Ashley:
You want to buy a rental property, but where do you actually find one? Do you open Zillow and scroll until something looks cheap? Do you send letters, cold call owners, build relationships with agents, or wait for someone in your network to mention a property?
Tony:
It can feel like successful investors have access to a secret website full of discounted homes, and the truth is they don’t. Most deals come from ordinary channels used with a better buy box, faster analysis, consistent follow-up, and enough offers to let the numbers, not the listing label, decide what is actually a deal.
Ashley:
Today we’re breaking down the ways we’ve used to find investment properties from Zillow and word of mouth to pocket listings, wholesalers, direct to owner outreach, and retiring landlords. For every channel, we’ll cover the advantages, the dropacks, and the strategy it fits best. So looking ahead to 2027, shifting inventory and seller motivation could create new pockets of negotiating leverage, which is why rookies should start building these deal finding systems now. Welcome to the Real Estate Rookie Podcast. I’m Ashley Kerr.
Tony:
And I’m Tony J. Robinson. With that, let’s get into our first step for finding the right rental properties now and what’s working today. So the first step is to start with your buy box. Okay, start with a very, very clear buy box. And a buy box by definition is just the boxes that a property needs to check in order for it to achieve your specific goal. So that it can vary from strategy to strategy and your buy box for a flip is going to look different than your buy box for a wholesale deal, is going to look different than your buy box for a long-term rental is going to look different than a midterm rental different than a short-term rental. So every strategy, even in the same market can have a very different buy box. But there’s a few ways that I would approach this.
At a high level, before you even think about buy box, the first thing you have to focus on is what is my investment goal? Am I doing this for consistent monthly cash flow? Am I doing this because I want a nice vacation house on the lake? Am I doing this because I want a big chunk of cash? What is your specific investment goal? What is your purchasing power? How much cash do you have on hand? How much loan can you get approved for? And then what’s your strategy? So if you have those three things, your goal, your purchasing power, your strategy, that’s the foundation for building out your buy box because maybe I’ll give you guys an example. Let’s say that you want to buy, say you live in Southern California, any high cost of living area and your goal is I want a cash flow, 30% cash on cash return buying something here in California.
With a lot of strategies, buy and hold strategies, that’s going to be tough. So you got to make sure that you have that laid out first before you actually put together your buy box. But once you have those things in place, and this is a mistake that I see a lot of rookie investors make, is that they start by going into Zillow or Redfin and seeing what’s for sale and they just kind of scroll and so they find something that looks nice and then they back into, okay, do I think this is actually a good deal or not? But the whole purpose of the buy box is that before you even hunt for anything that’s for sale, you’re doing very deep and thorough research on the market to understand what is already proven to do well in this market. So if I want to flip a house before I go hunting for properties to purchase, I’m going to look at all the homes that have sold in the last 30, 60, 90 days that are around the price point that I think I’ll be able to afford.
And I’m going to understand all those characteristics. If I want to buy a short term rental, I’m going to look at all of the top performers in this market to understand what are the specific boxes they’re checking that I need to make sure I’m including in mine as well. So we start the process of your buy box by doing a very deep and thorough research on the current market conditions and understanding, hey, what are people already paying for in this market? You do those two things. At least that’s how I start my process for buy box building.
Ashley:
We also have a buy box checklist that you guys can download. Go to biggerpockets.com/resources. And if you go under, it’s like finding deals or something like that, that section, there’s an actual buy box worksheet. And I created it and it goes through all of the things that you should think about when building your buy box. Some of these won’t apply to you. For example, there are certain things that may be in my area of the market that may not be in whatever market you’re in, or you may need to add some things to the sheet because it’s in your market and maybe not in my market, but at least it’s a starting point for you where you can go and see, okay, these are some of the things I need to look at. And then some of them I give more detail as to why this is something that should be on your buy box.
So you can go ahead and download that. It’s free to download. I’ll try to also get it linked into the show notes for you guys into the description on YouTube also so you can download that.
Tony:
So once your buy box is complete and you understand what you actually need to go find in that market, the final piece of this buy box step is actually working on getting the offers submitted. And oftentimes, especially when I’m working with students, I’ll tell them, once you have your buy box, we just need to go search for deals that fit the buy box and worry a little less about what the actual purchase price is right now because purchase price is always negotiable, but can we find the deal that meets the buy box? And then once we find the property, there’s different ways that we can negotiate to try and get the overall value of the deal to align with what we need. One of the most kind of simple solutions is we just try and reduce the price. If they’re asking 350, but it works for us at 300, well then let’s just offer 300.
