Real estate investing is an excellent avenue for wealth building, passive income, and portfolio diversification. Purchasing real estate off-market can be a great way to snag a deal with less competition, which is enticing in a seller’s market.
What makes a deal off-market?
An off-market deal is a property that is not on the MLS or otherwise publicly listed. Some of these properties will eventually go on the MLS, but have not yet. While other sellers don’t ever intend to list them publicly.
How does one go about finding that off-market deal? I will outline—
- Using Your Network
- The Internet
- Snail Mail
With all of these methods, the name of the game is time on task. Of the methods below, you need to pick one that works best for you. Once you pick a method to find off-market deals, you need to save time on your calendar to repeatedly practice it. With everything in life, real estate is a numbers game, and the more time you spend networking and looking for opportunities, increases the odds of you finding a property that fits your criteria.
Use Your Network
First, get to know an expert real estate agent. Agents are in the relationship business, full stop! Getting an excellent professional in your corner means their network becomes your network. Finding the right agent can take work. This can look like interviewing more than one agent. Also, one should ask other investors who they use. And look at reviews. The end goal is to find a real estate agent you want to do repeat business with. Top producing professionals will bring you the deals, save the deals, and advocate on your behalf; these are all items that save you time and money. When you find this professional do not discount their commission, afterall you don’t want discount service.
Now that you have that real estate professional, one of the most obvious relationships that agents have, are other agents who may have off-market homes for sale or coming soon properties. Agents also might have relationships with distressed sellers. One should also know other investors—join a meetup online, or in person (a real estate agent who works with a lot of investors may have recommendations). There are times when real estate investors make changes to their portfolio and need to sell, so knowing other investors can be very helpful.
Also, keep a good rapport with your other vendors. For instance, as an investor it is likely you know a paint crew that paints your property between tenants. Call your interior painting crew to find out what they are working on that will be on the market soon. Make the offer to the seller before the painters are done with their job.
Open that laptop to maximize the number of off-market deals coming across one’s desk. Properties can be found on Ebay, Reddit, Craigslist, and Facebook Marketplace. These sites can also be a great way to expand your network (see above). When in these groups, remember the old Russian proverb, “trust but verify.” Tread these waters with a dose of caution and do your due diligence. Now on the internet hunting for properties, what next?
1. What do you want? Looking for “a deal” is the fastest way to get looked over. Be clear about what you want and state exactly that. If you are looking for a quad-plex under $1M in the north suburbs of Simpsonville, say that. Sellers with quad-plexes in the north suburbs will pay attention to your request.
2. Find the niche within each platform that provides what you are looking for. Within Reddit, real estate is a different group with different conversations than real estate investing. Facebook has a multitude of groups that can get very granular, so choose what fits your initial criteria from step one.
3. Going back to consistent activity over time creates results. Your time on task is important on the internet. Make an appointment with yourself on your calendar to come back to the forums/searches you’ve set up to find out the delightful responses to your searches and requests.
Do you have a clear idea of what and where you want to purchase an investment? If you, for example, have a specific neighborhood, school district, or return rate in mind, you should send those homeowners a letter in the mail. In the letter, tell them you are interested in purchasing a property like theirs and keep it short. A successful letter I have used looks like this:
Dear Alvin and Lloyd Smith,
Would you be interested in selling your home at 1122 W 12th St., Apt. 112 to my client from Boston, MA?
If so, please call me at 512-364-0949.
This tactic works well for those looking for properties with very specific requirements. Forbes explains that a handwritten letter is a personal, intimate form of communication less likely to be viewed as spam (when compared to email). It has an 80% open rate, bonus points if the envelope is hand-written.
Another use for snail mail is when out driving for dollars. Do you know a section of town you would like to invest in? Drive around there, take note of properties in distress, then send them one of these letters via snail mail. If you are more of a direct person? Knock on the door of that distressed property with a contract in hand. Make it as easy as possible for the seller to say yes.
In the world of real estate investing, off-market deals can be hot and exciting, but it is only a deal if it still meets your criteria, be it appreciation, cash-flow, or growth. So, once you have found this off-market deal, still run those numbers. Happy deal hunting!