Director of Marketing, Bruce Prokopets, discusses real estate investment marketing strategies all investors should implement online and offline.

By: Steve Gillman

If you really want the best deals in investment properties, you have to increase your odds by finding more deals. Who is more likely to get a cheap apartment building, an investor that looks through the MLS listings and calls it a day, or the one that uses ten resources? Here are the ten:

1. Talk. Let people know you are looking and sometimes the properties will come to you. There are a lot of owners out there who want to sell, but haven’t yet listed their property.

2. Use the internet. Go to a search engine and enter the type of real estate you are looking for, along with the city you want to invest in. You never know what you might find.

3. Drive around looking for “For Sale By Owner” signs. Owners often don’t want to pay to keep the ad in the paper every week, so you won’t see all properties there.

4. Find abandoned properties. That’s a pretty clear sign that the owner doesn’t want to deal with the property. He might sell cheap.

5. Find old “For Rent” ads. Call if they are a few weeks old. Landlords are often ready to sell, especially if the haven’t yet rented the units out.

6. Talk to bankers. You might get a foreclosed-on investment property cheaper if you buy it before they list it with a real estate agent.

7. Offer someone a finder’s fee. There are people that always seem to hear about the good deals. Have such people coming to you.

8. Eviction notices. If your local papers publish eviction notices, or if you can get the information at the courthouse, it can be useful. A landlord who just went through the procees of evicting tenants is a likely seller.

9. Old FSBO ads. If you call on two-month-old “For sale By Owner” ads, and they haven’t sold, they may be ready to deal. Owners often give up the effort, but still would love to sell. Help them out!

10. Put an ad in the paper. “Looking for investment properties to buy,” might be sufficient to generate a few calls.

Here’s my “bad closing” story:

There I was, closing a loan, refinancing a sweet little property I picked up a few months earlier. My strategy on this property was to put a good tenant in rent-to-own, then re-finance the property. (I like this strategy!)

I’d spoken to my mortgage broker the night before. It looked like I was on track to pull out some $15,500 cash! She’d found me a company who would do ONE loan for 100% LTV (Loan-to-value ratio). Yipee!

It was a two-loan set up, 80% first mortgage, 20% second. So, all looked good, I was signing away on two mortgages. We got everything signed and the closing agent disappeared (to get checks cut). When she came back, she handed me a check for $7179.00 and said, “see you next time!”

Hmm! That’s about half of what I THOUGHT I was getting. And, incidentally, about half of a year’s tuition for my daughter’s college.

You can BET I told the closing agent to hold on, and I got my mortgage broker on the phone and started asking questions. She was surprised as I was. She’d call me back.

To make a long story short (determined after a flurry of phone activity) unbeknownst to any of the interested parties (me or my mortgage broker), the lender switched programs they had me in. In short, the 100% financing was only available for seasoned properties (those that have been owned for 12 months by the same owner).

Bottom line, the check I held in my hand was the proceeds from 90% LTV mortgage, take it or leave it!

I had a decision to make and I didn’t have much time to make it in.

So I did!

But, it occurred to me that this could have been a lot less disconcerting with some pre-thinking. Surprises at the closing table happen in this business. You could get there and the asking price be wrong. Your pay-off amount could be wrong, the insurance cost could double from what you were quoted. You name it, it could, and does, happen.

So, what do you do?

Remember, you can walk away. If the deal is suddenly sour, you’d lose your binder (what you put down when you signed the sales contract), and perhaps an appraisal and loan application fee. But, if it keeps you out of a really bad deal, so what? Just chalk it up to the price of doing business.
Wait. You can think about it. In most instances, you have until the end of the business day to close. Take it if you need it!
Have a written or mental checklist ready. Things that would be on your checklist would include:
Your mortgage payoff amount (if you are re-financing). One digit off can mean big money to you!
Your annual tax amount (if you are escrowing). You don’t want them collecting too much.
Annual insurance premium. Make sure the insurance premium didn’t grow from your initial quote.
What you are supposed to pay your mortgage broker. Check the closing statement to make sure the number didn’t change from what you were quoted.
Have the numbers of who to call if any of the above items need straightening out. Call them if something doesn’t seem just right. Pre-agree with yourself NOT to hesitate to ask questions of these members of your team. That’s why you pay them!
Pre-agree to put the brakes on if something is wrong. Be firm, but kind! It’s usually not the closing agent’s fault. Ask to see their closing instructions. (These are instructions sent t them by the lender on exactly what to collect at the closing table.)
Pre-agree what your limits are. Decide ahead of time what your walk-away criteria is. For instance, if your insurance is $100 high, will you walk? NO! That’s something you can straighten out later. Think through possible scenarios that would prompt you to make a decision, and make them ahead of time.
Re-evaluate. After you have to make one of these decisions, keep asking questions after closing and evaluate your decision and modify your walk-away criteria if needed. Evaluate who you are doing business with. Constantly evaluate your methods. You’ll get quite good at this in time!
So, what did I do?