So just asking for price reductions. Another great strategy that works especially well in today’s market is getting seller credits or seller concessions. Can you get the seller to give you a credit at closing to help buy down your rate? We’re actually in the process. We should be closing hopefully in a few days here on a new primary and we did both of those things. We got a 30K reduction on the purchase price and we also got another 30K in seller credits to help buy down our rate. So those are two things where the property fit our buy box. We knew exactly what it was that we were looking for for our primary. We found the property was priced higher than what we wanted it and we got both of those concessions built into the deal. So the buy box is the starting point, find deals that match and then use your negotiation tactics to make the numbers actually work.
Ashley:
One of the things I really like to do is try and find different ways to fund the deal. You can offer cash, you can get conventional financing, you can get seller financing. There’s all these ways to get creative and you can get a deal or a discount by the type of financing you are getting on the property. So if you’re able to get a better interest rate than somebody else because the seller is going to finance it for you at 5% instead of the bank that’s going to charge you 7.75% for a loan, you’re maybe able to have this as a better deal because you’re not going to be paying as much interest as someone else would. So getting creative with the finance can help you to get that discount while keeping the price the same. Or sometimes I even offer more if they’re willing to do seller financing.
Then the next is just looking at where the missed opportunity is in the property. Where can you add a value in just the operation? So I’m not saying going in and doing a full gut rehab to increase the market rent to make more money. I’m talking about things that you can do operationally, like quoting out the insurance on the property, maybe even disputing the property taxes to get them lowered. What are things that you can do right now that don’t mean that you’re going to have to put a ton of money into the property and it’s just operational pieces that you can buy it at this price point because you know you’ll be able to increase the cash flow because you’ll be able to put better operations into this property, even increasing market rent. And then the last thing is the seller’s motivation. You can use that to get a discount as in do they want to fast close on this?
Can you increase the timeline and put that into your offer? And maybe they’ll be more likely to accept a lower price knowing that you’ll be able to close fast. So think about that. What is their motivation? What do they want out of this? And try to include that. A lot of times when I’m buying properties, they’re full of stuff and I’m buying them from the estate or I’m buying them from someone who’s moving or I’m buying them from someone in their family. So I always put in my offer, you can leave whatever you want and I will take care of it. And that is usually a motivation for them to accept my offer because they don’t want to have to deal with cleaning out all of their family members’ stuff, getting dumpsters, going through everything. This way they can just leave whatever and I’ll have somebody take it out.
So there’s other ways to get discounts instead of just getting a cheap property, a better deal.
Tony:
Step number two or strategy number two is one of the easiest. And it’s just starting with the MLS, Zillow, Redfin, the places that you’re probably doom scrolling already. But this is best for Rickies that are looking for just kind of a quick and efficient way to get a large volume of opportunities to look at. Now obviously there’s pros and cons to finding deals on the MLS, on Redfin, Zillow, whatever it may be. I think the benefit, again, is that you can literally see inventory in any city across the country with a few clicks. There’s no gatekeeping, there’s no hoops you have to jump through. It’s just information that is readily available. Tons of public history, tons of, you can see the property taxes, you can see the transaction details. When did it last sell? How much did it last sell for? So there’s the photos, you can look at comparable properties.
There’s just an abundance of information that is completely free.
Ashley:
So the disadvantages are obviously it’s to the open market. So you’re going to have more competition on the property. Also, people may not exactly list their property for what it’s actually worth because they’re looking at what other people are listing, what other houses have sold for. So this has been a deterrent for rookie investors. Sometimes when you see the list price, you say, oh, well that doesn’t make sense. That property’s not worth it, blah, blah, blah. But remember, you have to have the mindset that the list price isn’t the purchase price. Also, there’s the Zillow’s estimate, which I find incredibly inaccurate or inconsistent. Maybe on some of my properties it’s accurate and then other ones just way off. At one point in time I bought a property for $52,000. It said on there that I purchased the property for $520,000 and the Zestimate on it was like $600,000.
This was a little duplex I bought for $52,000. So don’t rely on all the information, even the property taxes. So that’s also a disadvantage is you’re not getting fully accurate information from browsing these websites. The next thing is the rent estimates too. I would do your own research. A lot of the rent estimator calculators that are integrated into these different websites, a lot of them are only pulling data from their own website. So like Zillow, they’re getting their information from people who listed their property on Zillow. There’s a lot of mom and pop landlords that don’t even use some of these platforms to list their property. There’s people who still list property in the newspaper. I actually, I use TurboTenant and one of the places that they push out all of my listings, there’s like, I don’t know, 17 places my listing goes. And one of those is Craigslist.
