One of the biggest questions I get asked is how we find our deals. I thought I’d write about this topic at the request of one of the blog readers. Thanks for the question, Josiah!
When we first started doing this thing, deals could be found on the MLS pretty easily. It wasn’t a seller’s market like it is at the time of this writing; in the middle of 2019. There are still deals to be found there perhaps but we mainly buy off-market deals these days. I’m going to list the ways we have found our deals here for a very small marketing budget.
We are huge believers in networking. We have young kids or we’d be out at more meetups each week. But in keeping with our “keeping the main thing the main thing” philosophy, we balance the meetups with family time. Some of you may have seen us at a meetup dragging two cute kids along. We’re those people. In meeting people at these events, we have found people liquidating properties that we’ve bought from them. We’ve also met some good wholesalers who we have bought multiple properties from. All of these deals came from free meetups or low fee REIA groups. I would say that these connections have led directly to about 5 of our properties and two of our private lenders. I cannot emphasize enough the value of these groups. The one thing I would suggest, that I didn’t do initially, is to go to these meetups with the idea of talking to people. And don’t talk to the same people each time. As comfortable as it is to mingle with people you are familiar with; you are not building your network as broadly as possible if you do this. Instead, set up a time to meet with those closer connections at a later time to dig deeper into what you have in common but do what your mama said not to: talk to strangers! Tell everyone what you are looking for and what you are interested in. Connect on social media sites and follow the businesses of your new acquaintances to see who is doing what. You’ll soon see that there are lots of people who attend and a small percentage who are doing deals. Some of those who aren’t doing deals never will and some just haven’t YET.
The most surprising thing we found was how willing other investors were to give us tips and suggestions. Almost everyone we met shared things with us to help our business. It wasn’t the competitive atmosphere I had imagined. These people seemed to truly believe in the abundance theory.
Wholesaler. What does that word evoke for you? If you are a retailer of some product, a wholesaler is usually the person or company that supplies you with the product that you sell. This is pretty much what a real estate wholesaler is. They find properties before they make it to market and they get them under contract and sell their rights to the contract to investors. Wholesalers can be a great source of deals. They market by many methods and earn their fees by their hustle. But just because the deal is from a wholesaler doesn’t mean it is a good deal. You must vet the deal for yourself.
Like just about any trade, wholesalers are individuals that run from true professionals to less than ideal business partners. When you agree to buy these deals, the fee the wholesaler will earn is normally not divulged but it may be seen at closing. DO NOT complain about the fee. If the deal is good enough for you as you agreed to buy it, then the wholesaler earned their fee. We have paid from 3,000 to 25,000 dollars on individual deals. At first the 25K fee stung but the deal still worked for us. And then we realized that unless we want to set up a big marketing machine, we will have to pay others for their work. It’s only fair. We might have paid too much for a few deals too but we wouldn’t be here without a few mediocre deals that helped us get better at our trade. But time makes them all better!
Door knocking brought us our easiest BRRRR deal to date. If you haven’t read that story you can read it HERE.
This deal cost us zero dollars and has had truly zero vacancy and minimal repairs. We still meet all of the neighbors of the houses we buy but we haven’t found any other projects this way YET! We will! The sellers told us they sold to us because they trusted us. I am the worst salesman you’ve ever met. I rely on building a relationship with a seller and offering them several options. Us buying the house is usually two or three of the options with different terms; along with some options that don’t involve us. They can pick what works for them. We are honest and transparent and never pressure sellers in what may be the biggest decision of their financial lives. We may not be the biggest rental property owners in Texas but we do pretty well and we sleep well at night knowing we can hold our head high and that all of our sellers would speak highly of what we offered and how we treated them. For us it is about building genuine trust and treating people with respect and finding ways to solve their problems. Hint: it’s not always about the money.
MLS. We have bought three rentals off of MLS but not in a few years. There are a lot of strategies to make offers on these. Some pursue expired listings. Some throw out lots of low offers and see what sticks. I haven’t done any of these but I’m sure there are deals to be mined off of MLS still.
Text message campaign. This was an effort that produced one great lead. We’re early into the testing of this method but it works! In fact, just about everything works when done consistently. The text lead that converted to a sale was actually sent to the sister of our seller who had already sold her property but mentioned her sister had a property she wanted to sell. And we hit it off with her immediately. The house was a little different than our normal type but we now know that when you find a good deal, you find a way to capitalize on it. This was one of those. And now we may actually end up owner-financing it to one of our favorite people: our primary contractor (and his beautiful family). We’ll be doing more of this along with all of the other methods listed here.
Referrals. This method is a great way to produce leads. This could fall under networking but it’s a little different to me because these are realtors or other acquaintances that see what we are doing and send us a lead. Often these are deals that wouldn’t be a good fit for a retail listing. We always pay a healthy referral fee to these friends of ours who think of us when they find a house like we buy. We want them to think of us every time they come across a stinky, crooked or occasionally, a pretty house.
So why do we share this information? Because there are enough deals to go around and we feel like we’ve found something good and it just feels good to share it with other people. We believe that sharing positivity comes back in ways we never would expect. If you want to hear some real woo-woo stuff, stick around for my post about the power of attraction and my personal “mirror” theory. For now, take some of these ideas and use them. See what happens. Help someone with something you are strong in, without expectation of repayment, and see what happens. Smile and talk to strangers and see what happens. Tell people what you are looking for and see what happens. Put out some positivity and see what happens.
Thanks for the question, Josiah. And as always, “Keep The Main Thing the Main Thing!”