It may sound like the proverbial pot of gold at the end of the rainbow: dozens of sellers who can’t wait to sell you their income property.
Fortunately, you don’t need a leprechaun or a magic wish to find commercial investment properties with good profit potential. These tried-and-true tips have been used by experienced investors to locate and close on numerous deals from motivated sellers.
Check With The County Clerk’s Office
Landlords evicting tenants for non-payment process unlawful detainers at the county clerk’s office. In the same vein, these same landlords must pass through the courthouse.
And while you certainly want to avoid being known as an ambulance chaser, it can be quite helpful to build a relationship with county clerks who can give you tips on owners who might be open to selling their property.
1. Canvas The Area You’d Like To Buy A Property
Familiarity with a particular area helps you identify properties that are empty, have a high turnover, or are not in the best shape.
You’ll also have insider knowledge on the properties that never seem to do well, no matter who owns it, which properties could turn a profit if they were managed better, and which ones are prime investments.
Sometimes these properties will have for sale signs, and you’ll have to dig a little to find out the name and address of the property owner.
The easiest way to track down a neighbor or to even find out if a property is available is to ask the neighbors, but if that fails, you can try searching property records found at the county courthouse, county recorder, city hall or another city or county department.
Many counties keep property records online, where you can get access not only to the name and address of the owner, but also the tax ID or parcel number, as well as the amount of taxes owed on the property.
Some title companies will also do a free property profile, as well as copies of any deeds and mortgages on the property.
2. Find Code Violators
Every city or county has minimum standards that must be met by homeowners. These codes are there to ensure the safety, cleanliness, and suitability of a property. Housing inspectors regularly check for properties that violate any of these codes and tag them as a code violation.
There are different types of code violations: some are minor, such as high grass or an unregistered car in the driveway, while others are major, as in the case of a damaged roof.
If the house is in such bad shape that it is completely unfit for habitation, then a condemned sign is affixed to the door; the homeowner must fix the violation or risk court and a fine.
Most homeowners fined with a code violation are not purposefully ignoring the property – they simply don’t have the money to repair or maintain it. Some of these owners may be out-of-state owners or may have inherited a property from a family member.
These types of owners are often highly motivated to get rid of the hassle of worrying about the property but often haven’t gotten around to selling it.
Since code violations are a matter of public record, sometimes you can easily find owners by checking with your city or county office and requesting a list of all the code violators in the area you specify.
Occasionally some counties might pretend they don’t have the list available; simply cite the Freedom of Information Act and ask for a form to formally request the list.
Types Of Motivated Sellers
Once you’ve obtained the name and address of a possible seller, you’ll need to decide what type of seller they are. Motivated sellers fall into four categories.
Knowing the category each one falls into within the first few seconds of the conversation is critical. Each type of seller requires a different method of approach, and you’ll need to make sure you need to use the right one so that you can save yourself time, effort, and not drive yourself crazy.
- The Silent Seller
The first type of seller simply refuses to say anything more than one word or two at a time.You’ll have to work hard to get any information out of them, usually because they suspect your motives and don’t trust you.
Rather than wasting time, consider making the conversation brief by stating that you notice they’ve received a code violation. Sympathize with how much of a pain in the neck it can be, and then offer to send them a free leaflet on solving the problem they are struggling with.
Emphasize that it’s free, and mention that you’re sending it to them because you buy properties, and some of the people who have code violations would rather get the property off their hands than have to deal with fixing it.
The leaflet should be a brief discussion on their rights, and what to expect from the county. If you’re dealing with the owner of an empty property, you can detail some common problems they might be dealing with, and give them some simple solutions they can enact immediately.
In both cases, you should make sure to have a clear call to action that states who you are, what you do, and what your credentials are. Don’t forget to give people several methods of contacting you: SMS, email, voicemail, or a number to speak with you directly.
- All talk but no answers
This type of seller loves to talk but somehow never manages to answer any of your questions.
This can be challenging since most people’s natural tendency is to either hope they’ll eventually spit out the answer or to hang up in frustration. Your best bet is to come prepared with a list of questions, and to ask and re-ask the questions, interrupting if you need to.
I’ve had success by answering the question for them, and then asking them to confirm whether it’s true or not.
So for example, if the question is, “So you’re saying that you inherited the house from a family member?” then they have to either confirm or deny whether this is true. Don’t worry about interrupting; you’re not a talk show host, and most investors don’t have an hour to talk to each potential seller.
- Soap Opera Sellers
These sellers need to share their entire life story before they answer your questions.You can try the same method as above, but in particularly difficult cases, you might try getting hold of a different family member and getting the information from them, or asking them if you can send them a leaflet in the mail.
- To the point sellers
This type of seller is the best kind. Not only do they give you all the information you need without having to pull teeth, but they’ve often already decided they’d like to sell the property but haven’t had the time or knowledge to do it.
Personally, unless you have an endless amount of time I would stick with this type, and send the remaining three types a leaflet in the email. Keep in mind you’ll have to dig through dozens of owners and their properties before you find the right combination, one that has a property with good profit potential is willing to sell and for a reasonable price.
What To Say To Motivated Sellers
The most important thing to do when you speak to sellers is to spend the first few minutes listening to the owner. This helps establish a rapport and gives you time to intuit the things they won’t say directly.
For example, are they anxious about selling? Do they have an emotional connection to the property that might make it hard for them to sell? Are they worried about having to clean it up or fix it before they sell?
Everything except having an emotional connection to the property has an answer, and by listening before you jump in, you can make sure to address these first.
After listening to the owner, you can ask some basic questions to the seller that will help you get the information you need to make a ballpark estimation as to whether the property has profit potential.
- Full name
- Home and work phone numbers
- Email address
- Address of the property
- The name of the property owner
- Whether or not there is/are tenants, and how long their lease is
- If it’s a multi-family, find out what types of units there are, and what the estimated vacancy is
- Ask what types of repairs or renovations they would do if money or time weren’t a concern
Next, ease into the questions that are more personal:
- How long have they owned the property?
- Why are they interested in selling?
- How long have they thought about selling?
- What price are they asking?
- What was the assessed price?
- Is the property represented by a broker or listing agent?
- Do they have any other properties they are interested in selling?
Remember, don’t spend more time than you need to with a seller because you’re convinced it’s a great property.
It may make more sense to keep that person on your mailing list and contact them by phone from time to time, but otherwise, keep going through your list.
With persistence and patience, you’re bound to find a good deal.
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