Vacant properties in many markets can be considered some of the best deals you can find. There is also pretty low competition in the vacant house market because truthfully, about 90% of real estate investors don't want to take the time to scope out these deals and do the follow up work needed. Most of them want deals spoon fed to them via the MLS or through their realtor.
The vacant houses are usually sitting there, in distress and the homeowner obviously has some kind of situation they need to deal with in a timely manner. They are almost always motivated to sell and are looking for a buyer like you.
The 4 D's
Usually, no matter what the market is doing, there are always going to be vacant houses.
You will want to go after motivated sellers. Most people become motivated to sell a property at a great discount because of 2 main reasons: financial distress or their property is in physical distress.
The four D's that usually make up the most motivated sellers are:
- Distress (Job loss, etc.)
None of these situations are ideal to be in, so remember to have compassion for the motivated seller and think of it as you are finding someone who has a problem and can you help them solve that problem and/or add tremendous value.
If you are doing that AND working with the right people, then you can get some profitable deals.
5 Step Process
Step 1: Knowing Your Market
It's important to know your target market and where you want to focus.
A key area that usually works is the working/middle class. Try and avoid the lower income areas - there will be a LOT of deals available, but the properties will be tougher to sell. You should really be looking for the areas that first-time homeowners want to buy and live in.
Higher-end areas can be good rehabbing areas we well, but the price points are significantly higher and you need to make sure you are putting in high end fixtures and finishes so the rehab budget can get costly.
We advise to start looking for vacant houses in areas where the Days on Market are significantly low and houses are moving quickly where the price points aren't overly high (or incredibly low) but right in the middle. If you are looking in a newer market or somewhere you aren't as familiar with, you can contact a local realtor and have them create a report for you from the MLS.
Step 2: Locating a Vacant House
The first way to locate vacant houses in your target area is what we call "driving for dollars - which means you would drive the neighborhood to look for houses that seem vacant and write down addresses.
The second way we would only suggest if you don't have the time to drive neighborhoods or if you aren't locally around the area you are targeting. You can purchase Vacant Property High Equity lists from a site like Find Motivated Sellers Now, but we don't always encourage this to be your only option because the lists can be inaccurate.
Telltale signs a house may be vacant are:
- Overgrown lawn or not shoveled snow
- Signs or stickers on front door or window
- Newspapers or mail stacked up
Step 3: Look Up Addresses
Once you have a list of addresses of properties you think may be vacant, it's time to start doing your research. Start by looking up each address in your county's tax assessor or auditor's website. It should give you the owners name and if that owner has a different or forwarding mailing address.
Create a spreadsheet of the addresses of possible properties and the owners contact information.
Step 4: Send Mail
Send the owner a letter or postcard - we have found that yellow letters for vacant houses works really well. The letter can be simple and say something like:
Dear "insert home owners name"
My name is "insert your name." I was driving around the neighborhood the other day and noticed you have a vacant property at "insert vacant property address." I'm currently looking to buy a property in that area if you are interested in selling.
Give me a call at "insert your phone number"
"insert your name"
If you have a smaller list that's under 100 people, using Yellow Letters is a great option. You can get them out quickly for a pretty affordable cost.
If your list is a little larger, you can use Click2Mail to create postcards for about .43 cents per card. It will take about 3-4 days for the postcards to be printed and then a few days more once they are sent for the owner receive it.
Step 5: Follow-up
If your letter or postcard comes back undeliverable (which usually in mass sends, some of them do) you can use a skip tracing service track down the owner's better forwarding address or phone number. A service like TLO is the service we use for this.
Pro Tip: If you are having trouble getting information on the owner of the vacant house you are interested in, you may be able to stop by a neighbor's house and see if they can help provide you with some information.
Make sure to follow up with a phone call to any of the owners whose phone numbers you have available. The best times that we call at are on Monday evenings or Fridays around 4-6pm.
CEO Strategic Real Estate Coach
CEO Freeland Ventures and Freeland Lending
CEO Yellow Jacket Properties