Buying properties from out-of-state owners is what I consider to be the most overlooked method for getting great deals. Why? Because many top investors are NOT pursuing this method. Here's the situation: Those who aren't pursuing out-of-state owners often tell me, "Yeah, I need to be doing that." And the ones who are already doing it--absolutely LOVE it!
The worst comment I've heard about this method was as follows: "I tried mailing to out-of-town owners. I got a deal from it, but it seemed like the sellers I talked to were getting a letter about once a month from another investor or Realtor. So the competition was a little stiff."
I disagree. Compare that to the pre-foreclosure list where sellers are getting 10 to 30 letters a DAY. Truth is, sending an effective letter to out-of-state owners works wonders.
Notice that I'm referencing out-of-STATE owners, not just absentee owners. An absentee owner could live down the street or across town. So their level of motivation is likely to be lower. They can more easily rent, sell, or take care of the property. An out-of-state owner, on the other hand, is usually too far away to deal with the property.
Out-of-state owners typically have one or more of these problems:
- The house is vacant, so they're worried about vandalism.
- The house is vacant, so they're paying for a house that they're not using. And on top of that, they're probably paying for their new house, so they have two house payments.
- If they have it on the market, they're probably frustrated that most potential buyers are too picky. And they're not there to make the house look nice for showing.
- They have a non-paying tenant in the property.
- The property needs repairs, but they're not in town to oversee the renovation.
- They have a property manager who is not taking care of the house. After all, the manager knows that this owner is out-of-state and can't see the day-to-day property management problems.
So, how do I find these out-of-state owners?
There are several ways to get a list of out-of-state owners, ranging from free to costing $400 or more. You decide how much you want to pay. But the more you pay, the better the list gets. Here's what I mean...
For free, you can go to your county appraisal district's website and pull up property records one at a time to see if the owner lives out of state. Free? Yes. Unbelievably time consuming? Big yes. I don't advise doing this. There are better things you can do with your time.
A better way is to request an electronic spreadsheet of the data from the appraisal district. Just call them up and say that you need a listing of single family houses, and you need the list to include owner names, mailing addresses, and property addresses.
Almost all counties require that you write a letter requesting the file, and then they'll mail (or email) it you. And they WILL charge you for it. I called several counties and got prices ranging from $20 to $400.
Once you get the file that contains the list, sort by the mailing address state field. You can delete those that are in the state where you're looking to buy. And you're left with out-of-state owners.
But you're not done yet...
There's a VERY good chance that 20% to 30% of the mailing addresses are no good. Appraisal districts just aren't good at keeping that info up to date. So, if you want to get the current addresses for those people, you'll need to "clean your list." You can do this by paying a "list cleaning" company $250 to $450 per thousand names. It can be pricey, but I highly recommend it.
Another good way to get this information is to call a list broker. They can get information from many sources, compile it, cross-reference it, etc., and come up with a list of out-of-state homeowners. Okay, so some of them can. I recently called 14 different list brokers and only two of them had a list. You can expect to pay about $250 for a list of 1,000 out-of-state owners.
Little or no competition for some of the best deals
Pursuing out-of-state owners requires a little bit of time and money up front--which turns out to be a great thing! After all, that's what scared most other investors away, leaving you with little or no competition for some of the best deals in your market. Don't delay. Start generating your list of out-of-state owners today and profit tomorrow!
[Doug Smith has bought and sold over 40 properties using almost every method--wholesaling, rehabbing, landlording, subject to, lease options, and more. He is the founder and president of MyHouseDeals.com, a company that provides a constantly-updated list of bargain-priced investment properties in some of the nation's largest metro areas.]