As you may know, I love vacant house deals, and that is simply because they are disguised gold mines. In my previous post, I covered the fundamentals of vacant houses. But today is a continuation with more detailed info–a lot more.
In my informative post about the basics of vacant homes or abandoned property, I talked about why they have less competition than MLS and FSBO properties – and how that translates into endless opportunities that can ultimately be some of the most profitable deals you’ll ever do as an investor. We also touched on why you don’t need to personally fund your deals, and how the only capital you’ll risk is a small earnest money deposit of typically $10-$100.
I also laid out my 5-step process for quickly turning an abandoned property into BIG paychecks. Here’s a brief reminder of what we covered:
#1. Spot or Locate the Vacant Houses
#2. Find the Seller
#3. Strike a Deal with the Seller
#4. Flip the House to Another Investor
#5. Repeat 🙂
Sound familiar? Good.
So today, let’s jump back in by discussing, in detail, the first of those 5 steps: How to spot or locate those gold mines disguised as vacant homes.
Simplicity at its finest
The first way to spot a vacant house is simple. Believe it or not, it’s actually something that you’re already doing on a daily basis: driving in your car.
Told you it was simple!
Here you are, subconsciously scoping out the vacant houses–whether you’re driving to appointments, dropping the kids off at school, or heading to the grocery store – be sure and take a different route each time, rather than the same way every day… and most importantly… keep your eyes peeled for the tell-tale signs of vacant houses (They are everywhere!):
- Grass is high, unkempt, not mowed
- No curtains in the windows
- Doors and/or windows boarded up, broken or wide open
- Mail spilling out of the mailbox
- Postal worker’s note inside the mailbox (you can open the mailbox to look inside; you might see a handwritten note by the mail carrier that says the home is vacant, so substitute mail carriers know not to leave mail, just don’t mess with any mail in there.)
- Newspapers piling up in the driveway
- Foreclosure or code violation stickers on the front door
- No tire tracks or footprints in the snow (if it’s in a snowy part of the country; one of the best times to look for vacant houses is right after a fresh snowfall)
- Electric meter is missing (vandalized or outright stolen)
*(Just make sure you’re keeping track of where you’ve driven.)
In fact, you can use this free search tool here to see EXACTLY how many vacant house leads are available in your area (this works all across the country)! This tool allows you to pull a targeted list of deals to drive to, which will fundamentally make your “driving for dollars” experience much more profitable.
Also, be sure to keep in mind that what is occupied today may not be occupied tomorrow and vice versa. This is a fluid environment. Fluidity is a bit like chasing a chicken. What successful investors focus on is the value of those deals. Any of them might mean a $10,000 – $50,000 paycheck. So, just because you drove through a certain neighborhood today, doesn’t mean that you should write it off. Instead, in a couple of months, circle back to it to see if something new has popped up.
Pro Tip: Staying organized is a must and will essentially save you a lot of time and hassle.
To help keep you organized, you can put up a big map of your area on the wall and segment it into different areas, such as–‘Area #1,’ ‘Area #2’ and so on. From there, you can then formulate a plan to drive to Area #1 one week and then to Area #2 the next week. Then, you will want to make sure that you rotate going through your segmented areas throughout the year.
Look, you’re already out there driving around anyway, so making your time more useful and valuable is necessary, especially if you’re just getting started.
Why Direct Mail is a MUST
This method of finding vacant houses is also pretty simple and easy to implement…
Any time that you’re doing a mail campaign, such as a yellow letter or postcard mailing, you want to make sure that you add the following words to the envelope: Return Service Requested
Why do this?
Well, it compels the postal service to send you back a copy of the mail piece when there is a forwarded order in place. So what does this mean?
As you likely know, when you move, you fill out a forwarding order with the United States Postal Service (USPS) to have mail sent to your new address – your mail then shows up with a yellow sticker on the envelope with your new address. The post office will then begin to forward your mail for a whole year.
Besides ensuring that your mail gets to your new home, the general idea behind the forwarding order is to help remind you to communicate your new address to the people and companies who send you mail.
So, when you see the words – ‘Return Service Requested’–placed on an envelope, the sender, in turn, receives a notice from the post office about your new address. (In our case, you’ll get a postcard with the old and new addresses).
Why is the post office willing to do this?
Well, this is mainly because direct mail marketers (us!) are USPS’s best customers. This is a way for us to keep our databases up-to-date and clean, which they like (and so do we).
There is a nominal fee for this Return Service Request, but hear me now – it’s worth it for two reasons:
- It provides a clue to help you figure out if the property is potentially vacant.
- It’s a very effective method for locating the owner of a vacant house– since you’ll be notified of their forwarding address.
By the way, you can do a Return Service Request on any form of postage mailing: 1st Class, Pre-Sort 1st Class, 2nd Class, 3rd Class, etc.
Next, I want to share with you a mailing strategy that does require 1st Class postage. This idea applies when you’re doing a mass mailing to a list of a particular zip code or specific neighborhood. For example, you add the Return Service Request to the mailings.
If the house is vacant, the postal carrier will literally mark the envelope as vacant and return the mail piece back to you. Best of all, there’s no extra charge for this – it’s part of what’s included in the cost of a 1st Class mailing.
By doing this, you’re easily able to identify every vacant house within that specific zip code or area that you mailed to. So, if you’re doing a mailing anyway, and you can afford the minimal extra expense of a 1st Class mailing,–add Return Service Requested on your envelopes.
This is a very powerful and effective strategy.
My final suggestion for locating a vacant house is with bird dogs. I’ve been using bird dogs for years. A bird dog is usually someone who does not understand Real Estate, but either wants to learn or just needs some extra income. Although you can drive around looking for vacant homes, you can also hire people at affordable rates to do it, too. By attracting these types of people into your business, you can train them to scout properties for you that are vacant and need work, so that you can spend more time making offers.
