How to find a good deal

Question

Hi,

I am new to the forum and figured I would just get started. I am interested in starting out in real estate investing. So forgive me if my questions below seem insanely amateur.

I was wondering if anyone with any experience knows the best way to "find a deal" when investing in Real Estate.

I keep seeing you make your money when you buy. But how exactly do you get at a good price?

I have been listening to podcasts and reading some books, but not much is mentioned in detail. Maybe I am reading the wrong books or overcomplicating it, but it seems like this area gets skimmed over.

From the research I have been doing, going through an agent in any market likely means you are getting a Market/Retail price. AKA not a good deal. I am sure you could run the numbers and the property might cash-flow, but why go this route when you can do better?

How do you get a below Market price property?

I have only been able to identify a few methods for this based on my research.

Literally spamming neighborhoods with "I will buy your house" type marketing. But no one ever seems to talk about how that works once you get an interested party. Sure I can learn to work the numbers out with them and settle on a price or any contingencies. But how would I buy someone's house directly when I do not know much about the real estate documents required. Sidestep an agent by getting a lawyer involved? Is this easier to do once you've obtained a license and the respective knowledge?
Buying a distressed property that is under market because most buyers want move-in ready. Fix it up and add equity and then you got yourself a "deal." Although this seems to come with risk since it requires making repairs on a property. Which probably means having a good relationship with a contractor, having some basic repair knowledge yourself, and hoping it doesn't go over budget to blow your "good deal."
Possibly obtaining your Real Estate license to search the MLS. However, I don't understand how this will give you deals because this means the property already has a selling agent. Then you are back at buying at retail prices. Am I missing something?

Are there other ways? Are these methods themselves valid? Any insights appreciated.

Brenden Mitchum · Answer

Hey @Curtis Borns, welcome to the BP community!You're correct, that question does seem amateur but not because the answer is simple. In fact, the answer to that question is insanely complex. It will depend on your market, your goals, your network, your available capital & probably a bunch of other stuff I'm not thinking of. Bottom line is, it depends on your situation. There isn't any one answer, but typically the best way to find great deals is off-market, or at least that's what BP has taught us. Truth is, even going direct to seller these days can be tough and lead to months of frustration before you find your first inkling of a deal. My suggestion would be to, instead of beating your head against that "below market" wall in hot markets, find a creative strategy that boosts effective income generation. Then, despite having a property at "market value" you're still able to cash flow and see a solid ROI. Make sure this strategy will not crumble in a down market though because you will not have much of an equity cushion if this happens in the near future. Buying at market is only risky if your strategy is not solid. If this answer was too complicated, just focus on education and networking for now. Surround yourself with the right people & information and opportunity will come. Get yourself in an investor, abundance mindset too - make sure you understand where you want to be one day and how hard you need to work to get there. I promise, deals are out there but it takes time & persistence to learn how to find them. There is no hack or easy answer here. Hope this helps a bit - please, feel free to reach out anytime if you have other questions or just want to chat!

Curtis Borns · Answer

@Brenden Mitchum, Thank you! I will continue to do more research. I appreciate your offer for help! I am sure more questions will arise. @Bob Okenwa, Thank you! I did not know that bit of information about private notes coinciding with MLS access. To your point about retail price relativity, I purchased my primary residence in Aug of 2020 and have seen pretty good appreciation. The price I got it at back then would definitely be considered a "deal" today. I will check out that book, appreciate the tip! @Sherry McQuage, Great information Sherry! I am located in the Bay Area in California. Due to the high cost of property here I am aiming to invest out of state. I need to continue to do research before deciding on my target market. Thanks for extending an offer to assist! I like your point about not necessarily having to find a "home run" or "hot deal", especially with my experience level. At this point it's just important that I start. @Drew Cheezum, Thanks for the warm welcome! I considered getting a real estate license, but I am mostly considering investing out of state; therefore, you make a great point about not wasting my time. However, looks like it may be possible to get a CA license and then leverage that for a state that offers reciprocity. Perhaps that could still be worth it?What do you think is a good way to locate an effective buyer agent, especially out of state? Seems like finding a great agent that specializes in investing is a good option. Also, perhaps a novice question, but what is the auditor site? This will let a realtor know if someone has missed payments and could be a target for selling? I did not know this was something an agent could do.

