Why You Should Consider Wholesaling All Ownership-Type Properties

Real estate professionals have a tendency to fixate on the low-hanging fruit. However, the juiciest pickings could be slightly higher yet still within reach.

Case in point: Out of the four main ownership types (absentee-owned, owner-occupied, bank-owned, corporate-owned), most wholesalers concentrate the majority of their efforts on absentee-owned properties. The benefits of targeting absentee-owned properties seem obvious. For instance, out-of-state owners might not realize that properties have gone downhill. Even if they do live nearby, they could be exhausted by the hassle of keeping up the home. This opens the door to a fast, discounted sale.

On the other hand, the most challenging aspect of absentee owners is competition. Everyone from flippers to agents reaches out to absentee owners, and there's an added layer of complexity in dealing with renters — particularly if tenants have defaulted on rent.

Still, absentee-owned properties remain the primary lead source for many real estate professionals. These properties are hardly the only choice, though. If you want to diversify your leads, look for smart ways to incorporate other property types into your deal stream.

Other Owner-Type Leads

Consider owner-occupied real estate. Just because people reside in the houses doesn’t mean they aren’t open to moving. Many of the 75 million homeowners in the country dream of upsizing, downsizing, or simply relocating but don't think it’s feasible. If a property is distressed or in need of major repairs, it's possible the owners don't have the time or money to maintain it. They could be overwhelmed with the property and looking for a way out. At the very least, they might be willing to hear their options.

My first three major deals were all owner-occupied. The first owner-occupant I worked with had a home with a tarp on the roof. I sent him postcards from DealMachine for seven months, but he didn't respond until he had surgery and could no longer keep up with the maintenance. It was a true win-win for both of us.

The upside of owner-occupied homes is that the homeowners are present and immediately accessible for direct communication. It's likely those homeowners rarely receive marketing, so they won’t have gone through the same spiel a million times. These folks might be on the fence until one day, a life-changing event occurs and forces them to sell quickly.

In my case, the owner had surgery and could no longer keep up with maintenance. As a result, he needed to move into an assisted living facility. Diligence pays off with owner-occupied properties.

How about those bank-owned houses? These properties are often just sitting, practically begging to be sold. I've never been involved with a bank-owned deal, but most people think these properties are impossible to buy until the bank decides to list them. However, I've heard stories of people calling the actual bank and making an offer that got accepted. Persistence is the only way to crack this nut.

Real estate owned by corporations is another unique option. Most companies that acquire properties have mechanisms in place to steadily churn out passive income. Nevertheless, organizations might willingly unload a few of their lower-performing properties to provide disposable funds to scoop up additional homes, condos, or apartments. In other cases, they've kept the property for years without making updates — and decide to unload them at a discount instead of funding renovations. In addition to buying corporate-owned properties, it could be worthwhile to build a relationship with the company to see whether it wants to buy properties from YOU.

Buying Strategies That Include All Forms of Properties

Want to diversify your leads for deals and buyers alike? Worry less about the type of property you’re buying, and incorporate the following methods to unearth some gems.

1. Ask owners if they want to sell.

It might seem crazy or uncomfortable to contact homeowners or knock on their doors to ask if you can buy their homes out of the blue. Do it anyway. I have stumbled upon amazing deals, and plenty of them were owned by occupants who couldn’t keep up with maintenance. I completely understand why they fall behind: Grass doesn’t mow itself, roofs eventually wear out, and replacement HVAC systems are pricey. The owners were relieved to unload a money pit, and I added another property to my portfolio.

2. Look for signs of distress first.

If you see a distressed property, get in touch with the owner immediately — whether it's a vacant piece of real estate or a home with tenants. You can often snatch these properties for far less than their retail market value because the repairs or updates needed to take it to market would be considerable. Hence, you get a discount. Excluding bank-owned properties, the owners of these run-down locations could be open to fast, private cash sales that skirt the need for appraisals or inspections.

3. Woo corporate owners to become buyers.

Corporations might not want to sell properties, but they could be interested in buying more from wholesalers. These are thoughtful, savvy investors who probably have experience landlording or hiring property managers. Consequently, wholesalers who knock on these companies' doors might find themselves with potential future buyers.

4. Push hard for absentee-owned properties.

Just because absentee owners are swamped with other offers doesn’t mean they won’t accept yours. Be consistent with your messaging without being pushy or resorting to fear tactics. It may take a dozen tries to get an absentee owner to bite, but you'll want to be their first phone call when they make that choice.

You'll also want to get more creative with your marketing to absentee owners, such as the ballpoint pen letters we recently launched at DealMachine. We write these letters with actual ballpoint pens, which helps us stand out as more personal than others.

Above all else, stop fretting about property type, and stay alert for distressed properties. Use the ZIP code method to analyze where to hunt for run-down properties in your area, then get in the car and go. It’s time to harvest the entire bounty on the tree rather than fight for a few morsels.