And believe it or not, I get a huge amount of leads from Craigslist too. So there’s still listings out there on Craigslist even.
So just know that not all of the information is extremely accurate on some of these websites that you should do your own research to call around to property management companies, see what they’re charging for rent for different places. You can just say you’re looking for a two bedroom apartment or something that’s comparable to what you’re looking to buy and see what they have available for rent. And then kind of the last thing is obviously these are being put on these websites to sell. So they are going to show the best features of the property and these properties are going to look sometimes better than they actually are. Once in a while, you get the properties that have the worst photos, have the worst description, and you end up finding that it’s listed as a three bedroom, but it’s actually a five bedroom, but nobody knows that because it’s listed wrong.
So you do have those gemstones in a while, but sometimes they’re listed to be able to sell. So it’s just highlighting the great parts. My brother is looking to purchase house hunting and my mom went with him the other day and sent me the listing. Beautiful house, beautiful, beautiful yard. It had everything that my brother was looking for. They went to tour the property and in the basement there was this one slider door. They opened the slider door and it is literally just a room full of black mold. Obviously there was no picture of this on the MLS. So just that is another con is that it just doesn’t give all of the information. And then there also can be inaccuracies.
Tony:
Let’s talk a little bit, Ash, about how to actually use the MLS like an investor, because I think that’s maybe the most important point here. I’ll tell you guys how I’ve used it in the past. I was actually just opening up Zillow on my phone right now because I still have a lot of these saved searches, but you can save searches on Zillow. So for example, let’s say that you want to flip a house and for whatever target city you have on your list, you can save a search where it says, Hey, for any listing that goes for sale that’s between this square footage and this square footage or this price point and this price point or this bedroom count and this bedroom count that has certain keywords like TLC, as is, damage, repairs needed, whatever it may be. You just kind of stack all these keywords that someone might list in a home that could be a good potential for flipping.
You’ wake up every morning, you’ll get a fresh report from Zillow saying, “Hey, here are all the new homes that match your search.” And that’s kind of like your targeted list to go look after. You can look at homes that have been listed for a long period of time. So if your average days on market is X and you set your search to be like, “Hey, I only want to see properties that are listed 2X,” you can do it that way. And then even kind of the trickier piece, if you start tracking those listings and you see which ones start to fall off that didn’t sell, well then there’s an expired listing that you can maybe just go reach out to the seller directly even. But that’s the way that I’ve used the MLS is very targeted searches, either looking at properties been listed for a very, very long time or trying to be the first one to a property that just got listed, both bookends of that time spectrum immediately when it lists or after it’s been listed for a long time, I found the most success.
But those are the ways that I’m using the MLS. And anything that you’re doing, Ash, MLS wise, it’s also been useful for you?
Ashley:
I love going in reverse and seeing what’s been listed the longest, so sorting them by newest. And then it’s always exciting to see the new things, but I also like to see what’s sitting. I also like to go and look at what’s pending and I like to go back to the history of the property where it says the day that it was listed and then the day that it went pending. And I like to see how long that period was. So did it go pending within three days? I mean, that means it sold really fast and probably above asking in my area. Did it sit on the market for 60 days? Then it probably sold for under asking. So I really like to go and use that aspect of it as far as for research and stuff for my own things. But yeah, as far as searching, I go down rabbit holes still.
I have my selected searches save, and then I also take the map and just zoom all over to the different areas that I’m interested in and just hope that I didn’t get an alert for something and there’s something new and exciting. But I’m not actively looking to buy a deal right now anyways, so it’s all just for fun. But yeah, I would say my biggest thing is going back to sorting by newest, sorting by newest, and then looking at what is still sitting and how long it’s been sitting and then looking at the pending to be able to figure out how long things are sitting on the market.
Tony:
All right. Let’s talk about the next strategy, which is word of mouth. And I have actually, maybe by referrals, but by just the word of mouth we’re going to talk about right now, I’ve never gotten a deal by word of mouth where I was just in conversation and someone’s like, oh, actually I know someone that’s selling a house like that. Now Ashley, on the other hand, she’s like the resident expert of just like –
Ashley:
Oh, Tony, hold on. My neighbor’s outside rightnow. He said his friend’s got a property for sale. He wants to.
Tony:
I would not be surprised if that was actually happening right now and someone’s knocking on Ashley’s window.
Ashley:
He actually really was going on to get his mail though.
Tony:
Someone wants to sell a house. But yeah, Ashley is like. Ashley, what’s the secret, the book, The Secret? The Secret talks about, what’s the word when you just think about something and. Oh, manifesting.
