Find houses to flip or rent is one of the most important tasks as a real estate investor. Finding the deal can be a little difficult starting out depending on the market. Before even looking for the property find out what market you want to invest in.

Finding Your Market

Take a close look at the markets that are around you or ones that look promising. I like investing where I live since I am pretty hands-on with the rehab. Investing closer to where you live is always easier than remote.

If you are serious about flipping large amounts of properties you’re going to want to look for larger markets. There are advantages to larger and smaller markets. Where you should invest depends on how you want to grow your business.

Larger Markets

Look for populations of 100,000 or more. Some flippers prefer populations of over 1,000,000 like Los Angeles or Chicago.

The purpose of going to the larger markets is the availability of houses and the greater number of people looking to buy. Want to flip 50 houses a year? It’s not going to work in a town with a population of 100 people. The inventory and buyers just aren’t there.

No larger markets around? Look remotely into larger population areas. Just remember this is going to make it harder. Not impossible just a little more difficult. Go for a higher profit margin when investing remotely. Unplanned expenses will inevitably pop up.

When investing remotely try to pick an area you know or have a connection to. Maybe you grew up there and have friends or family there. Is there anyone you could ask to drive by a house for you or check up on something if a problem came up? Have a city you obsessively love and vacation there every year, invest in that city if the numbers work.  Having some sort of connection to the city can make it easier.

Small Local Markets

There are many advantages to investing in a large market but that doesn’t mean smaller markets are always a bad idea. If it is your first flip or only want to do a few flips a year a small market may be better for you.

The deals will be harder to find and fewer buyers when it comes to selling. Being close to the property and knowing that area is a huge advantage.

I like to drive around the areas I invest in. Investing in your town means you know one house could be better than another because it’s on the right side of the highway, closer to town, in the right school district, near a lake, or within walking distance to everyone’s favorite ice cream shop.

Knowing what roads to avoid because they’re busy or what parts of town are noisy. When investing in a small local market make sure to know that market! Don’t know that area well enough? Take drives around or go for a walk. Are people out walking, bike riding, kids playing, or are the sidewalks and yards empty?

Many investors who make money in small local markets don’t be scared to try. Just be patient when looking for a deal. The competition maybe a little stiffer.

What Class Property to Look for A, B, C, and D

Keep in mind this rating is pretty subjective but still important to think about when buying property. Look for a location that is class A or B. You can renovate the house but you can’t change the location. If you want to read more about property classes check out this article.

I like to look for distressed properties or ones that just need a facelift in class B locations. You can flip houses in class C areas but the resale won’t be as high. Upgrades should be minimal for class C. Class A locations can get expensive with high-end upgrades. I avoid flipping in class D locations. Even after rehab, the resale value isn’t high enough to make a decent profit.

Inventory and DOM

When looking at a market check to see if inventory is less than 4 months and days on market (DOM) less than 60. This is a seller’s market and once your house is finished if priced right it should go fast and at a high price.

When the market inventory is around 4-6 months and DOM creeps up to around 60-90 it’s time to be a little cautious. The property won’t probably sell for as high or as fast. Holding costs can start to cut into profits. If you are investing with a hard money loan be extra cautious in this market. Cash investors don’t have the interest to worry about but your capital will be tied up until you can sell the house.

Inventory of over 6 months and DOM over 90 days I would recommend staying away from those markets. Capital will be tied up and money on holding costs will be high. Making a profit is much harder in this circumstance so my advice is to stay away.

Finding The House

After picking the market and location, deciding how extensive the rehab should be, it’s time to find the actual house.

I know, that’s a lot of things to do before finding the actual property. Trust me in the end it’s worth it and great practice for evaluating markets.

How to find the houses to flip:

1. Find a Realtor

We decided to go with someone we had used before. After seeing he was great with numbers and able to accurately estimate the value of a property we asked him to help us find an investment. If you have no connections with realtors ask around or use a place like Zillow.com.

I like to look for ones that mention investments in their bio or have experience with REOs. If you go to Zillow look for realtors that have sales but are towards the end of the list. These realtors tend to be a bit more ambitious and willing to help.

Find a single person to work with as opposed to teams or groups. Having someone familiar with you and your business is key. The more you work with the same people the better idea they have of how you do flips. Also, you get a better feel for how they work as a realtor.

