What are the best ways to assure yourself that you are getting a good deal in the world of real estate? One has to start by devising a plan that will create less competition in the market, and in real estate, we do this by finding a deal before it goes to the open market. The best deals aren't always off-market deals, but the less competition, the less upward pricing pressure. Rental properties, commercial real estate, and real estate syndications can provide a great way to earn cash flow and create financial stability.
They say proximity is power, but you may feel helpless if you live in a market where the deals won't pencil. Are you familiar with the term "driving for dollars?" Real estate investors will hop in their car and go for a drive looking for signs of deferred maintenance. They'll look for overgrown grass, a boarded-up window, or aging, flaking paint. Well, if you live in a market like San Francisco, New York, or LA, where the numbers don't make sense, you'll be driving for a pretty long distance before you find a deal.
Savvy investors find hot real estate investments outside their local market by exploring off-market properties. Suppose you take the initiative to look for commercial real estate outside of the listed properties in your local area. In that case, you might see decreased competition and possibly easier deal negotiation. It takes great effort to find a property that isn't listed "on the market," so how to find off-market commercial real estate?
So it seems clear that finding something off-market will increase our chances of securing a property. It also seems evident we may need to travel outside of our local market to find that deal. Before you dive in, be clear on your criteria for the property you want. This clarity will help you avoid wasting your time (and perhaps someone else's) and will help you formulate your strategy and key market.
Whether you're searching for a rental home, commercial real estate like office, retail, or multifamily, here are some of the best ways to discover the best off-market deals.
Network With Fellow Investors
Most will look online for real estate properties. If you want to buy off-market properties, you may need a different approach.
They say it is a relationship business, so you'll want to develop genuine relationships with other real estate investors. Don't look as fellow investors as your competition. There is an immense amount of value in creating relationships with like-minded people.
Commercial real estate investors, especially those more experienced than you, often already have contacts and connections to investment opportunities that aren't listed elsewhere. Many investors already know and work with real estate brokers, have already dabbled in direct mail marketing, and can already guide you toward or warn you against specific locations or strategies.
Discussing markets and real estate strategies with fellow real estate investors and real estate professionals will help you gain the connections and knowledge you need. By forming a relationship, you can gain insight into their strategy, willingness to sell, and real estate approach. Surrounding yourself with fellow investors can help you realize the highest value from your future real estate investments.
This niche group of people knows what it takes to flip or BRRRR distressed properties profitably. This real estate support system will make generating passive income, finding an off-market commercial property, and achieving your financial goals more accessible.
If you've already built a network of real estate professionals, lean into it!
And, if not, it's time to start. It is the #1 way to expand your reach and find your groove in an off-market property.
Use Brokers for Off-Market Property Leads
Pushing local real estate agents beyond the MLS listings will undoubtedly give you better access to better deals. We often think of real estate agents focusing mainly on potential buyers, but experienced realtors maintain seller lists as well. If a market is favorable, a real estate agent may reach out to contacts who've previously expressed interest in or asked questions about selling. Sometimes, if the market value has risen significantly, homeowners become potential sellers quickly.
Real estate agents will often make phone calls, send postcards, and speak with property managers, landlords, tenants to develop pocket listings. How do you gain access to these listings? They say it is a relationship business, so you genuinely need to befriend them. Perhaps more importantly, they are going to want to know that you can close.
If you're a new investor and want to purchase your first property, a real estate agent could help you establish a long-term real estate investment strategy. Just understand that you need to play the long game. You need to educate yourself, brush up on your terminology, and communicate with confidence. The last thing a real estate agent wants - whether commercial or residential - is a tire kicker. You need to prove to them that you are committed, and only then will they share with you their off-market listings. There is a good chance that they will have a rental property or even an apartment for sale, right in their pocket.
Connect With Contractors
A good idea for individual investors is to connect with contractors in your desired market. Contractors often can help you find unlisted real estate because they know what renovations they've quoted and which owners have been considering a change. You might even consider partnering with a contractor to help you buy a distressed property and hit your investment goals.
Contractors can help in different capacities and with many types of real estate investing. Working with a "pro" contractor can help you develop your real estate investment strategy. They might share property details with you as they are renovating properties and working with real estate developers. You never know when the relationship might be mutually beneficial.
Direct Mail for Investing in Off-Market Properties
A lot of real estate investors use direct mail to find off-market real estate. Direct mail marketing does not require a lot of money, and you can help generate off-market leads for years to come. You can learn how to create your list or even pay for a listing service or list broker to provide you with a list. These lists exist for residential and commercial real estate. There are many sources that you can use to build your list.
Listsource and CoStar are great tools for creating more extensive lists, but they do not send you letters. Postcard Builder and Open Letter Marketing are two full-service direct mailing companies where you can create a list. They will also draft your letter and send out the direct mailing campaign all in one place. Local title companies are also a good resource for obtaining a list.
Consider direct mail marketing, whether you are a new real estate investor or have some experience under your belt.
Your first step in starting a direct mail campaign is to figure out your audience, and you can then craft a very well-thought-out targeted campaign. After creating your mailing list, send it out to residential and apartment owners and other types of properties that you'd like to have in your portfolio.
Real Estate Auctions
You can find great deals at an auction as the properties up for auction may be distressed properties at a low price point.
Browse auction websites to find off-market deals from all over the country, in every market, of every real estate type, residential and commercial. These properties often wind up at auction because property owners cannot pay taxes, the mortgage, or both and have fallen delinquent.
Auction properties generally need some rehab, so be ready for that. Always perform proper due diligence on the properties, investigate the parties involved and pull public records. You can then know as much as possible about the off-market listings presented at an auction.
Depending on the auction's location, you can buy an off-market property just by paying the back taxes or any past-due utility taxes the property has.
Find Off-Market Properties Through Real Estate Wholesalers
Wholesalers can help you grow your taxable income, add to your net worth, or develop rental income. They have information on strategy around and insider knowledge about off-market opportunities.
Wholesalers can find the deals, flip the right to purchase, and then turn it over to the buyer for a commission fee. If you are looking at rental income or commercial property, there are a couple of cons. These can range from bottom-line effects to property depreciation.
Wholesalers typically work with properties that need some work. You want to check how much work the property needs by surveying public records, looking at on-market properties nearby (for contrast), and talking to fellow investors. You do not want to have to invest more cash into a property than you have or than what it's worth.
When you know how much work a property needs, and you still think it's a great deal and that you can profit, you can find the correct lender and interest rate to cover those costs.
How To Find Off-Market Commercial Properties For A Great Deal
Everyone wants an off-market deal, and if you weren't sure how to find one, hopefully, this provided some ideas.
As you search for off-market real estate, you'll see your competition decrease, meet fellow investors, all while gaining insight and experience. All of these factors will positively impact your cash flow, diversification strategy, and investment portfolio.
Does this sound like too much work? Maybe it would be better if these off-market deals were brought directly to your inbox. A good portion of the deals that we present here at Fortress Federation are direct from seller, so in that sense, we make it easy for you.