Out of the box advice wanted

[Elizabeth Grunnah]

Hi friends, I've worked for an investor in DFW for three years now and we have had some success here flipping houses. But in the past year, as I'm sure most of you know, it's been nearly impossible to find inventory. Since we're a small company and need more profit than the bigger ones to keep going, our offers are not as high as other flippers can offer, especially wholesalers and the like. I get 50 wholesale emails a day and 49 of them will be trash. I scour the MLS every day; everyone is holding out for list price. Our main way of obtaining inventory is through direct mail, which also isn't working as well as it used to anymore since the owners of these homes know they can call five other companies and get five more offers. Our selling point is that we can close with cash in 3 days to a week, no option period, no inspections beyond taking a cursory look at the house once, so quick and easy. My investor doesn't do rental houses at the moment, just flipping, although if times continue like this we may have to look at that option.

So my question is, am I missing some out of the box way to obtain more inventory? The investor I work for lives and works in Austin (which continues to be a ridiculously hot market, so unlike here) so he doesn't have his finger on the pulse of the Dallas market as much as I do and can't really advise me in a different direction. I'm feeling pretty frustrated and would love to hear what y'all think I can be doing differently. Thank you!

[Michael Ealy]

Originally posted by @Elizabeth Grunnah:

Hi friends, I've worked for an investor in DFW for three years now and we have had some success here flipping houses. But in the past year, as I'm sure most of you know, it's been nearly impossible to find inventory. Since we're a small company and need more profit than the bigger ones to keep going, our offers are not as high as other flippers can offer, especially wholesalers and the like. I get 50 wholesale emails a day and 49 of them will be trash. I scour the MLS every day; everyone is holding out for list price. Our main way of obtaining inventory is through direct mail, which also isn't working as well as it used to anymore since the owners of these homes know they can call five other companies and get five more offers. Our selling point is that we can close with cash in 3 days to a week, no option period, no inspections beyond taking a cursory look at the house once, so quick and easy. My investor doesn't do rental houses at the moment, just flipping, although if times continue like this we may have to look at that option.

So my question is, am I missing some out of the box way to obtain more inventory? The investor I work for lives and works in Austin (which continues to be a ridiculously hot market, so unlike here) so he doesn't have his finger on the pulse of the Dallas market as much as I do and can't really advise me in a different direction. I'm feeling pretty frustrated and would love to hear what y'all think I can be doing differently. Thank you!

Elizabeth,

If I am a guru - I will ask for $35,000 for this out of the box advice I am going to give you right now (LOL). Because the below advice is going to make your investor 10X that money.

Seriously...

You described the problems of the majority of flippers in most real estate markets in the US today - deal flow.

So how do you get deal-flow in a hot market?

Here's how. 

You got to have MULTIPLE sources of deals.

For instance...

1.  Do you work with the Building Department of your city so you can identify vacant properties with code violations? You can then send direct mail to the owners of properties with serious code violation issues. But, to get the list, you should look into talking with your city officials and position your company as helping get rid of properties that need work.

2. Do you have relationships with Property Preservation Companies? These are companies that secure pre-foreclosure properties - change locks and do some light rehab - before they list them on the MLS. By showing to these PPCs you're a legitimate cash buyer, then they might connect you with the listing agent so you can buy these houses the day they get listed and you're first in line.

3. Cold call section 8 landlords in your city. How do you find them? Talk to your city's housing department. You can ask these landlords if they are willing to buy more properties or if they're willing to sell. If they're willing to buy more properties, you can add them to your buyers' list (you can wholesale properties you don't want or properties that don't fit your rehab-profile like properties that are more for rentals). If they are tired with landlording, they might be willing to sell.

These are just three sources of deals that most investors don't look into (we do these and MORE). They take a lot more work than scouring the MLS for deals or talking to wholesalers but once you do them and systematize them, you will have the deal-flow that you're looking for.