Have a realtor set up an auto search for finding houses to flip. Give them your price point, location, and have them automatically email you properties that include descriptions like:

• Fixer-upper
• Needs TLC
• cash only
• Handyman
• Motivated seller
• Distressed
• Must sell
• Repairs
• Fixer
• Damaged

This can make a great system that saves both of you time. Get alerts as soon as some of these properties come on the market. Assess them quickly and decide if they are worth seeing in person.

2. MLS Deals

This is one of the harder ways to find deals simply because everyone else has access to it. In the current market, you have to be fast to get a deal. Download real estate apps on your phone and set up alerts for when a property comes on the market in an area you are interested in. There are a few things that can give you an advantage when looking at the MLS:

• If a good deal pops up make an offer without even looking at the property. Make sure to include in the offer time for inspections and due diligence. You can look at the property later or negotiate once inspections are done. It also gives you a chance to blackout if there is more damage than expected.
• Have several apps for properties. Some have a delay or alerts that you set up can have a delay. I check these apps several times a day and many times find new listings that haven’t shown up on my alerts yet. Have apps that also list for sale by owner properties (FSBO).
• There are several different real estate sites out there but Zillow, Realtor, Redfin, and Trulia are some common ones. I check these daily along with the Facebook marketplace and craigslist.

3. Join a Local Investing Group

Find a local real estate investing group. Join them for the meetups and get to know other investors. It can be a great place to get advice on contractors, realtors, or what areas are good to invest or avoid. Some may pass deals they aren’t interested in.

Not one in your area? look for groups on Facebook or real estate investing websites like biggerpockets.com.

Connect with some people online or start your meetup group for investors. Once you have a couple of people wanting to meet up pick a place and time for coffee and anyone who wants shows up can. I have found people in real estate investing to be very eager to share their knowledge.

4. Find off Market Deals

Look for houses that are for sale by the owner. Check all the major real estate sites but don’t forget the Facebook marketplace and craigslist. Connect with realtors and encourage them to let you know about distressed properties before they even hit the market.

1. Drive for dollars 

   • Drive around looking for distressed homes or homes that look vacant. If you see a house you’re interested in and you’re ambitious and motivated go knock on the door to talk to the people. Don’t tell them their house looks like crap and you would like to buy it. Introduce yourself and explain your looking at some houses in the area and wondering if they had any interest in selling.
   • Don’t want to talk to them in person or the house is vacant. Write down the address and look through local records to see if you can find who owns it. Send them a letter or if you’re able to get their phone number give them a call. It may take quite a few letters or calls before you get some leads so don’t get discouraged.
   • There are also a few apps that help track your route and the houses you want to contact. Most of the apps require a subscription or cost money to use.

2. Facebook marketplace and Craigslist

   • I already mentioned these places before on MLS deals because sometimes these properties are also on the MLS. But Typically these places are for sale by owners.
   • Facebook also has real estate investing groups for different areas. Look around or ask other investors if there is one for your area and join.

3. Check local papers for defaults on taxes

   • Some local papers have notice of default. It can be a chance for you to help someone out. Check the numbers and get a rough estimate of what you could reasonably offer for the property.
   • These people may not have time to wait for someone to get a loan before the bank foreclosed.  Their home may not qualify for a loan and need to be sold as-is. With enough equity in the property, the owners may be able to quickly sell the house and pay off the bank. This could save them from foreclosure. The owner can make money if they have enough equity. This can be a win for both buyer and seller.
   • Go to the county clerk’s office if you can’t find a paper or any source that lists tax defaults. Sometimes you can get a list of tax defaults or water shutoffs. Sending a letter to these people explaining you buy properties can generate some good leads.

4. Put up signs 

   • Ever see a sign that says WE BUY HOUSES  and a number. These signs are called bandit signs. Make your own sign and start getting leads. All you need is a sign with a number to call.
     • Make sure it is legal where you live. Some cities have ordinances and don’t allow signs.
   • These signs are may also be put up by wholesalers. You can also call the number on the sign and ask to be added to their list and get an opportunity to buy deals they find.
   • If you put up your own signs it can generate leads for you but if a deal isn’t the right fit for you it is possible to pass it along to someone else.

