In the world of real estate investing, finding distressed properties can be a gateway to highly profitable deals. One effective method for identifying these opportunities is known as “driving for dollars”. This involves driving through neighborhoods to spot properties showing signs of neglect or distress. Let’s dive into this method and uncover the secrets to successful property hunting.
Identifying Signs of Distressed Properties
Driving for dollars starts with a keen eye for detail. Here are the key indicators to look for:
Deferred Maintenance
- Overgrown Grass/Lack of Lawn Care: A poorly maintained lawn can signal that the owner is struggling to keep up with maintenance.
- Overflowing Mailbox: An overflowing mailbox often indicates that the property is vacant or that the owner has neglected it.
Properties That Stand Out
When driving through a neighborhood, most houses will typically be well-maintained. Focus on the ones that stand out for the wrong reasons. These are your potential leads.
Observing Exterior Condition
New Windows
New windows can be a positive sign that recent renovations might be happening. However, it might also mean higher competition.
Window AC Units
If most houses in the area have central air conditioning and one house has window units, it could mean the central system is broken and the owner might not have the funds to repair it.
Outdated Blinds and Windows
- One-Inch Plastic Mini Blinds: These can indicate the house hasn’t been updated in a while.
- Vertical Blinds Over Old Windows: Another sign of outdated interiors.
Signs of Longtime Owners
- Old Vehicles/Basketball Hoops: These can suggest that a family lived there years ago and has since moved on, leaving an elderly couple who might be looking to sell.
Visible Deterioration
- Peeling Paint, Missing Gutters, Rotting Wood: These are telltale signs that the property is not being well-maintained and could be acquired at a discount.
Using Property Data
Checking Last Sale Date
Understanding when the property was last sold can give insight into the ownership history and potential equity.
Pulling Property Details
- Bed/Bath Count, Square Footage, Value: Gather these details for evaluating the property’s potential.
Investor Ownership
Check if the property is already owned by an investor, which might change your approach or indicate potential competition.
Neighborhood Factors
Converted Garages
In some areas, converted garages are common. If it’s uncommon in the neighborhood you’re scouting, it could be a unique selling point or a sign of owner modifications.
Second Story AC Units
In poorly designed houses, the second story might stay hot, necessitating window units. This is a sign of a potential issue with the home’s design.
Trees and Overgrowth
- Neighborhood Characteristics: In working-class neighborhoods, heavily treed areas can indicate older homes where owners might struggle with maintenance costs like roof repairs.
Driving for Dollars Process
Adding Properties to Lead List
As you drive, add potential properties to your lead list. Use a real estate app to streamline this process.
Taking Photos and Adding Notes
- Photos: Capture images of the property for reference.
- Notes: Make detailed notes about the property, including any issues like a tarp on the roof or overgrown bushes.
Sending Direct Mail
Use your app to send direct mail to property owners directly from the field. This saves time and ensures immediate follow-up.
Skip Tracing & Marketing
Skip Tracing Owners
Skip tracing helps you find the contact details of property owners. From the app, you can often directly call or send a mailer to the owner.
Pricing for Skip Tracing and Direct Mail
- Skip Tracing: Usually costs around $0.42 per search.
- Direct Mail: Around $0.70 per postcard, including the image of the property.
Importance of Consistent Follow-Up
Lead Acquisition is Just the Start
Finding properties is the first step. The real work involves consistent follow-up.
Multiple Touches Needed
- 5-9 Follow-Up Touches: You may need several interactions — phone calls, door knocks, direct mail — to close a deal.
Where the Real Money is Made
Consistent follow-up is crucial. If you don’t consistently follow up, you won’t convert leads into deals.
App Features
Support Tickets
Real-time support ensures any tech issues are quickly resolved, allowing you to focus on property hunting.
Tracking Team’s Driving Routes
The app tracks routes, helping to avoid overlap and ensuring comprehensive coverage of the area.
Pricing Tiers
- $29/Month: Basic app functionality.
- $49/Month: Includes a website for your business.
- $98/Month: Comprehensive package with all features.
Key Takeaways
Driving for Dollars is the Start
This method helps identify potential deals but represents only a small fraction of the work needed for successful real estate investing.
The Follow-Up is Where the Money’s At
Consistent follow-up is critical. Multiple touches and a systematic approach to contacting leads will increase your chances of closing deals.
Leverage real estate apps to streamline your process, from data collection to direct mail. Automation will help you stay organized and efficient.
Wrap-Up
Mastering the art of “driving for dollars” is an essential skill for any real estate investor looking to unearth hidden gems. By honing your observational skills and leveraging technology, you can efficiently identify and pursue distressed properties. Remember, the key to success lies not just in finding potential deals but in the persistent and consistent follow-up that converts leads into profitable investments. Equip yourself with the right tools and a strategic approach to turn your property hunting efforts into substantial real estate gains.
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