Ashley:
Oh, manifest. Yeah. I would say that I do the opposite because they literally come to me when I’m not looking for deals and it’s like, “Oh God, now I got to figure it out. I got to pull money out from underneath my mattress.” So
Tony:
Word of mouth, guys, is just that you’re sharing with everyone in your network who you are, what you do, and what it is you’re looking for. I’m a real estate investor. I buy fix and flip homes in the local area. I’m looking for properties that are three bedrooms, two baths, rent style homes, 1500 square feet max that are needed some love. And you just share that with everyone that you know, people who play sports with your kids, your hairdresser, your barber, the clerk at the grocery store, the person at the post office, all those different places. Everyone knows what Tony and Ashley do and what kind of deals they’re looking for. And then eventually someone’s like, “Oh wait, I think I might know someone who can actually work with you or give you that kind of deal.” So it’s best if you’re in a small.
I wouldn’t even say a small town, but if you’re in a town where you’ve got a lot of network and you’re good at talking to folks and you enjoy that part of it. And I think the advantages of this approach, and we’ve seen it happen with a lot of guests as well, is that you get deals that would just been really, really tough to get otherwise. Sometimes impossible. I’ll give you an example. We just recently interviewed a guest and he knocked on his neighbor’s door trying to buy their house and they’re like, “We don’t want to sell, but hey, we know the neighbor down the street actually. He’s actually about to move and he might be willing to sell.” And that investor ended up buying that neighbor’s house. That’s the perfect example of word of mouth where it’s just people knowing you and knowing what you want to do and sending you deals that otherwise you probably would’ve never heard of before.
And the benefit of this approach is that you’re not fighting with a million other investors the same way that you are on the MLS. Oftentimes, you might be the only person talking to that seller because they haven’t gone to market yet. They haven’t done all these different things. Maybe they haven’t gotten postcards from other wholesalers about their deal. You are the only option. So if you can find a solution that’s a win-win for both of you, then they get the property off their hands and you get a really, really good deal.
Ashley:
I think another thing you said about if you’re in a smaller town, you know more people or whatever, that’s an advantage, but also the fact that there’s usually less investors too. I think that was kind of my advantage for a while is that there wasn’t a lot of people that were investing when I started or talking about it at least where I was sharing it on social media. I would talk about it with my friends where at the time I was in my young twenties and nobody I knew my age was investing in real estate. And if they did, they didn’t talk about it or anything. But the other investors that I knew were older men that still had full-time jobs doing something else, but had some real estate on the side. So I think that was something too, is that it was such a small community and there are just not a ton of investors in the community too.
I
Tony:
Think the only drawback to this strategy is that it’s just not very consistent.
Ashley:
Yeah. You can’t rely on this as your only deal flow.
Tony:
Yeah, because you could get something today and maybe it’s months before you hear something else. So it’s not like the MLS, you can just turn it on and it’s there. It’s not like direct mail where you send out X number of mailers, you’re going to get this many back. It’s not like cold calling people where you make enough phone calls and people pick up. So I’d say unless you disagree, I just feel like that’s really the only big disadvantage that’s unique to this strategy.
Ashley:
Yeah. You can’t track any metrics on it. You have no way of knowing who your actual leads are, who are the motivated sellers, who potentially would sell to follow up with them. If you’re doing an email campaign or something, you can see who opened your email at least, even a text message or who answered your call, maybe answered a couple questions and you know that they’re a warm lead now. But I think one of the things that you could do is go in local Facebook groups of the market you want to invest in and put it out there is to be like, “Hey, I’m looking for this type of house. Does anyone have anything for sale?” I’m in a group like that in my area and just people post all the time and I don’t think they’re investors. They could be, but literally all they’re saying is like, “Hey, I’m looking for five acres to build a house on.
Does anyone have anything they’re thinking of selling? I’m looking for a three bed, two bath house. If I had two bedrooms, maybe couldn’t make that work. Did anybody have anything?” And there will always be tons of comments. They’ll tag real estate agents, first of all. If they know of someone, they’ll tag that person and be like, “Hey, weren’t you thinking of selling this?” And then people saying, “Hey, DM me. I have something that I’m thinking of listing in the spring or whatever.” So that’s always an option to do is every once in a while just post in there. I would just keep it as short and generic as possible to see what can be brought to you. I wouldn’t be like, “Hey, I’m an investor. I’ve been investing for three years now. I’m looking to get my third deal. I want to buy a duplex.” I would just keep it as.