5. Create a website or social media page 

   • Show your business and the houses you have flipped. Have a contact us page for people to get ahold of you. Some people hate talking on the phone so give them the option of text, email, or going through social media.
   • Be prompt when responding. If it typically takes more than 24 hours to respond put a not next to the contact info that there will be a response within x number of days. Respond within that number of days. When real estate is moving quickly it gets frustrating never knowing if you will get an answer or not.

6. Craigslist ad  

   • Create a list on craigslist that explains what you do and what you are looking for. List a phone number or website and start collecting leads.
   • Now you are not just searching for deals on craigslist but asking anyone looking to sell to come to you.

7. Follow up on leads – This is the most important tip!

   • If you don’t get a sale you still got the word out about what you do. Those people may pass your information along to someone else. You can always follow up with them in 30 days or 60 if they haven’t sold their house.
   • I have missed deals simply because I have made an offer early on that we couldn’t agree on. Then I was busy and didn’t put in a second one at just before 30 or 60 days and someone else bought it for a price I would have been willing to pay.
   • This works excellent for foreclosures on the MLS. Put in an offer right away and if they say no and won’t negotiate to a price you are willing to pay simply wait. Check the market in your area frequently and have an idea when these houses drop in price. Near me, it is around the 30-day mark for the first reductions. At around 60 days even if they have not dropped the price they will accept lower offers. If a property has been on market for almost 30 or 60 days put in a second offer. I CAN NOT stress this enough.  This is the easiest way to get deals. If everything else is too hard or time-consuming for you, do this!

Treat all people with respect don’t take advantage of people. A good reputation may get you more business in the long run. You could help someone at risk of being foreclosed on or someone who needs to move in a hurry but doesn’t have money or time to fix issues with their house. Word of mouth can get you some great leads.

5. Spend Money on Leads

This isn’t a great option if you are just starting. But after you get some capital built up this may work. Find a wholesaler to buy a property from. Always check the numbers yourself to see if the deal works for you. Finding a good wholesaler can be a great way to grow your investing business.

1. Wholesalers

   • Wholesalers find deals and get them under contract. They then contact the list of buyers they have to sell the property to. The buyer pays a little more than what the property is under contract for and the wholesaler keeps the difference. Wholesalers get a commission for finding the deal.
   • This can be a good deal if the wholesaler has chosen a good property. Finding great properties can be one of the hardest parts of the job. A good wholesaler is usually worth the cost. Although, finding a good wholesaler can be difficult. Make sure to analyze any deal they send you before agreeing to buy it.

2. Pay for a list

   • There are places like listsource where you can pay for a list of absentee owners. You can send them mail yourself or have a service do it for you. This can work better in some areas than others. If there are several investors sending letters in your area this doesn’t work well. If no one is sending to these people in your area it could be a gold mine.

3. Direct mail

   • What do you do after you find an address of potential sellers? You can send them letters yourself or you can pay for a service to do it for you. It can get expensive if you are sending out hundreds of letters to leads, but if it makes you money in the long run, it may be worth it. When starting you may want to make up a letter and handwrite the address on an envelope and send them out yourself.

Analyze Properties

Get good at going over the numbers. Practice and find a method that works for you. Have a rough estimate before really diving deep so you can make your offer but during the inspection period double-check everything.

Repair Costs. There are several different methods for coming up with estimates. If your new to everything getting a contractor or several contractors to walk through and give estimates is a great starting point. Get 3 or more estimates if possible. If you have no idea about costs this is probably your best option.

For more in-depth information on estimating rehab costs read this article.

After repair value.  Make sure not to overvalue what the property value will be after repairs. Don’t trust a realtor’s word on it or wholesalers. Make sure to do your analysis.

Having an idea of how long a flip will take effects this number too. The market can change in the few months it takes to fix up the property. This could work in your favor if you time it right. Typically spring is a hotter selling market and things cool off in the fall.

Quick Summary

1. Analyze and decide on your market.
2. Know what location class the property is in and how much upgrading and rehab is needed.
3. Explore different methods for finding your investment property.
4. Analyze the property and make sure there’s room for a profit.

When you find a possible deal but the seller isn’t motivated and wants top dollar, simply thank them for their time and move on. You can follow up with them later if you think they need more time. Don’t waste time on people who aren’t looking to sell.

Practice analyzing markets and properties before buying one. Don’t get stuck analyzing but never purchase anything. Remember to follow up on leads it is the simplest and easiest deal-finding tip to implement and a great way to find a deal even on the MLS.