You are about to learn about one of the best-kept secrets in creative investing. This hidden source of motivated sellers can be one of your biggest money-makers ever!
People who own property in your home town–but who live out of the area are great leads for you to talk with for three reasons. First, they are having to deal with the property long distance as either a rental property or as a vacant property. This means more headaches, hassles, and bills for them to deal with.
Second, they already have another place to live in their new location. This means that they don’t absolutely have to have all their equity out of the property you are negotiating on. The real benefit to you is that the seller can be flexible on the terms of sale. You can structure a long-term lease option, owner carry financing, or a land-contract.
Third, most times you are the ONLY person talking with them about buying their property. And any time you are the only buyer around the price always drops and the terms always become more flexible. This means you will be able to structure a win-win money-making deal.
Finding out-of-town owners
The best part about out-of-state owners is that they are easy and cheap to find and contact. You just need to find a property in your town where the tax bill is being sent to an address far away. This usually means that you’ve found yourself an out-of-town owner.
The best part is that on the tax records, which are public records, you will usually find the owners phone number, too! You can do your own research in your local county records (too time consuming in my opinion) or you can just buy the names, addresses, and phone numbers you want.
Simply call up a local information source provider. (How to find one? See below.) An information source provider is a business that has made the effort to put all the county property information onto a huge database that is easier for you to access. You can dial in to this pool of information and download it over your phone line and into your home computer.
Or you can simply call the company up and ask them to create a list of out-of-state owners for you that you can buy from them. Typically, this costs between 10 to 15 cents a name. When you find out how much money you can make by buying properties at incredible prices and terms you will realize that this is the greatest bargain you’ll have ever made.
Five ways to find an information source provider
1. Look in the yellow pages under “information source provider” or under “mailing lists.”
2. Call up the local REIA in your area (Real Estate Investors Association) and ask them who you can use (and what discounts they offer to members of the REIA group.)
3. Call up a few area appraisers and ask them who they use.
4. Make friends with a Realtor in your area and gain access to the MLS which is nothing more than a huge property data base. In many areas the MLS is tied into the county tax records which means your real estate agent contact can pull out-of-town owner lists together for you.
5. Try calling up Data Quick (800-863-4636). They are a huge nationwide company and charge more than most local and regional providers. So use them only as a fall-back option.
6. Contact your local county recorders office and ask them if they can either provide you with access to their records via Online services or CD-ROM or if they know of any company that provide you with this information.
When you get your names you can send out a letter or postcard to entice interested owners to call you. If you choose this route feed these incoming calls into a 24-hour recorded message. This message should be 60 seconds of the biggest benefits you can offer to an out-of-area seller. The sole purpose of this message is to motivate the seller to leave their name and phone number so you can call them back.
Pick up the telephone!
The best way to turn your list of out-of-town owners into cash for you is to pick up the telephone and call the owners direct! Your conversation will go something like this:
“Hi this is Peter. I’m an investor in (your home town), and I have your number here as someone who might be interested in selling a property in the area. Is there a reason for us to spend a few minutes talking about that or probably not? Oh, there is–can you tell me about your property?”
The biggest objection you will get on the phone is: “Where did you get my phone number?” Just tell the truth:
“I hired a researcher to put together a short list of people who owned property in areas I’d like to buy. They gave me a list and your name and phone number were on it. Is there a reason for us to spend two minutes talking about me buying your property, or should I cross out your name and never call you again?”
Of course you’ve noticed the use of the negative sell. I’ve found that this approach will give you the best results.
Putting the deal together
The final secret to putting together a deal with an out-of-town owner is to slow the whole thing down. Make sure you don’t ask too many detailed questions on the first phone call. Things like what the loan balance is and what the monthly payments are are better left to the second phone call.
The first call is just to find someone who is motivated to sell. Once you find that person get off the phone with them fast. Tell them you’ll drive by the property if you have a chance and give them a call back in a day or two.
Then on your second call you can get into the details. This allows them time to get to know you and feel comfortable working with you.
If you do come to an agreement, OVERNIGHT them the contract–don’t fax it! Faxes are no longer perceived as important or treated special. But when you get a Fed Ex envelope, it catches your attention. Also, put a return overnight envelope from the seller back to you inside and make sure it is PREPAID. This helps to create a sense of urgency to get the deal done.
Finally, make sure you arrange a telephone appointment with the seller the day they get the agreement. This way you can talk with them about any final snags that might come up.
So, just how effective is this strategy? One of my students used it and found a retiring landlord who sold my student THREE properties worth a total of $480,000–and all three of these deals were nothing down, owner-financed deals! So what are you waiting for?