All
Tony:
Right. Number four, which is somewhat related to word of mouth, but it’s pocket listings and agent relationships. So a pocket listing is slightly different than just a word of mouth transaction. A pocket listing is actually coming from an agent, but it just means that they haven’t actually published it live for the entire world to see. So sometimes an agent might keep a pocket listing because they’re like, “Hey, I know if I list this one, it’s just not going to go well. So I’ve got you here.” Sometimes they have a pocket listing because they just haven’t actually listed it yet. And maybe they just signed the contract with the seller today and you’re there and they’re like, “Actually, I think I might be able to sell this without us even going to market and doing the whole rigmarole of listing it.” So there’s oftentimes a benefit for the agents as well, but a pocket listing means that it’s an agent’s actual listing, but before they mass market on the MLS, they’re going to a select number of people they trust first say, “Hey, do you actually want first dibs on this deal?” It’s great for someone who obviously has relationships with those agents already and that it takes time to build, and it’s great for someone that’s got the ability to move quickly, the ability to confidently close, because a lot of times when an agent is giving you a pocket listing, part of the reason they’re doing that is because they want certainty of close.
It’s like, “Hey, this is a deal that traditional financing isn’t going to work with. So I got to make sure I take this to someone that actually has the funds to get it closed. Hey, I’ve done 10 deals to Ash. She always gets it to the finish line. Let me go take it to her to make sure that this transaction gets done and I take care of my seller.” So it’s for someone who has that certainty of their ability to actually close in the transaction. And even if you’re a rookie investor, it doesn’t mean that you can’t have that certainty, but either A, you’ve got the funds, maybe you’re pulling on a HELOC, maybe you’re partnering with someone else, you have the cash ready, but being able to quickly close, I feel like will be one of those barriers that you have to tackle. But the advantages here is much like the word of mouth, is that you’re getting access to a deal without fighting a bunch of other potential investors.
And because these are agents who solicit homeowners for a living, it tends to be a more consistent pipeline of deals coming your way. And there are real estate investors out there who the majority of their deal flow comes from agent relationships. In fact, I have a buddy, his name’s Brian Davila, he’s based out of Vegas, and his entire wholesaling operation is really based not on going after homeowners, but on going after agents and trying to get access to their pocket listings.That’s his entire strategy for wholesaling. So you can really build a meaningful deal pipeline out of the strategy by itself.
Ashley:
I’ve actually got a lot of pocket listings too as part of my portfolio and a lot. Well, the majority I would say were estates where they went to an agent, they wanted to sell it, the houses are full of stuff, they need repairs. And so the agent says, “Well, I know Ashley, would you like her to take a look at it?” And then I come in, look at the property and things like that. So it’s usually people who are looking for. They don’t want to have to go through showings and getting the property show ready, and they would rather just get it done and over with. They’re grieving because they’ve lost someone. So those have been the majority have been estates. I think there was maybe a couple other ones that weren’t estates. I don’t remember exactly what the reasoning was why those were kind of like pocket listings done, but most of the time it’s because they’re not turnkey properties.
They’re not beautiful properties that are going to command way above market listings. So if they’re priced right or whatever, I will buy a pocket listing. There are some rules around pocket listings for agents though. When a property is officially marketed to the public, you have to list it on the MLS within one day or something like that. I really don’t know these rules, but there is something like that too. So if you are a newer agent and you haven’t heard about pocket listings and you maybe want to build a buyer’s list of investors and make sure that you’re aware of what the rules are for pocket listings so that you’re following them. I’m sure your broker can guide you.
Tony:
I think the only thing that I’d add to the strategy is that if you do want to get good at getting more pocket listings sent your way, just spend time talking to more agents. My buddy Brian, who I mentioned, he literally has a team of people who just cold call agents all day and say like, “Hey, here’s who we are, here’s what our buy box is, here’s what we’re looking for. Here’s how many deals we close on a monthly basis. We’d love to get on your list of pocket listings.” So that’s one approach. But obviously if you’re not doing that level of volume, it’s clarity on the buy box, which was step number one. And then just doing your own outreach to those agents, say, “Hey, if you find something, just know I’d be a willing participant to take a look at that deal and build those relationships.” Strategy number five is working with wholesalers.
Wholesalers for folks that aren’t aware, you can think of them as professional deal finders, ideally professional deal finders, but that’s the role they’re supposed to serve. So wholesalers basically through different marketing channels, generate leads of people who are looking to sell their homes below market value. Sometimes those marketing channels are ads on television and radio. Sometimes that’s ads on Facebook and Instagram and Google. Sometimes it’s direct mail, sometimes It’s door knocking, it’s cold calling. They all specialize in different strategies, but the end result is they get a homeowner who’s willing to sell their property at a discount. And sometimes, most of the time it’s because the property’s in distress, needs a lot of repairs. Sometimes the seller’s in distress. They’ve got a divorce, they need to sell quickly. Someone passed away, they don’t want to deal with it. They’re packing up and moving across the country for a new job and they have to close quickly.
