Finding good deals is a concern for real estate investors throughout the country. That concern is more acute in places like California, where the inventory of good investment properties is low and the prices for those properties are stratospheric. Seasoned investors will tell you that you can find good deals anywhere, including among the dwindling home inventory in California. You just need more persistence and creativity to find those deals.
As in any market, finding good deals in California is all about establishing a marketing business process that creates a funnel. If you do direct marketing, for example, you might send 100 inquiries into a target neighborhood. Out of those inquiries you might average 20 return calls, and those 20 calls might lead you to extend 5 offers. At the bottom of the funnel, one of those five offers might be accepted. You might look at this funnel as a 99% rejection rate. In the alternative, if you consider that sending out 100 inquiries per month will generate 12 deals per year, you will have a solid annual real estate investment track record. Rejections are a part of the business process. The deals will not materialize without some effort on your part, but regular and consistent effort to create a deal funnel will lead to a regular stream of good deals.
You can increase your acceptance rate with smarter and more targeted marketing. A few possibilities include:
Checking the estate and probate filings in your target county. Many estates will include homes that the heirs do not want. Contact the heirs with an offer to convert the real estate assets in an estate into cash that can be distributed to the heirs, which they might prefer to paying real estate taxes and other holding costs associated with the home.
Likewise, look at filings for other legal matters, such as divorces or criminal charges. Contrary to impressions, you are not swooping in as a vulture in these situations. Rather, you are creating a great benefit to homeowners who might need to cash out of a home quickly to settle divorce or other legal proceedings.
If you are looking for rental properties, check out rental listing in sources like Craigslist. Many landlords got into the rental market when it was booming, with little or no experience or expectation of the amount of effort they would need to expend to manage properties. Some of those landlords will jump at the chance to sell a rental property.
Pick a neighborhood that interests you and drive around for a few hours, noting which homes or multi-unit buildings are in need of maintenance. Do some research into public records to find the owner, and make offers to buy those properties. Again, you might be doing a big favor for those owners, who either do not have the resources to do repairs, or who are simply tired of owning their homes.
In all cases, do your research and analysis and do not make any offers that are not justified by the numbers simply because you are desperate to get into a deal.
Trust Deed Capital can help fund your California deals. For more information on our funding services, please see our website or contact us to speak with one of our real estate investment funding specialists.