Absolutely one of the most underrated methods for buying direct is driving neighborhoods, also known as Driving For Dollars. The reason this can be so effective is that it lets you target the situation/opportunity before anyone else does.
One of the best stories I know is from a client of mine who drove his neighborhood and found a vacant house that looked like it needed a lot of work. He sent a letter to the owner, and after some negotiating, purchased a $279,000 house for $125,000. It needed $65,000 in work. You don’t need a calculator to know this is an incredible deal. The numbers speak for themselves.
How to Drive a Neighborhood
The best way to do this is to just drive around your target area where you want to buy real estate deals and look for the ugliest houses. They will be easy to spot because they will have one or more of the following:
- Tall grass and weeds
- Peeling paint
- All the lights off all the time
- Trash or furniture in the yard
- Uncollected newspapers or mail
- Or just a general look of vacancy
In the story just mentioned about my client who found the $279,000 house for $125,000, there was furniture on the curb set for bulk trash pickup. If you see one of these houses, do the following as soon as you can:
- Find the owner of the record. This is easy to do online either through the tax roll data for the county or some other public records source.
- Talk to the neighbors and find out what’s going on with the house. They don’t need to know what you are trying to do. You’d be surprised how many will tell you everything you need to know including how to contact the owner.
- Send the owner a letter saying you are interested in buying the house and can close quickly or try to find their phone number and contact them.
Does this sound like a lot of work? Not when you consider it could be worth $67,000 in net profit like what our client made. Set a goal to drive your targeted neighborhood each week for the next 12 months and repeat the above steps 1–3. Then stay tuned for part two on Getting Referrals.
—
If you are a Real Estate investor looking for Hard Money lenders in the Houston area, contact us today!
Mike Hanna is a real estate investor, mentor, author, and public speaker. He has been an active real estate investor since 2002 in both single family and multi-family properties, and has been in the hard money business since 2005.