So either the property or the seller are in distress. And the way that wholesalers make money is that they talk to the seller, they place the property under contract at one price, and then they resell that property to you at a higher price. So maybe they’re under contract at $200,000, they resell that contract to you for $250,000. They get to keep that difference of 50K. That’s how a wholesaler makes their money. So that’s what wholesalers do. The advantages of working with the wholesaler is that they’re doing all the hard work to go source the deals. You just have to make the relationships. They’ve already done all the hard work to make the deals. So it’s not nearly as consistent as what you’re going to see on the MLS. I don’t think anything matches the MLS in terms of volume, but it’s more consistent if you have a big enough roster of wholesalers where you can get deals sent to you every day.
This was several years ago where I went into a bunch of different Facebook groups in the areas that I’m looking to invest. And I’m pulling my phone here because I’m probably still every single day, but I put my buy box in a bunch of Facebook groups saying, Hey, here’s why I am. Here’s what my buy box is. Wholesalers send me your deal. And every single day, I just pulled this up, literally every single day, there’s five to seven emails in my inbox of properties that I could go buy. So there’s enough wholesalers out there to put on your market to keep you steadily kind of looking at deals and
Ashley:
Analyzing things. Some of the negatives are that you have to usually close quickly. A lot of times you have to pay cash for the property. You can’t really rely on the numbers that the wholesaler is giving you. A lot of wholesalers will tell you what the rehab cost will be and what the ARV will be the after repair value on the property. A lot of times these are not accurate because once again, they are trying to offload the property, sell the property and make a nice assignment fee on it. So you have to do your own due diligence and you have to do your own estimate on the property. Also, you should be aware of different rules, laws and regulations around wholesaling in your state specifically. Tony, there are some states that have completely outlawed wholesaling, correct?
Tony:
I’m not a wholesaler myself, but I believe so. And I believe there’s even maybe more states that have. You have to have a license now to wholesale, whereas before you didn’t have to be a licensed agent, but there are states that are moving towards like, you’ve got to have your license the same way that a realtor would. So definitely check the local laws and regulations for your state. I
Ashley:
Just looked it up and it says it’s not completely illegal, but heavily restricted or regulated in some states. So
Tony:
It’s getting tricky, right? So it’s trickier out there for wholesalers these days, but they’re adapting, they’re figuring it out and they’re still out there in full force. So again, check your state, see how restrictive it is, but wholesalers could be a great way to find the right deals.
Ashley:
Okay. Now onto number six, direct to owner and off market outreach. So I haven’t done a lot of this, but this is where you are going directly to the seller. You are going to find your own leads. You are going to find your own sellers. And this can be done by sending text messages. This can be done by writing letters, doing a mail campaign. This can be by calling people and asking if they want to sell their house. So this could be door knocking even. So this is where you’re cutting out the wholesalers, you’re cutting out agents, cutting out any middleman, and you are going direct to the potential seller. So you have to do the work. You have to do the mail campaign. You have to set up usually a service where you can blast out text messages, but you have to follow, again, rules, laws and regulations against spamming people.
The same with phone calls. You can do skip tracing to get the phone numbers of people that kind of fit your buy box, get the numbers for the property owners and do robocalling and you can outsource to a call center or you can make the calls yourself. Re simply even has AI agents that will do the calls for you too. But some of the benefits of doing these is you’re cutting out the middlemans, you’re not paying a commission, you’re not paying an assignment fee. So there’s more room to make a better price because you don’t have to account for those things to be taken off the top. One huge advantage I think with this is that you are getting direct to the seller to be able to negotiate. Sometimes it is nice to have a middleman, but also you’re playing telephone. You’re playing telephone from me to my agent, to their agent, to them.
In New York State, then there’s attorneys involved even, and then it’s even another additional layer of somebody that you’re playing telephone with and it’s going from person to person to person to person and things can get easily miscommunicated. One example I always think about is seller financing and explaining to someone the tax advantages of that. I don’t get to say when I’m working through agents really, if the seller’s agent doesn’t understand seller financing or doesn’t understand seller credits or doesn’t understand something I’m trying to negotiate into the deal, most likely they are not going to explain it correctly to their buyer. They’re not going to be an advocate for the buyer to accept this. So that is one advantage is you get to be face to face with the person and then also too, that you kind of cut out the middleman and then you’re also cutting out those expenses like the commission or assignment fee.
