Tips for finding homes not on MLS?

Question

I've read the suggestions for fsbo.com and craigslist.com, but I'm not finding much at all on fsbo.com and none of the properties on craigslist have addresses so I can go check them out.

Any tips or ideas on how to find deals that are not on the MLS?

Ned Carey · Answer

If you are looking on FSBO.com or Craigs list.com you might as well be looking on the MLS.  Those deals are no secret. Lots of investors look there.

Here are some people or situation to market to
Pre-foreclosure
rent court
vacant houses
absentee owners
out of state owners
code violations
fires
tax delinquent properties
probate/estates
bankruptcy
attorneys for the above
boarded up houses

Jerry Puckett and Michael Quarles are both very sharp marketing guys here on BP follow them and read their posts. They can help you figure how to reach the above with the right message.   Good luck - Ned

Jerry Puckett · Answer

Brian,

Probably the very best way to find off market deals is to market for them yourself. I work with several Landlords in my area (where the MLS is as dry as a bone) helping them to get their own deals. It's a matter of making a list and sending your message out far and wide, inviting people to talk to you about selling their house. From there a little negotiation and the next thing you know, you have a smokin hot deal.

Learn to do it yourself, and you'll never be dry, even when the MLS is.

Alternately, you could try to find decent wholesalers in your area, and get on their lists.

David Beard · Answer

For a buy & hold investor who is only going to buy 1 to 4 properties per year, particularly if you have a full-time job, it seems like the most cost-and time-effective approach is probably to find a few good wholesalers, as Jerry suggests, and pay them their 4-8K fee per deal.  Otherwise, the expense of doing large mailings, and the time of taking all the calls, meeting with sellers, etc., seems hard to justify if you're not doing volume.

You might say, but 3 deals times 6k wholesale fee per deal = $18K that I could have saved/earned by doing my own marketing, minus the cost of the mailings and the value of the many hours spent on it.  But... the experienced wholesaler who is out there every day will probably negotiate a lower price than you could, so when all is said and done the value of doing your own direct mailing as a small-volume buy & hold buyer seems dubious, at least to me.

I'd love to hear other perspectives.  Jerry Puckett, you said you work with several landlords.  What kind of annual volume are they targeting for adding to their portfolio?  Are they also trying to wholesale additional deals--those above what they can personally take down-- that they come across where the numbers work?  Are they taking all the calls themselves?

Steve Babiak · Answer

Here you go:

http://www.biggerpockets.com/forums/93/topics/76751-finding-motivated-sellers-my-list

http://www.biggerpockets.com/forums/311/topics/83692-cant-find-any-deals

Brian P. · Answer

Brian,

Half the properties for sale are not on the MLS.  Most of these are not listed. Some are listed but not on the MLS because you have an agent that gave the seller a snow job and is trying for a double ender, these are pocket listings. I made it a habit of asking the broker of the office do you have any listings right now that are not on the MLS. I found a few that lied and was only to happy to have the DRE suspend or pull their license for violating their duties required under agency law.

The whole point is you never know if a property is for sale or not unless you ask the owner. Over the years I have made deals just by saying to an owner I understand you have a property you would like to sell, is that true? I didn't even know if they owned a property, but who cares, shoot enougn arrows into the air and some will hit something. Could just have been sitting in a bar waiting for my wife to join me for dinner or whatever. First time it happened the guy said I didn't think anyone knew about that.

Be sure to talk to anyone, and listen to everyone, and keep your eyes open and observe. One of my first deals was the result of being in a car with 3 other investors and passing a property that I thought should be checked out. We passed it several times. I was new and they were old timers, so I just made a mental note and finally checked it out a few weeks later and hit upon an old woman that just wanted to sell her 4 rentals and her home and move in with her sister in another state. I'm sure I got those deals because I showed up at her door and we had tea together and I let her talk.

Jeremy Vogan · Answer

Local brokers are a great resource. They will have relationships with local home builders with portfolios of leased properties for sale that are off market and don't appear on the MLS. In today's red-hot rental market (Virginia is no exception) there are some awesome deals out there, and brokers who bring deals are compensated at 3%.

JV

Jerry Puckett · Answer

Hi David,

I tend to disagree, and here's why. For starters, the OP is looking for ways to find properties off the MLS. The reason being that the MLS seems to be dry or overly competitive in most areas in today's market. Finding a good wholesaler is another option, but 1) they are notoriously hard to find, and 2) with all the cash flying around the market these days, wholesalers are able to ask for more, making the margins smaller. In short, also very competitive. Me? I need another buyer like I need a whole in the head.

On the other hand, for the price of one wholesale fee (or Agent's commission), you can fund a 6 month campaign that is likely to turn up several deals. You cherry pick the ones you want, you wholesale or otherwise monetize the ones you don't. You make the campaign pay for itself

Taking the calls can be challenging at first, but it's a great skill set to acquire, particularly if you're looking to find off MLS deals. In fact, develop this skill and you'll not lack for a deal again. You can also find an assistant to filter the calls so that the only ones you deal with are the ones where it's time to begin due diligence. I'm guessing that as an Investor, you do a lot of due diligence, on many more properties than you actually buy. This is no different.

It's a continuum. I have one that would love to buy one property a month; another who only wants two this year, a few in between, not to mention a developer who's buying criteria is very narrow.

The ones that are local, I wholesale the "additional" deals for them, those that aren't I guide into doing the same.

Most of them take the calls themselves. When I launch their campaign, I keep my hand on the throttle so to speak, so that they do not get inundated with calls. It can be controlled to what you're comfortable with.

The long and short of it is this: the OP asked for tips in finding off MLS deals, and IMHO, marketing for your own is the very best way to do it.

David Krulac · Answer

You've already received lots of good suggestions.

Word of mouth brings in some deals.  Have a business card, tell everybody that you are in the market to buy.  If you have an existing property tell all the neighbors, "This is such a nice area, I would like to buy some more property here."

If you are employed, tell everybody that you work with.  A word of caution here, keep it on the down low.  You don't want your bosses/employer to think real estate is your first priority.  And secondly you don't want to have your co-workers jealous.

The first property that I bought was not listed, but a co-worker lived on the same cul-de-sac street and knew that I was looking.  Its a long story which I won't re-tell here, but it was one of the best deals I ever made.  (No rent/mortgage payment for 6 months, some utilities and lawn care paid by owner for 6 months.)  It was slightly advertised, but very poorly with the only description of the house being "having there upon a dwelling."  I missed that ad and so did most other people and the sign on the house drew little attention on a cul-de-sac street with no through traffic.

The second property that I bought was unlisted by owned by the deceased grandmother of a co-worker of my girlfriend.  Not listed, no sign on the property, not advertised, deceased owner, small apartment building with the owner's unit vacant.  There was no competition.

Another co-worker (not #1 above) got a job transfer 2,000 miles away.  He had to report to his new job in 30 days.  His plan was to leave the family here, go to his new job and wait for the home to sell.  Before the property was listed, I made him an offer to sell me his house, settle within 30 days so he, his family and all their possession could make the 2,000 mile journey to their new home together.

The added bonus was he also had a rental property, that was his former home, that he wanted to sell.  I bought that also, zero down, seller financed, positive cash flow, with an existing tenant who stayed 9 more years after I bought it.  No down payment, positive cashflow and not a day of vacancy for 9 years, does it get any better than this?

Brian W. · Answer

These two posts are some of the very best advice I've received in my time here at BP.

Thank you very much Ned and David.

Brian W. · Answer

Great advice Brian and Jerry.  Thanks a lot.

Tips for finding homes not on MLS?

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