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ADPI_028: How To Find Off Market Deals

Sep 24, 2018


Episode Transcription:

Hey what's going on guys welcome to the active duty passive income podcast? First of all I want to apologize for the last episode. We definitely uploaded it wrong and by us I mean myself. I apologize for not catching that. So if you are listening to this please go back and take a look at the last one I updated it and it is accurate. We are actually posting our fireside chat with our CEO and you'll definitely enjoy that episode, it's great. Alright so this episode is going to be about how to find off market properties. This is a good one guys. Really really love it, stand by. 

Hey freedom fighters welcome to the active duty passive income podcast. The only place where military members, veterans and their families learn how to build wealth through real estate investing. I'm your host Mike Foster and I'm here to show you how to stop wasting your benefits. Now get off your ass, step up to the firing line and make ready for today's lesson. Shooter stand by. 

What's going on guys welcome to the activity passive income podcast? Today I'm going to talk to you about how to find off market properties. This is an amazing tool and I'm going to explain why in a minute. But first what do I mean by off market? Okay well have you ever taken a look at the MLS? Like the Multiple Listing Service. If you been talking to a realtor and they ask you about a certain property that you're looking for alright and they pull up their giant you know system and they have a bunch of properties that pop in and out based off of your criteria. All these properties are coming from what's called the open market right or these MLS, these MLS properties are all properties that people have agreed to put on the open market. Because they're trying to find ample buyers. People that are looking to buy their home.

So if you ever take a look at sites like Zillow or realtor.com or Trulia, you'll see that all these properties that pop up all those are MLS or open market properties. Now you know Zillow has an integrated system where they pull in some other properties that are called for sale by owner and with for sale by owner you imagine would be an off-market property right. However it really isn't. Because they have a website, called for Sale by Owner and typically those who are looking to find the most buyers will put their home on that site.

Even though they're not going through a realtor or they're not going through any specific right open market source to go sell their home, they just want to deal with the closing of the property themselves and so yeah now you can if you're driving around right and you see some for sale by owner signs, you can find properties there that are not listed on any site. But essentially that is the main difference right. it's you know finding a property that's open to everybody to see or finding one that is not open to everyone to see right and those properties that are not open to everyone those are what we determine as off market properties okay. So that's the clear distinction behind that. 

Now let's talk about why. Why would you want to find an off-market property versus a non-market property? Well I'll give you a couple reasons. One, you know it's easier for you to work with the seller directly right and to find out things like why they're selling. You know what they need to get from the property. Are they going through any particular situation that you know they need either quick closing or they're a little flexible right and then the second reason is financing right? Once you understand all those other variables right, your financing can be a lot more flexible if you work a deal right. A good deal out that benefits both parties.

Okay now we haven't gotten into our deep dive on creative financing yet. So look forward to a lesson. We’re going to do a whole lesson on seller financing and all the different ways you can get creative on working on deals that is coming up. But just for this you know broad lesson here, understand that you don't have to go to a bank to buy a home and I've said this before right. It’s one of the biggest myths in real estate investing. You don't have to go to a bank to buy a home. you can totally negotiate terms between you, the buyer right and him or her, the seller and negotiate you know a purchase of this home without having to go through a bank you know for just for quick reference right the seller can act as the bank if they don't need a large portion of the money right away right.

They can accept a negotiable amount down. so maybe you give out 10% to the seller and then you negotiate payments each month with a certain interest rate and that seller will take those payments and upon the completion of those payments right the home will be yours and you'll be good to go right and you if you have a creative mind you can kind of see all the different ways that you can take that and run with that. But that is exactly why off-market deals are the best to find. Because you have that inside and you have the ability to find out what is going on behind the scenes. That way you can make the best deal that will work for both parties okay. so that's why off market properties are the best and now let's talk about how you can go and find some of these sweet deals okay. 

So if you have a little time right. Let’s say your spouse and you're working from home and you know have some time in the mornings and the afternoons to kind of walk around, do it or even drive around right. Look around your neighborhood and see what you know is up for sale. You’ll see a lot of places you know for sale and I'll be honest with you I've never seen so many for sale signs on properties until I started getting into real estate. I swear I didn't think anyone was selling any real estate around me until I actually started looking out for it and now I see these signs everywhere. All right so I'm sure you'll probably notice that too and it's interesting because you'll see a bunch of different signs right.

