Getting into the fix and flip business can be overwhelming, regardless of how much experience you have with doing renovations or working in the real estate market. Before you even begin to think about the other aspects of fix and flip real estate investing, you need to know how to find a property to flip. There are a few different ways you can do this, but the ultimate goal is to pick the best investment for you and your skillset, while aiming for a strong ROI (or return on investment) so your hard word pays off in the end.
Search the MLS
For the average house flipper, searching an MLS (or multiple listing service) is not realistic since you need to be a real estate agent to gain access. You might be wondering why this one is even on the list if the average person can’t access it! Because the MLS is the best resource for finding potential fixer uppers, it’s not a bad idea to work with a realtor who can help you find homes. Or better yet, if you plan to flip houses and work in real estate investment long-term, you can get your own real estate license.
However, if you’re not a realtor and aren’t able to align yourself with one right away, you can also use sites like Zillow, Realtor, RedFin, and others to find available homes in your area. HUD also lists properties for sale. These sites aren’t as comprehensive or as accurate as the MLS, but they’re a great start if you’re not able to gain immediate or reliable MLS access through a real estate agent.
Real Estate Investment Groups
A Google search for real estate investment groups in your area will likely lead you to hundreds of listings for meetup groups, groups from real estate agencies, online forums, and more. REIA is a great place to start, but you don’t have to limit yourself. Sifting through the options can take some time, and you’ll have to attend some meetings to get a feel for the group, but it can be a great way to network and find the resources you’ll need as a house flipper—from finding homes to flip to connecting with contractors, interior decorators, people who can offer capital, and more.
Don’t forget to check social media, too; there are lots of groups on Facebook and LinkedIn for this very topic. Bigger Pockets is also a wealth of resources. Some of these groups have monthly newsletters that will have additional listings as well.
As a note of caution, always be extra careful when working with someone you don’t know online. Whether it’s a listing or a person sharing information about a great investment opportunity, triple check backgrounds, references, and qualifications. While the internet is a fantastic place to make connections and do invaluable research, it’s wise to approach everything with a healthy dose of skepticism and due diligence.
Look for Auctions
Auctions are a great option if you have the ability to pay cash. According to Rehab Financial, bidding can sometimes get out of hand, so it’s important to know your limits and stick to them. You can usually browse auctions beforehand to see what will be “on the auction block” but keep in mind that you won’t be able to access any of the properties in person prior to purchase. You can drive by, of course, but getting inside won’t be an option, so buyer beware! Auctions can bring great investment opportunities to your portfolio, but they inherently carry more risk than other acquisition methods.
Drive Around Neighborhoods You Might Be Interested
Nothing beats spending time in the neighborhood you’re interested in, because it will give you a feel for what other houses in the area look like, what schools are nearby, area amenities such as community spaces and shopping areas, etc. If you can, attend a few open houses in the area to see spaces in person and begin comps research. That will start to give you an idea of what your potential costs and return on investment might be.
Don’t be afraid to talk to neighbors and area business owners as well. Some of the best investment opportunities arise from making an in-person connection. A local shop owner might know a resident who is motivated to sell a house that needs some work. A neighbor might know the history of the home for sale by owner next door and give you insights that make or break a deal.
Bigger Pockets suggests direct mail as a creative way to find houses to flip. To do this, you send letters or postcards to people you think might be interested in selling their home, with the understanding that a small percentage of those people will contact you and a small percentage of the people who contact you will end up actually selling their homes. However, you can’t just mail letters to a bunch of people and expect to be overwhelmed with responses. It takes time for them to know, like, and trust you.
Persistence is the key trait to have here — a person is more likely to call you, an actual person, who has taken the time to continue reaching out directly over a random sign they see on the roadside. The key is to build relationships and work toward deals that benefit both you and the seller.
It’s not uncommon for a seller to rent a home that has sat on the market too long. Whether they’ve had to move states for a job, are combining households due to a new relationship, or simply found a dream home they couldn’t pass up, an empty house that won’t sell is a huge financial liability.
A certain subset of these landlords-by-circumstance will inevitably end up with tenants that default on their rent and have to be evicted. Landlords dealing with evictions can be very motivated to sell at lower prices. Evictions are a matter of public record, so you’ll have to do some research to see how to get ahold of those records where you live, but then you can leverage direct mail or other communication avenues to reach out to the owner.
There are may other creative ways to find homes to flip, but the tips above are a great place to start. If you’re willing to think outside the box, you can find a bevy of homes to fix and flip.