Landing Your First Property

[Zach Shahan]

For those just starting out, it is hard to find your first "good" deal. Especially because all the big-name investors in your area have all the real estate agents on speed dial and get first dibs at a property. Most of them get a phone call before the property is even listed on the internet.

How do you recommend finding good deals? It sounds like you will just have to take a risk on a property that a big-name investor did not want. With that being said, it truly cannot be that good of a deal if they did not take it?

[Erik W.]

Keep in mind that all the "big" guys in your area were small guys at one time.  You will start like they did...small.  Buy a house.  It may not be a great deal, but it should be a solid deal.  Get comfy with the terminology, the timeline, and make yourself a checklist of things that outline the process step by step.  Agents like to work with investors who have some knowledge of what to expect so they don't have to hold your hand thru the entire thing start to finish.  Yes, I know that's what their commission is for, but you're going to be buying at steep discounts that may not leave them much anyway.  So you make up for that by not wasting a lot of their time poking around 50+ properties.  On that note, they also don't like working with low-ballers.  If that's your strategy, that's fine, but most agents are retail sellers of retail properties.  You will not often get great deals shopping the retail market.

Where to find deals?  Word of mouth is a good start.  Talk to family, friends, and various social circles.  Signs in the neighborhood ("Sell your house FAST!...insert phone#").   When someone wants to sell a home, you want your name in their mind.  People don't always sell to the biggest investors: often they sell to whomever first pops into their mind.  Go to local clubs / business meetings and shake hands.  Hand out business cards.  Ask if you can put up a printed sign on their bulletin board.  Take a few boxes of donuts and bagels to the local real estate offices for their weekly team meeting and tape your business card on all sides.  Introduce yourself and let them know what kinds of houses you want, specifically.  Don't just say, "I'm looking for good deals..."  Aren't we all!  ;-)  Tell them, "I want to buy 3+ bedroom houses with at least 1.5 bathrooms needing light to moderate rehab, between 1200-1800 square feet, within 2 miles of the Hospital over off of 3rd street."  That gives them direction.  If you can print those criteria on the back of your business card, even better!

I didn't really start finding GOOD deals until I was several years in.  I started slowly with some modest successes that laid the foundation to move into bigger stuff.  One of the best early-on deals I got was when I asked my handyman if he knew anyone who was selling stuff, and he introduced me to an older gentleman he'd done some work for who was unloading his entire portfolio of 100+ houses.  Unfortunately, he had sold most of them by then, but I found some that were still good and he was willing to 0% down owner finance to me because 1) I had a track record 2) I was introduced via a trusted relationship.  I ended up buying 8 houses from him, and they've all been cash flow cows!