with. In many cases, they're downright cooperative particularly when I'm offering all cash and a quick closing.
Bad: Direct mail to real estate agents.
The theme of this campaign was this: if you, Ms. Agent, have a property listed that fits my criteria, I'll make an offer and you get to keep the entire commission. Out rolled my brilliant campaign all mailed first class, incidentally and in came the phone calls. All 7 of them.
That's right. The week after the first letters went out, we got 7 calls. We had already made offers on three of the properties; two were out of our price range; and two were overpriced listings about to expire.
The next mailing generated even more results about 15 calls all basically in the same categories. The final mailing, a postcard, received no notice at all. Basically, I wasted about $1400 on a campaign that generated absolutely nothing.
What went wrong: I still think that this idea has some merit, but if I do it again, I'll make some major changes. First, I'll target only the 200 or so agents who list the types of properties I buy.
Second, I'll do a better job of writing the letters, emphasizing how the agent and his seller would benefit from working with me.
Third, I'll make my campaign a continuous one throughout the year, testing different letters for response and mailing the best to the same agents over and over.
And lastly, I'll personalize the campaign by following up with a phone call to the 50 or so best prospects. Oh well,live and learn.
Good: Ads in the Yellow Pages. For 8 years, I've had an ad in the real estate section of the Yellow Pages. Each year, the ad has had some variation of the wording, I buy houses all cash.
This ad only generates 3-4 calls a month, but for some reason the quality of the calls is better than those that are generated by any other method I've ever used. The sellers tend to be motivated, cooperative, and have unlisted properties.
Why it's worked for me: I love that you deal with these ads once a year, then forget them. While they're pricey up to $3500 per year the phone company will generally bill you monthly for the cost. In addition, as one of the very few ads in the phonebook that promise to buy houses, I haven't got much competition.