Finding Investment Property : Searching the MLS Versus Buyer Groups
I have had a LOT of questions lately about finding real estate investment property in the MLS. Mostly would-be investors who are upset that they are wasting their time looking at house after house that doesn't make sense financially to buy as an investment property.
Interestingly enough, I got my real estate license 20 years ago primarily so I could have immediate access to freshly listed properties in the MLS (Multiple Listing Service).
Of course, as a Realtor, I could also learn more about the legal side or real estate which would be advantages as an investor. However having a license as an investor is a double edge sword. There are pros and cons to being licensed when investing, but that is for another post.
As an investor having access to the MLS (multiple listing service) seemed like the best way to get the deals before everyone else did. Early on in my investing career I bought properties that were listed on the (MLS). What I came to discover is it proved to be a struggle and a whole lot of work. I now had access to the latest properties before they were noticed by the thundering herd of buyers and investors. However it did not take long to learn that sellers of a property that was freshly placed on the market were not motivated to take low ball offers.
I was becoming frustrated searching hundreds of listings, and then crunching the numbers, only to narrow it down to a few worthy properties. I would then drive by the properties and crunch more numbers, occasionally writing an offer that would not be accepted and not make its way to contract just to start the process all over again.
I knew there had to be a better way because most of these properties did not have any financial merits for investing at all. The formula to find investment properties worthy of buying is look at 100 properties online, narrow it to 2-3 and write offers and hopefully get one property.
I found the better way in unlisted properties:
While doing much research I learned of properties that were not listed. I ran the numbers on these properties and, wow, they worked much better, so I started buying them. I enjoyed this concept much better so I continued to search for more and more unlisted properties.
I indeed found the secret to great investing was in unlisted real estate properties.
(What I mean by unlisted properties, is they are not listed for sale through the conventional MLS system)
Why Non listed properties are better for the real estate investor:
The MLS system is retail focused:
They are intended to attract the retail buyer, a buyer looking to move their family in it and make it a home. Often a seller becomes skeptical when they find out their home (in which they raised their family) is being sold to an investor).
Sellers become further skeptical when they see an investor looking to buy their property for a profit. They feel they must be leaving money on the table. They are not interested in an investor making money on their property and saw most of them as low ball offers.
Non listed properties are like buying business in a box:
Sellers who sell non listed properties tend to market them toward a real estate investor.
They are fully aware of what an investor is looking for (a return on the investment with appreciation potential). The price structure tends to already be conducive for an investor to purchase and make a return on their investment; often these properties already have a tenant in place. These properties often tend to be a turnkey property that is already a performing asset.
Non listed properties:
Are purposefully marketed for sale to the investor looking for investment property. These properties are catered to the investor knowing up front that the investor wants to make money on it.
As these properties often have tenants in place, they do not make a good listings for the MLS system where buyers are looking to move into them because they are currently occupied by tenants.
Knowing this, these properties tend to be positioned within the investor advantaged micro markets that make the best financial sense for the investor. Most investors are looking for cash flow and or equity growth. Sellers who sell investment properties have originally purchased these properties within the micro market of a city that best represents a solid equity growth.
Non listed properties are typically promoted through different channels than the MLS.
Sellers understand that the typical real estate MLS channels are designed for the home buyers and sellers to buy and sell. Investors or rehabbers typically sell their buy and hold real estate through promoters who work with investors.
Real Estate Investors Buyer Group
I have been so intrigued by these non-listed properties that I focused the last decade of my life building a business around them. As I search for non-listed properties every day I compile them together and send them to my investors every week.
While you are busy doing what you do for a living I am busy doing what I do, (searching investor advantaged no listed properties.) If you too would like to be added to the buyers group list and receive these non-listed properties to your inbox every week, simply register to join the group.