So you'll see signs of people's faces on them, signs are just a bunch of words hanging from a fancy little you know picket or whatever right and usually those are you know homes that are on the MLS right, that open market. They are working through some brokerage, they're working with a realtor and those people are trying to sell their home on the open market. Now those are good. Those are really good to find and it's important you take down those information’s and follow up with those people. Because you never know right. Those could be some of your best deals. You know another way to go and find some off market properties again driving around and seeing which properties are kind of falling apart.

All right which properties don't look like they have anybody there? Because another thing that you can do is you can go online and you can find you know they'll look up the address of these homes on the county website and you can see who owns these homes. Guys its crazy okay. I'll tell you right now anytime you buy a home, it is a public record right and that transaction happens and such that anybody can find out who you are and the address that you listed. So it's important for you to that in mind and while you're driving around if you find these homes and dilapidated and falling apart, you know little deuce a little research.

Look it up to see who owns those homes and you know go out and if you maybe can send some mail out to them right. Maybe you want to write a letter and send a mail to whatever address is listed and see you know if this person is willing to sell their home. You never know guys you might send a letter to someone who inherited a property in a parent or a you know family member's death and they just don't want to deal with that home.

So they let it fall apart. They haven’t been paying the taxes, they haven't you know been taking care of it. Because they don't care and you'll be surprised guys there are a lot of people out there that do this you know. You might even find someone who has been paying on taxes on the property just because they feel bad, but they don't necessarily care about it or want anything to do with it. So they've just been paying it to pay it hoping that one of their family members will want to do something with it later on down the road right.

So I mean you never know. You run into a bunch of different people from different walks and everyone has their reasons. But you know I mean you never know. Also you may run into you know someone maybe you talk to you all the time. Let’s say it's your neighbor right. you talk to your neighbor all the time and they constantly tell you know I've been thinking about selling my home blah blah blah all that stuff right. well there you go, that's another potential off-market property that you know if you have been talking to your neighbor or your friends or whoever right this person is and you've been telling them what you've been getting into real estate and you've been looking around at deals and whatnot and they know you're in the real estate, they'll probably will share this information with you.

Because maybe I'm off chance you might know someone who'll be able to help them out. Well why can't that someone be you? Right. why can't you step in and say oh okay sir, okay ma'am well if you're thinking about selling your home you know what makes you want to sell it right? are you just looking for some cash are you just looking to get out of it and then go into apartment so you don't have to deal with homeownership or like what's going on? What’s the situation and then at that point you know you can negotiate something that will make sense for them right.

Maybe you say okay well I'll take over the property for you or if let's say for instance right you're dealing with someone who's about to go into foreclosure, the main issue that they're going into foreclosure is that they can't handle the payments. But maybe they haven't thought about all the other possibilities. So talking to someone in foreclosure, maybe you say hey I can take over these payments for you.

We’ll transfer title into my name and I can make sure it gets rented and I can find someone who's looking to buy. so you find a renter right, that Miss may be looking to buy that home and at the time that they purchase you transfer all the money over to the person that God gave you the home and you take a portion for profit because obviously you stepped in that transaction and boom all right I mean you can make deals happen guys and off market properties are the best ones to use to go about it and again when you're using on market properties,  sometimes you can get a little hairy with these transactions.

Because you know everything has to by the book, everything has to go into you know a certain way right. You got procedures and rules that you need to follow when you're getting financing right, with Fannie Freddie and the process can get rather difficult right. They just gets a bit crazy. But you know off market properties are definitely a great way to go about it and there are many ways to go out and find them. Now if you are active duty and well if you're active duty you don't have time to go out there and run around look at properties right. That just is what it is. But I'll tell you what you can do, you can wake up a little early and do some of morning PT and go run around your neighborhood and find just you know find a few homes just in the area.

Now you may not find anything there that's fine. But maybe you want to branch out right. Maybe you want to branch out to other spots to for your little morning PT. you can do it okay.  There’s always a ways to make it work. Sometimes you got to sacrifice a little time on the front end and the back end. But you know hey or even if it's on a weekend, right a Saturday. Maybe instead of you know sitting around and watching Netflix on a Saturday morning, you take your car you go out for a little stroll and you go see what is going on in your neighborhood. Right so you just got to figure out you know little ways to make it work. 

