Looking to buy a good rental property?
There is no shortage of information in books and on YouTube on how to find a good rental property.
So, why I am writing this article?
I have spoken to many investors who seem frustrated and pulled in different directions by the sheer volume of advice on this topic.
What I understood from my conversations is that investors have different needs based on the time and money they have to invest.
I examined the different ways you can acquire a rental property and separated the strategies based on the investor situation.
Find out where and how to look for rental properties if you are:
- Short on Time, but have Money
- Plenty of Time but Little or No Money
- Plenty of Time and Money
Short on Time, but Have Money
How to Search for Properties if You Are Short on Time?
A lot of people I talk to are in this situation. They have good-paying jobs and saved cash but they don’t have the time to drive around and search for properties.
If you are one of those investors and you want to start building your passive income portfolio but you don’t have the time to make offers, oversee rehabs, and find tenants, you can either:
- Partner with someone who has the knowledge and is willing to do the work.
- Or find a Great Team of professionals. This is also a very scalable way to grow your rental portfolio.
Where you should look for deals if you are limited on time?
Focus on properties listed on foreclosure auctions, court auctions, and old and expired MLS listings.
Court Auctions are different from other online auctions. In judicial foreclosure states, the lender files a lawsuit in court to foreclose on the mortgage.
If the lender wins the lawsuit, a final judgment is issued and the property is sold at auction at the courthouse.
Today in many counties, this process is done online.
If you want to learn more about this, I have a video on Buying at the Courthouse Auction.
In addition to Court Auctions, other online auctions like Auction.com and Hubzu.com are worth following.
Both are real estate online auctions, mostly for bank-owned properties but they also list other properties.
Both Auction.com and Hubzu.com run a reserve auction, which means that if the seller doesn’t get their price they will reschedule the auction. Some properties take months to sell because the sellers keep relisting them. It takes patience to get a good deal. Here is an article on what strategies to use to win on both auctions.
Other good websites are HUD.com, for foreclosed homes by the US Department of Housing. You can only bid with a HUD registered broker.
All of these listings are in the MLS as well, so you are working with an agent they can email them to you.
Here is a list of other websites where you may find an occasional deal. These are fun to browse because in addition to real estate, they sell other stuff. You can even buy a lighthouse.
VA (Department of Veteran’s Affairs) – https://listings.vrmco.com/
Federal Deposit Insurance Corporation –https://www.fdic.gov/buying/owned/index.html
Internal Revenue Service – https://www.treasury.gov/auctions/irs/
Real Estate right of redemption 180 days after the sale.
US Army Corps of Engineers – https://disposal.gsa.gov/s/
U.S. Marshals Service – https://www.usmarshals.gov/assets/sales.htm
How to Search for a Property if You Have Plenty of Time but Little or No Money
- Drive and look for vacant properties. If you find a property that looks abandoned, get it under contract and wholesale it to another investor, maybe partner with them if you have skills they will need.
- Contact tired landlords, look in the court records for recent evictions. They may be looking to sell. You can offer them a lease option. If the market is going up like it is right now you will make money just by holding the property.
- Call landlords who are looking to sell but don’t want to pay high taxes and depreciation recapture. Maybe they will agree on seller financing. This will require some deposit.
- SEO – create a website and get it to rank on Google – you get free leads but it takes some time to get on the first page.
- Network with real estate agents and other professionals
- Auction websites if you have some money for earnest money deposit.
Where to Search if You Have Plenty of Money and Time
- Create a tax relief and foreclosure solution program for homeowners who are delinquent on their taxes or are in foreclosure. Partner with a lender. This requires a good follow up system.
- Mail to targeted lists like absentee owners, probate lists, divorce lists, and others. This also works if you are consistent and have a good follow up system.
- Pay-per-click – Expensive choice but you get immediate results.
- All Auction websites listed above.
- Court Auctions
I hope this article was helpful and narrowed down the available options on how to find a good deal even in today’s market.
Here is a reply from our Livestream on this topic.
Transcript from the Q&A
How to calculate if a rental property is worth it?
Use a rental calculator to give you a more accurate picture of your ROI and cash flow. I know some investors use the 1% rule, which tells them that the monthly rent should be at least 1% of the purchase price. For example, if you buy a property for $200,000 you should be getting at least $2000 in rent.
We have a rental calculator at Rentce.com that will calculate the cash-on-cash return, cash flow, and net income.
How to find a realtor who specializes in investment properties?
Ask them how many properties they own. You want to work with an agent who understands real estate investment.
Another way is to find who are the listing agents for REOs,bank-owned properties and keep in touch with them. Let them know what you are looking for.
I watched yesterday’s video about the court auction. I like the idea but I am also afraid that I will make a very expensive mistake.
We are affraid of something when we don’t know how it works.
Watch the How to Buy at Court Auction video to get an idea of how this process works. Get a title company to help you research the properties you want to invest in. If you are buying title search in bulk, your price may get in the $35 per search.
The other option is to learn how to do it yourself. I have an article on Rentce.com on how to do it in Florida. It’s probably similar in other states.
I am interested in the tax foreclosure prevention program. How exactly can I team with a lender and create a program?
I think the key to creating a program is to actually try to help the homeowners. Some hard money lenders will lend on owner occupied property. Not all owner will qualify under their program. If they don’t you can offer them an option to sell.
Approaching these owners with an offer to help them is much easier than asking them to sell you their property. They don’t want to sell they want a solution to their problem.
You can set up a website specifically with this program, run pay per click ads or do direct mail. To offset the price for the ads you can sell the leads to your lender.
What is the best way to set up a website and use Search Engine Optimization to get leads?
Well, first as I mentioned in the video this is a slow approach and requires learning about doing proper keyword research and in general marketing online.
Nowadays setting up a wordpress website is easy and there are some many templates that you can use. I will link below to the host I use. They have a wordpress managed option. They do all the maintaining you just build your site. I am sure there are other options but this is what I use.
If you decide to do it, you have to be patient. It could take up to 12 mos to see any results. However, after that, you get free leads.