How to Find the Best Off Market Properties for Real Estate Investing

Finding investment properties for sale is always a click of a mouse away. However, what’s the deal with off market properties: How do you find them?

Putting it simply, off market properties are those that are for sale but are not advertised to the public. Well, that is the very challenge- not being advertised to the public! So, how in the world are you supposed to find them?

For that matter, you have come to the right place. After reading this blog, we doubt you’ll have any problems finding off market properties for sale. All you have to do is continue reading!

Before we get into how to find off market properties, let us view the general steps to finding properties for sale in the first place. Once you understand the general process, it’ll be easier for you to understand the process for off market properties in particular.

How to find investment properties for sale

Finding investment properties for sale is a very delicate process. But, this does not mean that it is complex. Here are the three steps to finding any profitable investment property in the housing market:

Pick your favorite location

Regardless of the type of real estate you are looking for, they all share the same procedure. The first step is to always start with looking into a location that you might be interested in. For the purpose of buying an investment property, your criteria should be as follows: 1) The investment potential for a certain location and 2) The potential for a rise in value over time. This process is what we call the real estate market analysis which looks into a certain area to determine its profitability.

Create a list

Once you have determined a location of interest, it’s time to move on to the next step which is none other than looking into property listings in that area. However, as your goal is to find the best investment properties, you will have to go through hundreds of investment properties for sale at that location. It seems too much, we know. However, it is necessary in order to be able to have at least ten properties that are your top choices.

Now that you’ve got 10 properties on your list, it’s time to narrow that down to only 3 properties. To do so, you must go through their return on investment indications, of course. One fact to keep in mind: the higher the rate of return, the higher your chance of making money in real estate.

Contact the owner and seal the deal!

At this point, you have 3 properties whose owners you must contact. Send them offers and see what you get in response. The moment you have an offer accepted, you can go on and start negotiating the deal with the owner until you get to an agreement. The very next step is the legal and financial procedures to close the deal. When choosing a financing strategy, make sure you shop for the right mortgage as it has a huge impact on the rate of return.

How to find off market properties for sale

So, by now, you know how to buy an income property, in general. As a matter of fact, that is exactly how to buy off market properties as well. However, since off market properties are not public deals, there are a few ways you can find them.

Check your contacts list

The number one method to find off market properties would be the most traditional one; ask around. Checking with your family, friends, and acquaintances is a very effective way to find such properties. Perhaps you’ll find someone who is thinking of selling his/her property and has not yet advertised it for the public. Or, perhaps you are a member of a real estate investment network or a club. These types of connections are also of great help in pursuing an off market property. By asking around, you will always find either someone who is interested in selling their property or they know someone who does.

Hire a broker

Another method to find off market properties would be through a real estate broker. An agent or a realtor is a professional who knows exactly what to look for. Besides, they know where to look for the best off market real estate properties. Working with a broker is also a great way to sit back and skip performing any of the calculations associated with buying an investment property. They will calculate all the numbers and sort out the best real estate investments for you. The only downside for this is the costs. A real estate broker usually charges a commission in exchange for their work. It eventually adds up to your closing expenses which means you will have to have a higher budget for the whole thing.

For many investors, the whole point of off market properties is to buy low and avoid any extra expenses. However, for a beginner investor, it makes sense to hire a broker regardless of the cost in order to mitigate any risks of making any mistakes.

One tip we could give you for hiring a broker is to hire a local one. Why? Because a local one knows the area inside out. They know exactly what works and what doesn’t in the housing market in that specific location.

Short-sales!

A short-sale property could be a great candidate when looking for off market properties for sale. Basically, a short-sale property is a property whose owner failed to repay the mortgage. In this case, the owner has an option of selling it for low and repaying the lender. Otherwise, the lender takes over and sells it as a foreclosure.

While foreclosed properties are also ideal to buy low, still it is better when you are dealing directly with the owner. The best thing about short-sale properties is that they make for the best off market properties because unlike foreclosures, you won’t have to compete with so many real estate investors to get your hands on it.

What to look for in off market properties

Sure enough, you, as a real estate investor, are interested in an income property. Therefore, your ultimate goal is to always find the most profitable income properties in the housing market. In order to achieve that goal, you must focus your attention on three major aspects:

The return on investment which you calculate through cap rate and cash on cash return measures
The location which you examine through the real estate market analysis process
Finally, the real estate comparables (comps) which you find through the process of comparative market analysis

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