We’re still not sure what the overall impacts of COVID-19 on the real estate investing market are yet, but there are some more immediate shifts and changes that investors are seeing midways through 2020. In particular, the best methods for finding off-market properties seem to be shifting as a response to COVID-19. We’re seeing older methods that many investors have moved away from in recent years resurge as primary strategies and some new emerging ways that just might surprise you. Here are our top 5 ways to find off-market deals due to COVID-19:
1) Preforeclosures & Foreclosures
As the clock winds down on many mortgage relief programs and foreclosure moratoriums, foreclosures are undoubtedly going to increase dramatically. It’s an unfortunate byproduct of any major disruption to the economy, but with so many people out of work or on extended furloughs, becoming current on mortgage payments is simply not going to be an option for many owners. Banks will begin the preforeclosure process, which is where some investors may seek out discounted properties for their next project. Here are some of the ways investors can find preforeclosure deals:
- County court office: From state to state the standard procedure and regulations may change, but typically Notices of Default (NOD) are recorded with the local county court. You may be able to contact your county court and request access to these files to track down property leads.
- Online records: If your local county court is more technology-inclined, you may have access to the NOD’s via an online database. Again, there is no universal standard used by all counties or states, so you may need to do some searching before you can locate the property data, but once you find it you may be able to apply filters to distill down the list to preforeclosure homes with an adjoining NOD.
- Other Online sources: MLS foreclosures search, Zillow and Realtor.com foreclosure searches, Foreclosures websites (foreclosure.com, foreclosurelistings.com, etc.)
2) Mailer Campaigns
If we expect to see a rise in foreclosures, you may want to get ahead of the foreclosure process altogether and offer owners an alternative option in the form of a cash offer. Launching a mailer campaign will allow you to throw your hat in the ring as an alternative to the bank taking back the property and a means of avoiding a black mark of the owner’s track record. Mailers are considered by many to be an outdated means of marketing for a property, but your success rate may be higher now with many owners worried about an impending foreclosure.
One thing to keep in mind is that you will be competing against the wholesalers who do this for a living, so you are going to need to create a mailer that stands out. Be bold and creative with your messaging, colors, and the tone of your mailers; otherwise you may just be more white noise in a sea of “we buy ugly houses” mailers. Check out Vistaprint’s mailer and postcard services to create a mailer and have it sent directly to your contact list.
3) Hard Money Lenders
Any reputable hard money lender is not in the business of taking back properties when there are other options available. When a borrower is financially overwhelmed and worried about making payments or running out of construction money, it can be a saving grace for both the lender and the borrower for a second investor to come in and purchase the property mid-completion, relieving the overwhelmed borrower and providing the lender with either the option to offload the property completely or to gain a new client. One of the biggest benefits of purchasing a property from a hard money lender mid-completion is that headaches like permitting and costly services like architectural/engineering plans may already be taken care of and come with the property.
4) Deals meetups
Wholesalers aside, a lot of people come across deals that they know are profitable but don’t want or have the means to do, so deals meetups are a good way to connect with property leads specifically curated as investments. This may also be a great place to secure a mid-completion project from an overwhelmed investor. Check out the local REI and “deals” meetups or Facebook groups swapping properties in your area.
5) Wholesaler Websites
We’ve already mentioned wholesalers a few times in this post because they are still one of the most dominant forces in off-market property sources, and for good reason. They already have the marketing dollars and bandwidth that most investors simply don’t have – all dedicated to finding solid deals and delivering them to investors. Before COVID-19, profitability on deals was tightening, and many real estate investors were more willing to take on the effort and expense of marketing for their own deals versus paying for wholesale deals to preserve as much profit margin as possible. We’ve seen lots of fast-moving properties during COVID-19, so wholesalers are still doing what they do best, and making it easier than ever for you to get new properties sent directly to your inbox with pricing breakdowns. Either the numbers work for you, or they don’t – so keep checking out wholesale deals from reputable folks like our friends over at MarketProDeals.com and GreatDCDeals.com to see what’s available.
As the investing landscape continues to react to COVID-19, we may continue to see some deal-sourcing methods succeed while others fade, but the key is to source your deals across many platforms. Just like in investing, diversification is your ally. And if you find that perfect investment for a fix and flip, let us know and we’ll give you a fast, free loan underwriting to help you secure it!