Drew Cheezum · Answer

@Curtis Borns Welcome to BP! I agree with everyone above, there are plenty of ways to find "good" deals but none is necessarily easy. If you are looking to invest locally then getting your real estate license may be a good option, however there are some barriers to entry (time and money to get the license, local Realtor association fees, etc.) to even get the MLS access. If you are thinking about out of state investing than I wouldn't waste your time getting your license since the MLS is limited to your market. I agree with @Sherry McQuage in that using a buyer agent can be a good idea. They should know what a good deal vs a bad deal is. Not EVERY listing is appropriately priced (some agents out there aren't the best haha) and they can help spot deals for you. Some agents specialize in investors and spend most of their time finding off-market deals for their clients utilizing the tools you mentioned. Using the auditor site to pull single family/multi family properties in the neighborhood you're interested in, and then skip tracing those properties is a great way to find off-market deals! I do that here in Columbus, OH and have had a lot of success.Best of luck!

Sherry McQuage · Answer

Hello,The two responses you have already received are spot on. Your profile doesn't say where you are located, and I don't know what areas/states/towns you are looking in....Since you are a self-proclaimed newbie, working with a buyer agent might actually be helpful to you. The seller pays their commission, and if you can find an experienced investor-friendly agent, you can learn while you look. The best deals are off-market, or properties that have been on the market for a while that have a "problem" that no one else wants to tackle....figure out how to solve the property's problem and you could turn it into a deal. You may not find or need a home run the first time out...just getting a fair deal and making it work could also teach you sooooo much.If you want to look for property in Moore County, NC, I would be happy to assist you. Keep listening to BP podcasts, read investing books, post on the BP forums, and keep asking questions. There is no short cut to figuring out where/how to find good deals. Right now, there are so many investors out there (with lots of experience and lots of $$$), so unless you stumble upon a property near where you live, you are probably not going to find "a hot deal". You don't have to have a hot deal; a fair deal is good, too.Best to you,Sherry

Bob Okenwa · Answer

You get properties below market prices by targeting what a seller is looking for and solving a problem or buying something that needs work that others are not willing to take on. If you can identify what the seller's motivations are (easier said than done), then you'll be heading in the right direction towards getting a deal.If you can close quickly with cash and no or few contingencies, you can usually get a better deal on a home than someone with traditional financing that takes 30-60 days to close.To answer your questions:1. Use the search feature in the top right corner of the screen. Lots of people talk about direct mail campaigns and how they work when someone replies to a letter.2. Just about everything in the world involves risk. Driving your car on the freeway, eating at a restaurant, spending too much time in the sun, etc. Investments always carry risk. Some more than others. Due diligence and experience help mitigate this risk to an extent. 3. Having a real estate license and MLS access helps as there are private notes that only realtors can see that can sometimes explain seller motivation or contain other notes about the property or seller situation. Retail price today can end up being a great deal tomorrow. Anyone who got a house between 2015 and 2020 probably doubled or tripled their investment by now.Going through an agent doesn't automatically equal "bad deal" because it is on the MLS. Depending on the market you're in, there are still deals to be found on the market, but the best deals are usually found off-market as there is less competition. Focus on running the numbers and what's on the market and how you can structure an offer that makes the deal work for you and the seller. If you haven't already done so, I'd suggest reading the Book On Negotiating Real Estate.

Cameron Braig · Answer

@Curtis BornsWelcome to the BP Forum and congratulations on getting started.

Drew Cheezum · Answer

@Curtis Borns Reciprocity is an option! But there are typically some additional barriers to getting those reciprocal licenses. You'd definitely want to check out what barriers there are.I think bigger pockets is great way to meet buyers agents for out of state investors! There are plenty of us agents on here in addition to investors. If you see an agent that you feel you'd connect with based on their comments, it never hurts to DM them if they're in a market you're considering! Most of us have our title in our bios.As for the auditor site, that is something we have through our county website. All real estate transactions are public information in my state so the County Auditor website has property information as well as the recorded owners.