By far the most difficult part of Austin real estate investment is finding a deal far enough below market value to be worth investing in. Real estate contracts, financing and other hoops are far less difficult than the art of finding the deal. Most conservative investors look at 100 deals before buying one. Yes, you read that right: one hundred.
The key to a great deal is almost always a motivated seller. The hard part is you need to find a seller not only motivated, but motivated enough to sell you their property at a price at least 30% below retail market value. They also have to have enough equity to do so.
Why would anyone be that motivated to sell their property? Investors can close in days instead of weeks. Divorce, illness, death, debt and bankruptcy, for example, could make the time and trouble between the seller and the closing table more valuable than the price difference. 45 days is the minimum a seller could expect between listing and closing in a traditional sale and it often takes much longer than that.
Finding Leads so You can Land Deals
To find a deal you need to find leads. You need to talk to lots of motivated sellers who are interested in selling you their property at a discount. Most investors reach motivated sellers with online ads, print ads or direct mail. Knocking on the doors of people facing foreclosure, divorce or bankruptcy is an aggressive strategy, but it works extremely well for some real estate investors.
Talking to Sellers
Working with people who have problems can be a challenge for some investors. You’re there to help, but there is only so much you can help with. You’re showing up during a very difficult time in their life; be compassionate. Be prepared to listen to sad stories but know that you’re there to solve at least one of the biggest problems they’re facing.
Be up-front and honest about their options, even if (and maybe especially if) selling to you isn’t the best solution. If they have time, selling on the open market to someone who wants to live in the house is almost always better than selling to an investor. Tell them so. If they are in a hurry and value a simple, guaranteed quick closing, then selling to an investor may be the best way to get out from under the property. When you find a seller who you can truly create a win-win situation for, you’ll both know it.
Austin Real Estate Investment: Finding Motivated Sellers is the Hard Part
In general, you’re only going to get a great deal from a motivated seller, someone who has a strong motivation to sell quickly. Most people aren’t in a situation where they need to sell, but these are precisely the people you will get a bargain from.
Real estate investors solve problems by liquidating homes when sellers don’t have time for the traditional means. Real estate investors make their money by focusing their energy on sellers with real estate problems. If these sellers had the time and patience, they could often sell their property for much more. Time and energy are more important than money to some sellers though, and these are the people you can help most.