Everything in real estate starts with the purchase price. By overpaying for a property, you immediately start the process behind the eight ball. Conversely, if you get a good deal, you are granted flexibility with regards to what you can do with the property. Getting good deals often means knowing where to look and how to pursue them. Very rarely will a great deal just fall into your lap. You need to either look where nobody else is, or do the little things to get your offer accepted. Every dollar you save at the start of the transaction will be felt at the end of it. Here are a couple of ways to get better deals.
1. Scour the MLS: It is no secret that the MLS (multiple listing service) is one of the most popular resources for real estate investors. Many real estate investors rely solely on new property listings for deals. While this can be a great way to find deals, it is also very popular. Instead of looking at new listings, why not go the other way? There can be great value in looking at properties that have either been on the market an extended period of time. Every day that a listing sits on the market without activity it loses a little bit of value. Once a listing hits 90 days or longer, desperation may set in for the seller. This doesn’t mean they will accept any offer, but they certainly may be more willing to negotiate. The same is the case with expired listings, or ones that are back on the market. This is usually a sign that they have either listed much higher than market value, or there was a problem with buyer financing. Either way, by staying updated on these listings you can find deals that slip through the cracks.
2. Trusted online sources: There are a handful of reliable websites to find new listings and deals. Between Craigslist, Zillow, Trulia and Postlets, there are many different places to start your online search. Instead of going to the sites and clicking any new property you see, there should be a method to your search. Start by location and price. Almost as important as price is reading every line of the posting. In the post, there is usually a reason that the home is listed where it is. In some cases, the risk is far less than the reward. In other cases, there is too much that needs to go right to squeeze out a profit. Either way, finding good deals online is often a numbers game. If you read ten posts from five different sites a day, you will have hundreds of potential properties every week. Obviously you will not make offers on every one of them, but even a handful is not out of the question.
3. Actively make offers: If you are looking for good deals, you need to stay active. This means looking at new properties as they become available. It can be easy to get discouraged if the last dozen properties you looked at don’t fit with what you want to do. You never know when the next one you see will be the home run you are waiting for. The minute you start to get lazy is when you will miss out on good deals. Looking at properties goes hand in hand with making offers. Instead of just making any offer, focus on making the right one. It is important to look back on past offers you made to see where you went wrong. This should help you with new ones moving forward. Finding the sweet spot between price and speed will help you get more offers accepted.
4. Look for ways to add value: Buying low does not necessarily mean you have a good deal. In order to sell for a higher amount, you need to find ways to add value. This can be done by improving the quality of the property, or – in some cases – buying in the right market. Going a step further, if you can save money with the improvements, your bottom line is increased. Look at the property to see if there are ways you can do the work yourself or have it done at a lower cost. Tap into your personal network and reach out to your local contacts. Ask them to price out a job on a property for you. If the task is something you feel you can do, think about trying it yourself. Whatever you can do to add value will give you a better deal.
5. Look at different markets: If you are having trouble finding good deals in your local market, it is worth looking elsewhere. A lot can change in a matter of just a few miles. You can often find much better deals if you are willing to travel outside of your immediate investing area. The amount of work and time spent will increase, but it may be worth it if the prices are right. Looking at different markets may give you a completely different perspective on the business. Instead of focusing on a specific type of property or deal, a different market will often provide a different way of thinking in addition to a new set of opportunities.
Finding good deals is the backbone of any good real estate investor, and there are plenty of opportunities out there if you know where to look.