The process of driving targeted subdivisions with the intent of locating “for rent” or “for sale by owner” signs, distressed and/or abandoned properties, that’s what we’re doing it for. We want to see if there’s any deals out there that maybe we’ve missed. When driving for dollars, there are several red flags you should pay attention to.
Number one, “for rent” signs. There is no more painful of a me for a property owner or a landlord than when he has vacant properties. Because if I got a vacant property, nobody’s paying me every month to cover the mortgage. I’m now coming out of my savings, my reserve cash, and my cash flows from other deals, to make the rent payment or to make the mortgage payment. I hate vacancies, and most property owners do. It’s a great me to call the “for rent” sign, but not as a tenant. Call the “for rent” sign and say, “Hey, I see you’ve got a vacancy over here on Maple Street, have you ever considered selling it?” “Yeah, I’ve considered selling it. I can’t get a tenant, the thing’s killing me, and you want to buy it?” Yeah, actually I do. So vacant, “for rent” signs are great opportunities.
As well as “for sale by owner” signs. Now my preference on “for sale by owner” signs are the ones that have been sitting out in the front yard for like nine years. You know, they’re so tattered and torn, you can even barely make out numbers or words on the sign. The ones to avoid from a “for sale by owner” standpoint, are the ones that, you know, you can tell, that they went down to Home Depot as a family, they had breakfast together. Then they stopped at a calligraphist office, so that they could very neatly write the words. What those people are looking for is a retail price without having to pay realtor fees. So understand the differences.
A junky, ugly sign that’s been weathered and worn, those people, they’d love to sell, but nobody’s buying, probably because of the condition of the property. This beautiful sign in front of this beautiful home, they want full retail price or more, and they don’t want to pay realtors for it. Understand the difference and know which ones to invest me on and which ones just to pass.
In the summer months, tall grass. Some of you live in climates that don’t have winters or snow, tall grass is a great sign that it’s vacant or abandoned. Boarded up or broken windows, mailboxes filled to the brim with mail, code enforcement taped to the door. If the grass has been long for a very long time and the neighbors have complained, code enforcement will actually come over, mow the grass, and then charge you like $135 for the service, and then they’ll post it on the window of the house. When you see that, that’s a good indication that the property has been in that shape for a long me. Piled-up newspapers on the front stoop, overgrown vegetation, obviously another sign.
Tips for driving for dollars. First of all, you’ve got to de ne your market area. Don’t waste me in the car, we are investing me in the car, so I want you to stake out set locations in areas that you want to invest in. Also, as you begin pulling those notices of default lists, or those [liens pending 01:07:57] lings, and you start driving the foreclosure properties that are coming online for next week or the week after, it’s in those neighborhoods that you’re going to nd the best leads. Because these are the neighborhoods where birds of a feather ock together, so if there’s one foreclosure going on in that market, there’s probably four or five or six more. Drive the area, write down the address of every vacant, boarded, abandoned property that has any of the signs that I just showed you on the last slide, because there may be opportunity there.
But we have to determine, is there equity on the property? The place that you go (once you get the address) the next thing you determine is, go to Zillow, determine the value. The next thing you ought to know, is what do they owe? You can nd out what they owe simply by going to the county recorder’s office, it’s public record. The mortgage amounts are recorded there, or you can get the informa on from First American Title. They have an app called myagentfirst, or agentfirst. You do need to contact a First American Title agent rep to get access to that, but it is a tremendous tool and by using it, you can determine what the debt owing is, and then simply look at, what do they owe, what is it worth, and determine if there’s enough spread to make it worth your me to track down the home owner. If there is, pursue them with gusto; if there isn’t, scrap the lead, go on to the next one. Your me is so incredibly valuable; you’ve got to make sure it’s being invested in the highest probable income-producing events, or deals. Don’t waste me hugging bad loans or hugging bad deals.
Bring a notepad, pen, and a camera, record the address, and take pictures of the properties of interest. After you finish your drive, return home and research the properties you’ve located on your county’s local central appraisal district or other. During the research phase, you’ll want to filter out properties that do not meet your criteria. This should include all bank-owned proper es. Again if it’s bank-owned and not yet listed, there’s nothing you can do pre-foreclosure. You’re going to have to go buy it at the auction. It’s just not worth your me. For instance, if you’re looking for high-equity properties, you need to look for deed dates fifteen years back or more.
So if I go and I find an abandoned, boarded up property, and I see it’s worth a hundred and , and I go into the public records and see that they have a mortgage on it from 1990, that’s a very, very, very old loan, there is substantial equity, even if the original face value of the note was a hundred and fifty? You know, twenty- five plus years later, they only owe maybe twenty-six, twenty-seven thousand. So that is what we would consider a high-equity deal, and one that you should absolutely pursue aggressively.
To Your Success;
Lee A. Arnold
The Lee Arnold System of Real Estate Investing
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