Real Estate Research On The Cheap: Driving For Dollars

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There are a lot of all-in-one real estate investment systems out there. Systems that will generate a ton of leads for you. These systems use predictive analytics to comb through data to determine who might be the most likely to sell. But this type of research costs money. A lot of it.

You can also build these lists cheaper on your own using a site like ListSource. But there will be no predictions in this data. You set the parameters and you get the results. Want to focus on absentee owners in a certain geographic area? Done. How about people who have a lot of equity in their properties and have lived there more than 10 years? Done.

But this costs money too. Less of it. But some. And you still have to do the work. There is no system that will do the upkeep for you. My dad never had a computer system. He never built a list online. And he managed to find hundreds of properties a year.

He did it old school. With me in the car on the weekend. I didn’t know what he was doing. I just knew I was going to get a butterscotch sundae and an Intellivision game when it was over. But then I got older and I started doing it. Instinctively. I was always looking.

If you’ve never heard the phrase Driving For Dollars you are about to get an introduction to real estate research on the cheap. And it’s as simple as it sounds.

Mapping

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Just because it’s called Driving For Dollars doesn’t mean you just hop in your car and go. At some point, you will get used to always looking around to notice the top indicators of a motivated seller, but before you get there you need to learn about mapping.

I am an efficiency freak of nature so just aimlessly driving to discover real estate investments doesn’t suit me. Some Sundays it can be fun to try a new area but to get started and hedge your bets in the right direction you need to get out a map. Or open Google Maps. And if you aren’t familiar with the market prices, you might want to open Zillow too.

When you start mapping you are looking for what you believe to be the top up-and-coming areas. If an area is hot, you already missed out so please don’t bother unless you have the money to multi-bid, overpay and renovate to the hilt.

What you can do in cities or towns that are hot is look for the pockets in that city. There are always a couple of pockets that haven’t caught up to the same value as the rest of the area but still share the same schools. That’s a great area to research. But if you see multiple renovations going on, you are also too late.

Look at the map. Really look at the areas that surround you. You are looking for areas that haven’t started to go up in value yet. But you know, based on the surrounding areas, that it will come. Use Google to look for proximity to these things which serve as helpful mapping criteria to build a driving map around:

• Schools
• Parks
• Public transportation
• Starbucks
• Supermarket options

Don’t hate, there have been several articles over the past couple of years linking the influx of Starbucks to property values going up. The article below also includes Whole Foods and Trader Joes as indicators.

time.com

You have to know your areas to properly map your Driving For Dollars routes. But one thing you will find is that the more you drive, the more you begin to identify the key factors in future real estate investment success.

Once you’ve established some front runners in terms of areas, now is the time to do property value research. You can use Zillow, but know that many things will be left out. You are looking for steady value at a lower level than surrounding towns. And you are looking to see if newly renovated homes are for sale or have just sold.

If you don’t do proper mapping you will waste a lot of time. It might be a fun time getting to know certain areas, but you can account for time spent like this later. If you want to beat the other investors to the good deals, you start by mapping your roadway to success.

Driving

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So you did your mapping research and now you have some areas of interest. It’s time to hop in the car to use your eyes to start to identify what to look for.

Pro tip: You should always be driving with a partner. If not, you will be almost getting in 37 accidents and pulling over to write things down all the time. You will end up spending four times the amount of time you would without a partner. One drives, one scribbles. Both look.

When driving you are first looking for the worst house on the best block. Never the other way around. So you want blocks with well-kept homes and manicured lawns. Until you see the one or two that don’t fit in. You will know them when you see them.

Instead of telling you more in story form, I am going to cut to the chase with a list of a few things to look for that may be indicators, without any back data, of someone who may be looking to sell for the right offer. Here it is:

• Unmowed lawns and out of control front yards.
• Chipping exterior paint in a variety of spots.
• Roofs in bad shape.
• Multiple broken windows.
• For Sale By Owner sign in the yard.
• Decrepit front doors.

These are just characteristics that tell you that someone does not want to or can not take care of the house. Or just doesn’t care. This also can be an indicator of someone who might need to get out from under this house and start fresh.

When the house appears to be a burden to the owner, from the exterior view, it usually is. And then some.

Charting

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Make a written chart (trust me it’s easier when you are driving than using a tablet) with these headers:

• Number
• Street
• House Color
• Notes

The first three are easy, but what about Notes. Notes are literally anything that stand out. Looks like a two-family (better investment). Mail all over the porch (an indicator of an absentee owner with an unrented property). Gutters falling off. Corner lot. Anything that stands out for good or bad.

This is why you need a partner to Drive for Dollars with. Because when you get good at this you need to write a lot. Because you are writing to help you when you go back and do research. You will stop a lot either way, but you also need to be safe driving as well.

Your notes need to help you remember exactly which house it was. If you are working with a partner you also might want to take a quick snapshot of the house as well and quickly add in the address to the photo. You think you will remember the good ones, but after driving for three hours you won’t remember sh*t.

Make a chart. Write anything down that could be of any relevance.

Your Next Steps

Now it’s time to organize your prospects and gather data on them. You can use free county search tools to see when the home was purchased and for how much. You can also get an address for the owner if they don’t live there (absentee owner = potentially ripe to sell).

After your research is done, you move on to the contact phase. But that is a completely separate post about how to approach a homeowner by both mail, phone and potentially email. This one was just about Driving For Dollars.

Why Driving For Dollars is the Best Practice

Even if you don’t have the money for investing in real estate right now, Driving For Dollars is fun. And you can also practice evaluating houses. If you drive an area and take notes and then follow-up every three to six months you can see which houses are being renovated and which are for sale. From your list. And you can see how your property evaluation techniques are going.

As I will talk about in an upcoming piece about how to approach homeowners, sometimes you get lucky when you are Driving For Dollars and someone is having a yard sale. Or they are out in their garage. Don’t think it’s crazy. Back in the day, my dad bought a few houses just from meeting the owners at their yard sale. I probably nabbed some baseball cards.

To be a profitable real estate investor you have to be able to trust your own eyes first and foremost. And you won’t be able to do that until you have practice using them. So, what are you going to do today? Get mapping. And driving. And charting.