I actually have some requirements for my bird dogs, which enables me to get the biggest bang for my buck–this has been the biggest game-changer for my business and for my students!
But first, let me explain this further…
Initially, I send them to my Real Estate bird dog website so that I can automate the entire process. I use iFlip Real Estate to set up my websites and automate my entire business from beginning to end. If you haven’t done so already, you can try it out 100% risk-free here!
This way, when they’re out driving around looking for vacant houses, I require them to provide me with at least 6 photos of the house:
- 1 picture of each side of the house = 4 (front, back, left side, right side)
- 1 picture with the house on the left side of the frame, looking up the street
- 1 picture with the house on the right side of the frame, looking down the street
Those last 2 pictures give me a good idea of the neighborhood, further allowing me to see what the other houses on the street look like.
I also require my bird dogs to provide approximate square footage of the house. (Yes, we can get this info online, but I like having it done at this point in the process –again it’s all about saving your time.)
I’ve made it simple for my bird dogs to do this – when they first come on board with me, I ask them to lay a tape measure on the ground to measure their stride. (My stride, for example, is about 3 feet.) When my bird dogs are at the property, I will ask them to walk around the outside of the property and gather the dimensions based on their stride.
Then, they’ll apply their measurements to this simple equation:
Length x Width = Area
So, if the bird dog has a 3-foot stride and the house is 20 strides long and 10 strides deep, that’s 60 x 30 = 1,800 feet.
For example, if it’s a 2-story house, you’d double that. If there’s a non-attached addition, like a small guest house, the bird dog will walk that too, where they will then add that addition, plus the main house together.
You have to admit, that’s pretty easy math. (And it’s a great way to verify or support the square footage you’ll later find from the tax assessor’s report online– which we’ll soon be covering in an upcoming post.)
Here’s another pretty simple thing that I want my bird dogs to do – provide me with a classification of repairs by putting the home into one of three categories, in terms of condition:
Standard rehab – needs paint, kitchen and bathrooms need some work, light fixtures need updating, a bit of landscaping – nothing crazy
Everything in the “Bad” category, plus – needs new siding, windows and roof
Everything in the “Bad” and “Really Bad” categories, plus – structural issues, electrical work – a major rehab
(Then I use a square foot multiplier to help estimate the cost of repairs.)
*Keep in mind that these numbers will vary depending on your location, specific neighborhood and labor costs, so we’ll use some numerical examples to further explain this…
If a house is in ‘Bad’ shape– let’s say it’ll cost $20 per square foot for repairs. So an 1,800-square-foot house will likely cost about $36,000 to repair. ($20 x 1,800 = $36,000)
If it’s ‘Really Bad,’– it’s $30 per square foot. So, $30 x 1,800 = $54,000.
If it’s got the ‘Awful’ categorization–it’ll be $40/square foot. $40 x 1,800 = $72,000.
The more and more deals that you do, you’ll learn the average price per square foot for repairs. And, by using my technique, the repair estimate process will be quick and easy.
Pro Tip: We’re just using these numbers as an example for our purposes today. If you’re not sure how to get an estimate of what repairs cost in your area… check with other investors or local contractors so that you can best determine the typical pricing in your area.
For years, I have tried to devise a way to estimate repairs without actually going inside of the home, and I couldn’t figure it out… But then, I came up with the 3 categories of ‘Bad, Really Bad and Awful’. I’ve gotta say, it works like a charm! It’s also very helpful knowing what the repair estimate is, as it’s a crucial aspect of vacant house deals, along with real estate investing in general.
At this point, you might be wondering, “But Cam, how does my bird dog do all of this without actually getting inside of the house?”
Well, believe it or not, your bird dog will become so experienced, that eventually, they’ll be able to get all of the necessary information, without even getting out of their car!
So…thanks to the beauty of delegating–when my bird dog brings me a property with the photos, approximate square footage and repair categorization, I don’t even need to go to the house. (Now.. talk about saving time!)
One last thing about bird dogs…
Let’s briefly talk about how to pay your bird dogs for their work.
Personally, I like to pay per lead. Again, we’ll use example numbers here:
- $5 – if the property is within the 30-mile radius of my office
- $10 – if the property is outside the 30-mile radius of my office
I know what you’re thinking…
“You’re crazy, Cam. That’s a lot of money!! What if my bird dog brings me 20 leads today? That could be either $100, or even $200, if they’re outside the area. That’s a decent chunk of change there.”
Well, think about it this way – if you had to shell out $100 to your bird dog for 20 $5 leads, do you think that you could turn just one of those leads into a deal?
Yes. In fact, with my 5-step vacant house process – I know that you can.
So, think of it this way: Spend a little to make a lot.
Most importantly, consider the value of your time. Think about the amount of time that it would have taken you to find 20 leads when you can actually just spend $100 for someone else to do it.
And remember, if you’re using the Vacant House Data Feed to sift & sort through leads, you are ready to drive by them (or have a bird dog drive by them for you).
…Or if you would prefer, you could just send a mailer.
The question that you need to ask yourself is, “Is your time worth $100, or is it worth a multiple of that?”
This is a no-brainer. Your time is much better spent negotiating with sellers and finalizing deals.
Still Sooo Much More To Come…
So, now that you know a few methods for finding vacant houses – you can begin by taking action on some of them today.
In my next post, I’ll cover–in detail–the second step in my 5-step process– finding the owners/sellers of these properties.
We’ll go in-depth into locating the seller through several methods, including tax roll data and the super helpful skip tracing.
Until then, if you have any questions or comments on spotting vacant houses, please feel free to leave any comments or questions below. I personally monitor and respond to them.
PS. Do you have anything to add about spotting vacant homes? Share it with me in the comments section below.