How to Find Rehab Deals

House Dart

Whether I am attending a real estate networking event, reading Facebook posts or blog posts, I often come across the question “How do you find a good rehab deal?”

There are a ton of answers to this question but most people receive similar responses – mail to absentee owners, use bandit signs, drive for dollars, etc.  While these are all great ways to find deals, I think it’s more important to think about WHY you are marketing to homeowners.  Understanding the WHY is powerful because it gives you the ability to find untouched markets.  And at the end of the day:

Motivated Sellers + No Competition = Great Deals!!

As a way to think about where to find these untouched markets; I try to get into the head of the homeowner.  Here are the two questions that I ask myself:

  • “What situation or change in circumstance would make them need to sell a house now?”
  • “If I were someone in the above situation, what would I do to get out of the situation?”

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If you take a couple minutes to really think about these questions, you’ll likely have a good list on how to find real estate deals.

Examples for the first question:Damaged House

  • immediate job transfer
  • house had a fire and owners don’t want to deal with rehabbing
  • landlord tired of dealing with bad tenants
  • inherited a property and either have to sell it to pay the transfer taxes or would rather have cash than to deal with the property
  • elderly not being able to keep up with the maintenance of their house
  • absentee owners who can’t or don’t want to keep up with the maintenance of the house
  • falling behind on mortgage or tax payments
  • needing to sell the house due to a divorce
  • Property has code violations or was condemned

 

There are literally hundreds of different answers to this question.  Also, keep in mind that you can combine answers to be more specific (i.e., the homeowner is falling behind on tax payments and is an out of state owner).  The more specific you are in identifying a situation, the greater the potential for motivation.  Now how can you find these homeowners?

Let’s move on to the second question.

Examples for the second question:House Newspaper

  • search the internet to find someone to buy the house
  • post an ad on craigslist, Kijiji or other classifieds website
  • post on a FSBO website
  • put an ad in your local newspaper
  • do nothing because you don’t know what to do
  • find a realtor to sell your house
  • let the house go into foreclosure
  • call the bank to refinance the house
  • apply for a loan modification

 

Once you understand all the options that a homeowner has, figure out how you can get in front of them.  You can do this by taking an active approach and/or a passive approach.  The active approach is when you seek out a homeowner and a passive approach is when you find homeowners who are seeking help.  There is a subtle difference so let me provide an example.  For my answer “post an ad on craigslist, Kijiji or other classifieds website”.  The active approach would be to post ‘We Buy Houses’ ads on these websites with the intent that a homeowner will see the ad and call.  The passive approach would be to search craigslist and other listing websites for ads where homeowners have posted to sell their house.

Both methods can provide good results, but doing both at the same time can provide excellent results.

I’ll get into what I am specifically doing for marketing in future posts but I wanted to provide a different prospective on how to think about marketing for rehab deals rather than executing on someone else’s recommendation.

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  • E. Kalenowicz

    I love this post!
    The explanation is so clear. You really narrow down the important questions from both perspectives: the buyer’s and seller’s.