Those who have been in business for a long time, especially, may be
motivated sellers. Being a landlord can be tough, tiring, and stressful.
Often, small-property owners don’t have systems and management policies
and procedures in place. They may have been lax about collecting
all the rent; maybe they haven’t been raising the rent; perhaps they
haven’t been keeping up with the maintenance and the property is in
disrepair. They likely bought it 20 or 30 years ago for very little money,
and they may not understand today’s real estate market as well as they
should, so they’ll sell it for below market.
“For Rent” Ads
When you call on For Rent ads, you get in touch with landlords or landladies,
real estate investors, property managers, or Realtors acting as
property managers. Landlords and landladies are excellent sources for
investment property and lease-option deals. (See Chapter 4.) Everyone
who owns rental property knows that all of the tenants pay the rent on
time and never call about repairs, right? Wrong.
Landlords have rent collection problems, repair problems, vacancy
problems; they can be constantly dealing with headaches, but they can
be highly motivated to sell. If you talk to 20 to 30 small-property owners,
managers, landlords, and landladies, you’ll probably find some
deals, and they often have more than one property to sell.
Auction companies announce that they’re auctioning a house, a commercial
property, or a farm 30 days from now. You want to call that
auction company, gather all the details, and get on its list to be invited to
the auction. You also want to meet dealers at the auction company
because they’re out to find deals like you are. They find motivated sellers
who are willing to auction their property. Sometimes those sellers
say, “I don’t want to auction; I don’t want to advertise; I don’t want to
pay your auction commissions. But do you know of anyone who will
buy property quickly?” Many auctioneers are also brokers and sell a lot
of property, so try to develop good relationships with them.
You can meet other investors at auctions because, when you buy at an
auction, you usually have to close within 10 or 20 or 30 days with cash.
Would you like to know a lot of investors who are looking to buy properties
with cash? Absolutely, because when you find a deal, you can
wholesale it to them; you can partner with them; you can use their
funds, their cash, their credit. They’re your real estate partners. Again,
as in any business, networking is invaluable. Go to every auction, meet
everyone, and add them to your database.
Newspapers post legal notices of divorces, bankruptcies, and foreclosures.
Follow all of those and get to know who the players are. Call
them; look at the deals. Find attorneys who are representing people in
bankruptcies, divorces, and foreclosures and see if you can contract any
of their deals. Call a few lawyers and ask where they advertise foreclosures
and bankruptcies. Get a copy of that paper and go to work.
This may sound a little morbid, and I prefer not to do it, but some of
you might. In the newspaper, look for a list of people who have just
passed away. These people may have owned property, but their family
members often live in other communities. You can perform a service for
that family by helping them liquidate the real estate. They don’t want it;
they usually don’t know how to sell it; they certainly don’t want to take a
lot of time to make decisions. You could offer them a quick sale and
they might be motivated.
If you contact them, of course, be sensitive to what they are going
through, saying, “I’m sorry to hear about Rose passing away. Is this a
good time to talk?” Ask them whether property is involved and what
they plan to do about it. Could you help them by offering to get rid of it
quickly? If you call on enough obituaries, you’ll probably get deals.
You can also run classified ads to find deals. You can run them in newspapers,
on radio, TV, and billboards. Do you have any local neighborhood
shopping newspapers, community weeklies, or even the Thrifty
Nickel? Putting ads in these small papers doesn’t cost much—$10, $20,
$30, or $40. One of my students did a study in Memphis, Tennessee,
and found that—per time and per dollar—people get a much better
response out of the smaller neighborhood newspapers than they do in
the larger papers.
Use the following sample “I buy houses” ads:
DO YOU NEED A MONEY MIRACLE RIGHT NOW? If you have a
house in any condition that you want to sell, I’ve got cash, know-how,
and banking connections. And I’m eager to buy your home. Please call
[investor’s name] at 000-0000 right now for an extraordinary no-risk
Every major city has a legal newspaper in which people advertise bankruptcies,
foreclosures, divorces, estate sales, probates, and related
events. Get a copy of this newspaper and look at it at least once a
month. Then follow up with phone calls.
In every area, you’ll find two or three attorneys who specialize in foreclosures.
Find out who they are and talk to them They may not be able
to give you a lot of information because of client confidentiality, but
they might be interested to know someone can buy their properties, pay
off the banks, or help their clients get rid of their properties.
Driving for Dollars
Pick an area that’s in transition: one that is getting better or an area
where people are fixing up houses. Watch for lots of activity—houses for
sale, houses for rent. Then start driving around looking for signs of possible
motivated sellers: vacant homes, needy homes, condemned homes,
For Sale signs, For Rent signs, For Sale by Owner signs. You ought to
get excited if you see gutters hanging off, 10-foot-high grass, garbage
piled up, holes, junk cars. There’s a basic premise to follow: The worse
shape the house is in, the better the deal. These are the signs of opportunity.
Write down the address, locate the owner through the property tax
records, and phone or write them to see if they want to sell.
One of my students in his early twenties, a young man in Memphis,
Tennessee, just sends letters to homeowners of vacant properties he
finds driving around—about 50 to 100 letters a week. He had been
making $25,000 a year working part-time on the night shift, but he
made that much on one real estate deal. He has now made about
$200,000 in 12 months just using this idea consistently. He doesn’t
work the night shift anymore.