3 ways of sourcing off market deals you haven't heard of

[Joshua Michael Hauman]

Direct Mail Marketing, Cold Calling, Door Knocking, Driving for Dollars, Wholesalers, Facebook groups, the list goes on.

I've done a couple deals using the methods mentioned above and seen others succeed with them as well. What I'm about to share is the 3 ways I use to source off market deals and the mindset shift that differentiates these strategies from the rest of the pack.

Sourcing Deals from Lenders, especially, Hard Money Lenders:

Banks are in the business of lending, not owning real estate. When a borrower takes on a loan and cannot keep it current the lender in may of these cases forecloses on them and repos the property. The bank doesn't want to hold onto this so they oftentimes will sell it off, in many cases, at a discount to get it off their books. This has landed me some fantastic deals that I ended up BRRRRing or outright flipping. Oftentimes, the lender will rewrite a new loan and get another set of lender fees thus rinsing and repeating the process and making more income on lending for that property with a better hope of the borrower keeping the loan current. The breakdown of how this plays out in real life or at least how its worked for me is this:

• Step 1: Research and identify local lenders, especially hard money lenders, who specialize in financing real estate deals. I've had luck meeting people at my local Real Estate Investors Association, asking other flippers who they recommend for bridge debt and simply google searching lenders in my area.
• Step 2: Understand that banks and lending institutions are primarily in the business of lending, not buying or managing real estate. They want the loan, not the asset. 
• Step 3: Attend industry events, conferences, and networking functions where lenders and investors converge. In my experience events have sponsors. Oftentimes some the vendors or sponsors of the event are lenders.
• Step 4: Initiate conversations with lenders to express your interest in acquiring properties. Do not mention that you are looking for properties they have repossessed or foreclosed on. This is a very bad practice to use when conversing with lenders of any kind. Simply tell them who you are, what you do and then ask them lots of questions about their business and what kinds of projects they like to take on to build the relationship.
• Step 5: Build trust and credibility by demonstrating your ability to close deals promptly and professionally. If you have yet to close a deal that's ok. Send them your buy box, follow up with them consistently. Ask them questions you have curiosity about. If they send you a property, review it and provide your feedback quickly as to if it fits your criteria or not. As you build the relationship and maintain ongoing communication with these lenders you stay top of mind and continue to plan the seed that if they have any other inventory available you give yourself the best opportunity to be at the top of their list.  

Contacting Craigslist Sellers for Purchase:

Just like banks prefer lending over owning real estate, some property owners who list their homes for rent may have a change of heart when presented with the opportunity to sell. Some landlords renting out their properties find they can unlock a range of advantages if they were to sell. Although they initially explore the rental route, they may discover even more benefit from selling. This not only provides them with a faster exit from property ownership but can also lead to a more seamless transition for you as the buyer. Here is how I've done this successfully:

• Step 1: Find rental property listings on Craigslist using relevant keywords in my target markets.
• Step 2: Reach out to the seller via phone or email with a polite message expressing your interest in their property.
• Step 3: Inquire about the rental property and gather information about its features and terms.
• Step 4: Express your interest in potentially purchasing the property instead of renting it.
• Step 5: Build rapport, negotiate, and conduct due diligence as needed to facilitate the purchase transaction. Easier said than done, volume is the name of the game here. I've built great relationships with property owners this way that has lead to lender, contractor, agent and property management referrals even when I the deal didn't pan out as it wasn't in their best interest to sell. Its important that you keep the frame of win-win or no deal rather than pushing them to sell the property if its not aligned with their best interest.

Building Relationships with Real Estate Agents for Pocket Listings:

Pocket listings are properties held 'in the pocket' of real estate agents, not yet officially listed on the market, while expired listings are properties that didn't sell during their initial listing period. Both present unique opportunities to secure off-market deals, and the key to unlocking these opportunities lies in building strong relationships with real estate agents.

• Step 1: Identify local real estate agents who specialize in the type of properties you are interested in.
• Step 2: Attend local real estate networking events, seminars, or open houses to meet agents in person. Using sites like zillow, redfin etc.. can also help you find current properties listed in your market that fit your criteria. You can often see how much transaction volume that relator has done. Since their contact information is listed on the site its easy to use this to connect.
• Step 3: Initiate conversations with agents. Similar to the lenders situation you don't come out of the gate expressing your interest in off-market or pocket listings. The relationship needs to be developed overtime.
• Step 4: Establish credibility by sharing your investment goals, your ability to close deals quickly, and any relevant experience. If you don't have much, rely on promptness and professionalism in communication.
• Step 5: Maintain regular contact with agents, keep them updated on your criteria, and build a strong working relationship to gain access to their pocket listings when they become available.

The Mindset Shift

The key takeaway here is by building trust and credibility in these relationships with lenders, owners and agents overtime builds you an inbound deal acquisition machine. 

You could constantly spend time and energy:
Sending letters out

Competing with other investors on Facebook

Competing with wholesalers email list of dispo buyers

Making cold calls 

Driving for dollars

Or...

You could build relationships with the people that have the deals so when they have opportunities, you are top of mind and have the reputation as a closer.

Its great if you know the market, its better if the market knows you.

With Discipline,

Josh