Tony:
In terms of the drawbacks, there are a few big things that come to mind for me. Number one is that this isn’t like an instant kind of spigot that turns on for you. So we talked about MLS. I can literally open up my phone at any point and any time of the day and go find a bunch of deals to go look at. When you’re doing your own direct outreach, there’s usually a long kind of warmup period before you can actually get to a point where deals start closing for you. And some of the folks that we talked to that go off market direct to seller, it’s six months. James Zehner talks about how he knocked doors for like a year before he got his first off market deal. So it just takes time to build that flywheel. So if you need a deal like today, typically this isn’t going to be the best approach.
Second is that, to Ashley’s point, you have to make sure that you’re following all the rules and regulations as it relates to outreach. If you’re texting people, there are guidelines around, I think it’s called TCPA where you have to make sure that you’re following those guidelines. I’m sure different states have different rules around mail and what does that look like? And if you’re calling people, so you’ve got to make sure you’re on top of what those look like for your local city, state and otherwise. And then I think that maybe the bigger downside that is maybe a little hidden is that depending on how good you are at this, it could actually end up costing you more. A lot of people want to go direct to seller because they feel it’s going to give them the best deal. And oftentimes that can be true, but let’s say that you’re really, really bad at direct mail.
Let’s say that you’re really, really bad at selling people on the phone or those face-to-face conversations and you’ve got a really, really low conversion rate of, “Hey, we send out X number of mailers and we get back this response.” If your response rate is really, really low because you’re not good at it, you end up spending more money on mailers and time and all those different things than if you would’ve just paid the wholesaler an assignment fee. So you’ve got to make sure that if you are going to go down this path of going direct to seller, that you’ve got the skillset and the proper training to execute on it to actually make it a cost effective model for you.
Ashley:
Now let’s look at number seven, retiring landlords. And I bought a portfolio from a retiring landlord before. And one of the big advantages of this is that if they have a smaller portfolio, it is way easier for them to retire by selling one person their whole portfolio or at least a large chunk of it than having to individually sell each single property to different people and having to do a ton of different transactions, a ton of different showings. So that’s just one advantage for them even, but also for you to be able to buy a portfolio and buy multiple properties in one transaction compared to having to go out and do all these separate transactions to try to build up your portfolio. This is more common for long-term rentals than I would say short-term rentals, but hey, who knows when Tony’s getting time to retire, he might offload all of those Joshua Tree properties that someone can snatch up a whole bunch of them.
But I would say more common small multifamily properties and long-term rentals, especially with boomers retiring that there may be lots of opportunity out there. And I will say that it probably is not very common for boomers to have huge short-term rental portfolios that they’ve owned for a long period of time, maybe lake houses or maybe different vacation properties like that, but it wasn’t as popular, I would say, as it is now. And long-term rentals, they could have held for 30 years where you’re looking at advantages of they have no debt on the property for holding it for so long. They are going to pay a ton in taxes if they just sell the property and pay capital gains on that. And then also they have the opportunity to most likely do some kind of creative financing like seller financing where they don’t absolutely need a lump sum of cash upfront maybe.
And they can be the bank do the seller financing that also offsets their tax burden and lowers their tax bills. So there’s benefits to both sides of that. But that’s one thing I love about the retiring landlord is usually there’s a lot more room for opportunity in how you finance the deal and getting creative with it. The portfolio that I bought, I bought some at once. Some were cash, some were I used a line of credit and then the rest were seller financing. And then two years later I bought the rest of the portfolio. So it wasn’t even like I had to do it all at once too. So that’s just some examples of how you are able to get these portfolios from retiring landlords.
Tony:
Yeah. Just the only disadvantage, and I’ve personally never purchased from a large portfolio from a retiring landlord, but I did get pretty deep into conversation when we were investing in Shreveport, this wonderful woman named Mary. And we had a long conversation about her portfolio, but the reasons I didn’t move forward with it was because really I guess there were a few reasons. Number one, deferred maintenance. Number two, really, really poor kind of bookkeeping and record keeping to confirm some of the actual revenues and expenses. And then they were just still asking a little bit too much given what that was. So obviously the rents were low, so I had the opportunity to bring them up to market level, but because there was so much deferred maintenance, it was going to be a really big capital expense to get all these properties to the point where I could actually increase the rents.
And when I balanced those two things out against what they were asking for, it just didn’t work for me. So I think that’s the only disadvantage is you really wanted to complete your due diligence to ensure that the asking price allows you to still execute the business plan and get the rents where they need to be, which is true of any underwriting or any property that you’re looking at. But that was a disadvantage I saw. And from you, Ash, given that you’ve done this a few times, anything that we’re not considering?
