As a real estate investor, there are many different ways that you can acquire new properties. One that you may want to rely on from time to time is driving for dollars. This is a strategy where you drive around and locate distressed properties that look to be vacant. By contacting the owner of these properties, you may be able to get them at a significant discount.
However, you’ll need to follow the five steps below to ensure that you only find good deals when you’re out driving.
Define Your Target Market
Before you ever get behind the wheel of a vehicle, you need to first figure out what your target market looks like. You could have a game plan of what specific neighborhood you’re going to be driving through so that you can concentrate on locating distressed properties instead of trying to figure out where to look.
You’ll want to find your target market based on the type of house you’re looking for, desired age, price, and so forth. You should be writing down all the necessary subdivisions that you’ll be visiting so that you can have a clear game plan or where you’re going.
Know What to Look for
Many people make the mistake of only looking for one trait in a potential property while they’re driving for dollars. The reality is that you need to be looking at several different key indicators that will let you know that no one’s living at the house.
Some of the best attributes to look for are an overflowing mailbox, no cars in the driveway, no trash cans at the curb, the need for obvious repairs, and no window coverings.
When you’re physically driving around looking for distressed properties in your target area, you should have your smartphone or another camera with you. You want to take pictures of the entire property so that you remember what it is and what needs to be repaired. Tracking your route with an advanced tool like DealMachine also comes in handy to drive for dollars in an organized manner.
Bait the Property Owner
Once you know what properties you’re going to target, it’s time to locate the owners. You can typically find the homeowner via state or municipal records in your area. It’s best to use a multi-pronged approach when trying to reach the owner of the property.
Some of these methods include direct mail, calling them, and even leaving a letter on the abandoned property’s door. The more methods of communication you have for the property owner, the more likely they’re going to respond to you.
Make Your Offer and Seal the Deal
Once a property owner contacts you, it’s time to get your offer out there. It’s important to remember that the seller is most likely motivated to get rid of the house as it just costs them money. Since it’s not on the MLS, it’s very likely that you can get them to settle for a low amount because you’re the only one that has shown interest in the property. Once you agree upon a specified purchase amount, it’s time to get the paperwork done by the title company.
Driving for dollars is an effective strategy for Real Estate Investors who are looking to turn a profit in their area. While it may not be your only property acquisition strategy, it can be useful to turn larger profits on your real estate projects.