After calmly talking to my mortgage broker, I decided to take the 90% LTV proceeds.

It was like being left at the alter. No wife, but a heck of a party!

My reasoning was that:

(1) 100% financing comes and goes with these lenders. If I waited another 6-8 months to re-finance this property, there’s no guarantee that I’ll get 100%.

(2) A bird in the hand is ALWAYS better than 2 on the wing.

What would you have done?

Here’s a test to see if you’ve got what it takes to be a rehabber. Just be honest and rest assured nobody’s going to rap you over the knuckles for your answers!

- Are you a problem solver?

- Do you relish a project…I mean one that can occupy your attention for more than a few days?

- Do you understand that sometimes you’ve got to make a mess in order to make things right?

- Can you see value in things that may not be pretty now, but could be made so?

- Do you know your own limitations and know how to pass on a little too much rehab?

- Do you enjoy fixing things?

- Can you negotiate and work with contractors?

- Can you get used to making your money in tens-of-thousands instead of hundreds at a time?

- If your general philosophy one of seeking ease, or are you a go-getter?

Okay, that’s enough. Here’s some food for thought on these topics.

- Are you a problem solver?

Rehabbers are LOOKING for problems to solve. Now, not all problems have to be massive. Sometimes all a house needs is paint and carpet, but unless you do this routinely, and have the money and time to do it, it seems like a daunting task for most Americans. Not to a rehabber. The trick is spotting the problems we want to solve, which really isn’t all that hard.

- Do you relish a project…I mean one that can occupy your attention for more than a few days?

Even if you hire a contractor for a turn-key rehab, you need to stay engaged in the project. Your contractor needs to know you are minding the clock and intend to hold him to his word and price. Nobody’s more interested in your project than you…spread the wealth…make sure everyone involved knows how interested you are and it tends to make THEM interested. A rehabber doggedly stays with the project because he knows time is money! If you are the impatient type there are other types of real estate investment for you, like buying houses that are already rehabbed, or wholesaling.

- Do you understand that sometime you’ve got to make a mess in order to make things right?

A rehabber is okay with tearing up a wall to get at some bad plumbing, or rewiring a house because he’s got the big picture in mind. He know somebody’s going to live in his project eventually and knows when to make a mess, and when to patch and cover.

- Can you see value in things that may not be pretty now, but could be made so?

A rehabber can walk into a mess and see the diamond in the rough. A rehabber profits on most people’s reaction of revulsion to an ugly property. A rehabber sees a beat up property and his mental calculator starts working

“That’s $250 for a dumpster, new HVAC ($2500), paint inside and out ($3000)…”

A rehabber can get to a total (slowly or quickly with experience) that he or she thinks the rehab will cost instead of most people who will just let their emotions scare them out of big bucks. A rehabber knows where he or she is “safe” in a property.

- Do you know your own limitations and know how to pass on a little too much rehab?

A rehabber knows when to be Macho Man and when to be Chicken Little. A rehabber passes on HUGE RED FLAGS like cracked foundations and sagging roof lines…that is unless they know exactly how to fix them and what it’ll cost. If they know that, it makes these houses huge opportunities.

- Do you enjoy fixing things?

Big cost items involved with a rehab like a new roof, plumbing or wiring don’t bother a rehabber. A rehabber would have spotted these requirements and factored them in. Those items only scare away the weak of heart and give the rehabber a better deal!

- Can you negotiate and work with contractors?

A rehabber knows when he’s being played for more money. The rehabbers learns quickly what it costs to get things done and is not afraid to make someone justify a price. If you are new to rehabbing you are probably paying more than someone who’s been doing this awhile. That’s okay. You are still making money! Keep talking to fellow rehabbers and you will learn as you go. Don’t let a lack of knowledge in this area prevent you from making some great money.

- Can you get used to making your money in tens-of-thousands instead of hundreds at a time?

A rehabber isn’t content to work for 40 hours for a few hundred dollars. The rehabber is okay waiting for a few weeks or months for a bigger payday. Rehabbing is a business. Just like any other business, money flow in and out. There will be time where your working account will be a little flat, and other times it’s fat! Before you go on a spending spree in a fat time, look ahead at your projects and figure out what your outflow will be over the short term. A rehabber has to plan!

- Is your general philosophy one of seeking ease, or are you a go-getter?

Rehabbers usually aren’t very laid-back people. They are Alpha personalities, not content to sit around waiting for things to happen. They are the ones making it happen. If you are reading this and are interested in rehabbing, you’ve taken the first step by educating yourself.

Sometimes it’s actually WISE to not jump in with both feet. I feel strongly in this fact:

KNOWLEDGE ALWAYS PRECEEDS THE MONEY!

But, don’t wait around for too much knowledge. Rehabbing IS one of those things that take knowledge of the basics to get started. BUT, for SOOOO many aspects of this work, it takes experience. It takes experience you can’t get on the couch or in front of a computer. So, stick around and read about the basics then GET STARTED!