Ashley:
I would say maybe the only. No, I don’t think so.
Tony:
All right. And the final one here, number eight, Ash and I are just going to rattle off a few bonus channels that maybe you hadn’t considered that you can go take a look at. So one is HUD owned in Fannie Mae Home Path properties. So if HUD or Fannie Mae have to take back properties or they get control of properties for whatever reason, you can actually go bid on those properties. Now, don’t quote me here because I’ve never purchased through those programs, but I want to say that they have a timeline where it has to be someone who’s buying for their personal property first. And then after that timeline, then investors can go in afterwards. Ash, do you recall that? Does that sound familiar to you?
Ashley:
Yeah. They usually open up first to, if it’s going to be your primary residence to a certain amount of window. If they don’t get any offers or accepted offers that they don’t accept any of them, then after that window closes, they open up to investors. And still, if it’s going to be your primary home, you still can bid on it and look at it, but they do give that time for just primary residents to be able to submit offers, to not have to compete with investors. Okay. So the next thing is local banks and actually going and talking to the loan officers at that banks and seeing if they are actually foreclosing on any properties or if they know of anyone that maybe wants to sell their property, but building those relationships with people who deal with real estate investors or deal with homeowners, so loan officers, but also property managers, so property management companies in the area, they’re usually one of the first to know that an owner is going to sell their property if they manage that property.
And sometimes they will kind of keep the house in sale because then they’ll know that they are keeping the property. But if you can get on their list to be notified when they have a property that they’re selling for an owner too, that’s an advantage. Going to investor meetups, going in the BiggerPockets forums and just saying, “Hey, I’m looking to buy a property in this area,” searching where other people are investing if maybe you need to find a new market. And then local online groups, so Facebook groups, connecting with people on Instagram that are investing in your market. And then there’s also auctions and tax sales. So the Marshalls, the US Marshalls, they seize land and then they have auctions to sell it. I actually went to one before and it was really interesting. And the guy that I went with actually ended up buying the piece of land.
He was the only person bidding, so they got it exactly what it was, but it was like a prime piece of property. But they only notify the people who have the adjoining land. They send them a letter and just saying, “Hey, just this parcel of land that is adjacent to your property is going to be sold at auction. Here’s the date. Here’s where you need to be if you are interested or whatever.” And then I think you sign up in advance as a bidder. But there’s a ton of different government entities that do different auctions. There was one by my lake house recently. It was just a small parcel of land and it was listed because it back taxes. The person hadn’t paid the taxes on it and it was being put up for auction. It was just an online auction up there and they do it once a year and you just sign in, you register to bid and then you can bid on any of the properties.
So there are different. I would just go into Claude ChatGPT and ask in my area, what are some of the properties that are for sale? I bet you could actually find a lot of these tax auction websites just from using AI in your area.
Tony:
Last thing that we’ll wrap up here guys is that we gave you a bunch of different strategies, but none of this actually helps if you don’t execute on what we’ve talked about. And I’m a big fan of tracking things and data provides clarity and you can make the right move based on the right data. So if I’m a rookie sitting in this seat and I haven’t yet closed on my first deal, the things that I would be tracking are one, just did you complete your buy box, yes or no? But once you have your buy box complete, how many deals have you analyzed in a rolling 30 day period? And the goal is to never let that number get below at least one per day. And if you can do that, analyzing a deal every day for 30 days straight that meets your buy box, there’s a really, really good chance you’re going to find at least one or two properties that are worth really, really pulling the trigger on.
And I know that because I’ve seen it happen time and time and time again. So that would be my challenge to you guys is dedicate and focus yourself to one deal analyze that meets your specific buy box every day for the next 30 days.
Ashley:
And we want you guys to track this. So you’re going to track your new leads. You’re going to track the amount of properties that you are analyzing if that ends up being once a week. You’re going to track your offers submitted and you’re going to actually track follow-ups. So how often are you following up on a property? When did you follow up? Did you follow up? And then any contracts and closing. So you can use a project management board to track this. You can use a Google worksheet, whatever you want, pen and paper to track this. Thank you guys so much for joining us today, and I hope that you will look into some of these ways that you can find deals in 2027 or start this year. Take Tony’s advice and start analyzing, analyzing, analyzing, and it’s just going to make you more comfortable and better and help you get over that analysis paralysis.
I’m Ashley Hughes Tony and this has been an episode of Real Estate Rookie. Make sure I subscribe to our YouTube channel and if you haven’t already, check out biggerpockets.com. We’ll see you guys next time.
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