All right so why is this important? Now I've got a story for you okay. I want to tie story again because this is a little personal, it's actually just happened this past weekend. so I live in Norfolk Virginia and since I moved into my house I mean you know great as it is right, I mean I'm always looking for that next thing and I saw a property next to me all right; it's a four-plex and there it was an issue that think they had with one of their previous tenants. It’s what I heard from one of the neighbors and they moved out.

But I noticed that since that issue hasn't been rented, well at least I haven't seen it rented. I've been you know out on deployment, I've been gone for various reasons and stuff.

So I know I haven't been here like a hundred percent of the time to see it. But I've seen that sign up there for you know four-bedroom for rent blah blah blah right and I've always been curious. I wonder if the seller is looking to get rid of this property right. Because if you think about it how is that place not rented yet right. I'll give you one or two and a few things. maybe that sign right that he or she has out on the balcony that the rental is on, maybe that sign is the only thing that they have to advertise that home all right and so the people that are you know passing by here either A, already have a place to live or B, they just passing by to go visit the person that they're you know going to stay with right. I mean if you don't have it on any other place because I've never seen that place upper right on Zillow. I've never seen it on realtor.com or anything like that and I don't see that sign you know represented by any you know company.

So it might just be the seller who's just looking for a tenant and hasn't found a tenant. maybe they'd be looking to sell right and so I've been wondering that for a while and over the weekend I was having brunch with a buddy of mine down the street and we're all sitting on my balcony and we're just talking and I pointed out to him I'm like yeah see this property here you know I've been wondering about it and we saw some guy walking out on the ground-floor from that property, he had a mask on and he had you know a tool in his hand looked like he was just doing some painting.

Either in one of the units or you know whatever right and so as he's walking like towards us a little bit I asked him hey sir do you happen to know the owner by chance and I'm telling you guys like it was a moment so perfect he looks up at me and he says well actually I'm the owner and I'm just looking at my friend like oh my goodness man this is amazing did not even expect to you know be talking to this guy.

But yeah so I'm talking to him and I said oh well sir you know I've been eyeing this property for a little bit now, I bought this one here a couple years ago and since then I've seen you know this sign up, I just want to know like do you by chance you know are you looking to sell at all and he looks up at me and he's like actually yeah I've been looking to sell this for a little bit.

I inherited this property from my mom when she passed a few years ago and I really don't have any intentions in keeping it and so right there at that moment guys I ran down I'm like alright I need to give this guy my card and I told him I'm like hey sir I would love to you know talk to you later on, potentially buying it you know if you're interested in selling it. because I would totally love to take this off your hands you know and so boom I gave him my card and he said hey you know I gave you a call and we'll meet up later on I actually got a call from him just the other day and yeah so we are going to meet up and he's going to walk me through the property and we're going to negotiate you know some  terms and I'm hoping that everything will go nice and smooth and things will make sense and I'll be able to help him out and yeah we'll make a great deal you know.

Even try and see if I can get my buddy and on it you know because it would be great to kind of get him started with his first property and with the VA loan you can buy a four-plex. So you know looking at making something happen here. That the beauty of being you know an entrepreneur it's a beauty of being a real estate investor and honestly that's the beauty of finding off-market deals. So never ever you know lose sight of that opportunity that may come across your door. If you're looking at real estate right, make sure that you ask these questions. Because if you don't ask the question, you'll never get and you'll never know if the answer is yes right. You’ll never know if that person is actually looking to get out of their property and you could be the one to help them out okay. 

Alright alright alright guys that's going to do it. Thanks again so much for listening. Make sure you're going out there and you're finding those off-market deals so you can get creative with your real estate investing. Hey next episode is an episode you don't want to miss. We’ve got an awesome interview with Buddy Rushing coming up and I'm so pumped. Also we are launching a book. All right guys we're launching military house acting 2.0. It is an amazing book there are a lot of great minds have come together to cultivate it and make it happen. All right we're going through the editing phase right now. It’s going to release at a later date. After Columbus weekend you're going to put that out some of you guys will know when to get it, make sure you get it. It’s great.

Okay we need ambassadors that help us launch this book. So if you are interested in getting your name added to our book as well as a hard copy sent to you when it launches, reach out to us because we want your help. All right guys I'm out of here, bye.

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