When it comes to real estate investing, discovering off-market distressed properties can lead to lucrative opportunities. “Driving for dollars” is a straightforward and effective way to identify such properties. By physically driving through neighborhoods and observing visual indicators of neglect, investors can pinpoint properties that may be undervalued or likely to sell below market rate. Here’s everything you need to know to make the most out of this strategy.
Why Distressed Properties Are Worth Your Time
Distressed properties often signal an owner who may be motivated to sell. The reasons can vary—financial hardships, deferred maintenance, or even absentee ownership. These properties usually come at a discounted price, giving investors an opportunity to invest less upfront while leaving room for profit after repairs or renovations.
By knowing what to look for and approaching these opportunities systematically, you can build a steady pipeline of leads that other investors may overlook.
Warning Signs of a Distressed Property
Spotting distressed properties takes practice and attention to detail. Here are some telltale signs to look for:
Exterior Clues
- Lawn Neglect: Overgrown grass, weeds, and dead bushes indicate a property has been ignored.
- Overflowing Mailbox: If a mailbox is stuffed with uncollected mail, it suggests the owner may not live there or rarely visits.
- Broken Fences or Overgrowth: Peeling fences, bush-covered yards, or visible debris are signs someone’s let things slide.
Structural Indicators
- Roof Issues: Look for tarps, sagging areas, or missing shingles. These are clear signs of deferred maintenance.
- Window Problems: Old or damaged windows, missing screens, or AC units in places where central HVAC is standard.
- Blinds and Coverings: Vertical blinds, one-inch plastic mini blinds, or faded window coverings hint at a dated interior.
Vehicles and Driveway Details
- Old or Unused Cars: Homes with outdated trucks or cars that never move could point to an elderly owner or long-term neglect.
- Cluttered Driveways: Broken basketball hoops, rusting bikes, or piles of junk in driveways all add up to hints of distress.
Neighborhood Context
You’ll also want to compare each property to the surrounding homes. If most homes are updated and well-maintained, the distressed property often stands out. Conversely, in neighborhoods where most homes appear worn, determining what qualifies as “distressed” requires closer observation.
Special Considerations When Driving for Dollars
Certain features may initially look neglected but aren’t always red flags. Be sure to evaluate context before marking a property as a lead:
Window Units and HVAC Systems
In some areas, outdated or inefficient HVAC systems can lead to homes with multiple window AC units. This isn’t always a sign of distress if it reflects neighborhood norms. However, window units in a neighborhood where central air is the standard could be worth a second look.
Converted Garages
Check if a property has a converted garage in a neighborhood where this isn’t common. An unplanned conversion often stands out and might be a sign of an owner making cost-conscious adjustments.
Roof and Gutters
Homes with rotting gutters, visible water damage, or sagging structures often require attention. However, in heavily treed neighborhoods with working-class homeowners, roofs may often show wear simply due to hail or falling debris. Scout areas proactively to ensure what you’re observing is abnormal.
Using Tech to Simplify Your Process
Incorporating technology can significantly enhance your driving for dollars efforts:
Driving Route Tracking
Apps like Propelio’s Driving for Dollars tool allow you to record your driving routes. This prevents you from duplicating efforts and lets you focus on covering as much ground as possible.
Saving and Organizing Leads
When you spot a potential property, use an app to pin the address, take notes, and even snap photos. Propelio takes it one step further by letting you add detailed observations, such as roof issues or yard neglect, directly within the app. This ensures no detail gets overlooked.
Modern tools let you pull property details, such as the owner’s name, last sold date, or even equity estimates, instantly. This minimizes guesswork and allows you to prioritize leads more effectively.
What to Do After Identifying Leads
Driving through neighborhoods is just the first step. The real progress begins with follow-up actions:
Research Properties
Cross-reference properties you’ve marked against tax delinquency lists, absentee owner data, or any other records indicating potential equity. This helps you focus on leads most likely to result in a deal.
Door Knocking Tips
Approach homeowners respectfully and with curiosity. A simple script could look like:
“Hi, I invest in properties in this area, and I’m wondering if you, or anyone you know, may be looking to sell. I’m happy to offer a $1,000 referral fee for any lead that turns into a sale.”
Even homeowners who initially say no may reconsider when you mention the referral incentive.
Sending Direct Mail
Use the app to instantly create and send postcards to a property’s owner. Including details like a photo of their own property on the postcard increases the chances of them paying attention to your offer.
Skip Tracing
For owners who are tricky to track down, skip tracing helps find their best methods of contact, including phone numbers or email addresses. Propelio allows you to skip trace directly in-app for as little as 42 cents per search. Once you have contact information, follow up with calls or emails.
The Role of Follow-Up
Identifying potential deals is just the starting point. Success comes from consistent follow-up. On average, you’ll need five to nine touchpoints before closing a deal. These efforts might include:
- Door knocking more than once.
- Mailing multiple postcards over time.
- Calling periodically to check if circumstances have changed.
The key is persistence. Without it, even the best leads can slip through the cracks.
Cost of Driving for Dollars
Investing in your tools and follow-up processes doesn’t have to break the bank.
- Driving for Dollars App: $29/month for basic tools.
- App + Website: $49/month for added web functionality.
- Full Suite: $98/month to access all features, including advanced marketing.
Skip tracing generally costs around 42 cents per search, while direct mail postcards average 70 cents per card.
These small upfront costs are minimal compared to the windfalls you could earn from a successful deal.
Scaling Your Efforts with Bird Dogs
If you’re working as part of a team, apps like Propelio make collaboration easier. Bird dogs (individuals who scout for leads on your behalf) can track their routes, see where others have driven, and contribute to your database—all from the app. This allows for more comprehensive coverage in less time.
Wrapping It All Up
Driving for dollars is an essential strategy for real estate investors. Whether you’re a beginner or experienced, focusing on distressed properties gives you a chance to uncover off-market opportunities others might miss.
The process only works if you’re systematic:
- Take detailed notes and use tech tools to stay organized.
- Follow up consistently using methods like door knocking, direct mail, and cold calling.
- Collaborate with others, like bird dogs, to broaden your reach.
Remember, the harder you work at identifying and following up on leads, the “luckier” you’ll get. By repeating this process regularly, you’ll build a reliable pipeline of potential deals and grow your real estate investing success.
