Although at the moment it seems like the real estate supply is low and demand is skyrocketing—making it challenging to find promising leads—what you may not be aware of is that the Multiple Listing Service (MLS) does not account for each and every listing for sale. In reality, a significant percentage of property transactions take place without the underlying property ever being put on the MLS. These off-market properties are a wonderful source of leads for real estate professionals that know how to go about finding them. Here are some useful tips to make it easier than ever to locate off market properties and diversify your portfolio.
In terms of efficiency, it’s hard to beat direct mail marketing. All you must do is define your ideal home seller and mail out postcards or similar ads expressing your interest in buying their property. You would be surprised to learn that many homeowners don’t even know themselves they are prepared to sell until they get a lucrative offer. Before implementing this approach, however, you will need to do a bit of homework. Get familiar with the traits of your target customer base and which marketing ad venues will catch their attention.
While major online real estate platforms such as Zillow and Trulia typically feature MLS listings, they can be used to locate off market deals—with some offering features that enable sellers to list their properties a month prior to it hitting the MLS. Be sure to track these sites regularly to get a leg up on the competition in competitive local markets.
The real estate industry is all about relationships. The same goes for off market properties. Be sure to check out your local REIA, bulletin boards or even Facebook, to find groups who may be holding events around you. Networking gets easier with time and practice, so don’t hesitate to put yourself out there and start building professional connections. Because off-market leads are just that, off market, networking is typically the most common way to identify and acquire these in-demand properties. Some of the best individuals to reach out to are real estate agents. Agents are often privy to which properties are just about to go on the market. keep in mind that even if a particular real estate agent cannot offer help with your current search, that doesn’t mean they won’t be able to in the future.
Savvy real estate investors should keep a close eye on public records, which will often feature pre-foreclosures or short-sale assets—both of which can translate into a healthy return on investment for either a fix-and-flip or buy-and-hold strategy. On occasion, these sources will also provide advanced notice of real estate properties that are soon to hit the market so you can plan accordingly to beat out any potential competition when the time comes to submit an offer.
Auctions are an ideal opportunity for investors because they always feature a consistent source of off-market properties. Websites like RealtyTrac or Auction.com are a great resource to find promising leads with tons of upside. You can also monitor upcoming auctions via your local courthouse or through your professional network. There are two main categories of auction properties to keep an eye out for:
- Foreclosures: These properties are processed differently depending on the jurisdiction, but typically all follow the same general route. These properties are usually sold ‘as is’ for below-market value prices. If you do eventually decide to pull the trigger on a foreclosure, just be sure to do your homework ahead of time to get as much information about its history as possible to avoid any lien issues or other potential costly complications.
- REOs: Real estate owned (REO) properties are structures owned by lenders, typically following an unsuccessful foreclosure auction. Again, be sure to get these properties inspected beforehand—but they can still be a great way to score an awesome deal on a lucrative project.
There’s no doubt the real estate market is hot right now and is expected to remain that way for quite some time. Apply this knowledge to help get ahead of the competition and successfully expand your portfolio. The experts here at Express Capital are here to offer you flexible and intuitive funding options to help make your investment dreams a reality.