Sixty Days to Your First Bargain Purchase - by Bill Bronchick

The following is an excerpt from William Bronchick's home study course: Flipping Properties: How to Generate Fast Profits in Real Estate

Finding good real estate deals is an art that takes time to master. Like any business, customers are what drive it. Your primary customer is the seller who is motivated to sell below market value. Finding motivated sellers requires advertising, marketing, salesmanship, and, like any business, keeping your nose to the ground.

Nothing happens and nothing matters in real estate until you find a deal. You cannot put together a deal without a motivated seller, and you can only convince a motivated seller to do something creative or at a discounted price. A motivated seller is one with a very good and pressing reason to sell below market.

The most common problem new investors face is finding bargain properties. Many who start out in real estate investing quit without ever buying their first property. They go through the motions of looking for deals for a few weeks or months then decide it doesn't work. They forget that finding motivated sellers is similar to the salesman finding his first customer--it takes persistence and hard work.

Find the motivated seller

At the cost of sounding redundant, the concept is simple: Find motivated sellers who are willing to sell their properties at a discounted price or "soft" terms. Currently, the real estate market in some parts of the country is hot, hot, hot! Many people are complaining that the strength of the market precludes investors from finding deals on properties.

The popular misconception is that in a rising market, even the most motivated seller can find a buyer for his property at full market price. The truth is, you can find deals in ANY market. A logical person knows that time, money, and effort can solve virtually any real estate problem. But, some people are too emotional about their real estate problems or have other motivating issues.

Some of these issues include:

Divorce

Lack of concern

Inexperience with real estate repairs

Time constraints

Death of a loved one

Job transfer

Landlording headaches

Impending foreclosure & other financial problems

Farming neighborhoods

Successful real estate agents use a technique called "farming" to increase their business activity. They pick a neighborhood or two and focus their marketing efforts within that area. You should try the same technique. Start with a neighborhood that is relatively convenient for you.

1. Drive the area: Spend a few weekends driving around the area. The goal for you at first is to learn about the area, the style of houses, and the average prices. Over time, you may expand your farm area, but stick with areas that contain the type of homes you plan to purchase.

It is not necessary to begin your investment career by learning every square mile of a large metropolitan area; it is important to learn the value of "typical" homes in your target areas. This knowledge will enable you to make quick decisions about whether a particular prospect is a bargain.

2. Attend open houses: Visit open houses and "for sale by owner" (FSBO) properties on weekends. Speak directly with owners and their agents. Pass out your business cards. Make friends. Word of mouth and referrals are a big part of any business.

Part of the process of finding a deal is to know how to recognize one. Take a good look at the property and its physical features. After viewing a couple of dozen open houses in the neighborhood, you will get to know the value of the properties and the different styles of houses. When someone calls you about a house in that area, you will know the value by its description.

3. Look for ugly and vacant properties: While you are driving around neighborhoods, look for vacant, ugly houses. How can you tell if a house is vacant? Look in the window! Of course, this practice may get you shot, bitten by a dog, or arrested. First look for the obvious signs of vacancy: overgrown grass, no window shades, boarded windows, newspapers, garbage, mail piled up, etc.

If you are not certain whether the property is vacant, knock on the door. If the owner answers, be polite, respectful and ask if he is interested in selling. In many cases, it may be a rental property, so ask the occupants for the name and telephone number of the owner.

If the property is vacant, ask the neighbors if they know the owner. Most neighbors are helpful, as they know "ugly" houses hurt their own property values. In addition, ask the mailman; they know all of the empty houses on the block. Leave a business card and write down the address of the ugly or vacant properties. When you get home, look up the name and address of the owner.

Finding the owner of a vacant house can be difficult, which is why the persistent people who find the information make the most money. The name of the owner can be found by calling your local tax assessor's office or by looking up the deed recorded with the County land records.

If you want to contact the owner, it takes a little more digging. Try speaking with the neighbors or asking the post office for a copy of a change-of-address form on file for the property. Online services, such as www.infousa.com, will search public databases, such as the Driver's License Bureau and the Department of Motor Vehicles.

Some cities, towns, and counties will "tag" a house with code violations. This is often a sign of a neglected or vacant property. Ask your city if you can obtain a list of such properties or find where this information is publicly recorded.

About the author...

Bill Bronchick, is an author and attorney who regularly presents workshops and do-it-yourself seminars at real estate and landlord associations around the country. He is the president and co-founder of the Colorado Association of Real Estate Investors. Bill specializes in all forms of asset protection and is the author of several great home study courses:

The S.O.L.D. System Power Real Estate Negotiating Flipping Properties Big Profits with Lease Options Alternative Real Estate Financing Secrets of a Real Estate Attorney How to Create a Bulletproof Corporation Your Step-By-Step Guide to Land Trusts How to Form Your Limited Liability Companies Wealth Protection Strategies Complete Wealth Protection Library