Driving for dollars. While it definitely sounds like the title of an obscure game show somewhere, it is actually an important strategy for today’s up-and-coming real estate professional. Just what exactly are you doing when you “drive for dollars”? Simply put, this is a technique that real estate entrepreneurs can use when they want to find properties that are distressed and might have a motivated seller. How does it work? Here are some things to keep in mind:
How will your investment benefit?
According to DealMachine, driving for dollars is a great way not only to find properties that your team could invest in later, but it also works well if you want to earn a tax deduction based on your mileage. Additionally, DealMachine is a handy tool for this strategy because it will help your team ensure that they avoid driving through the same street twice. The main purpose behind the drive for dollars strategy is to find properties where the seller is more likely to get a good deal on. Of course, before we continue, a handy definition of this practice is in order.
What is it?
One basic definition of the dollar driving strategy is that it is simply the act of picking out a specific geographic area, and then walking or driving in that neighborhood in order to search for real estate marketing leads. Simply put, this is one of the most efficient ways to assemble a list of motivated sellers. Your real estate team can often use this list for direct mail or cold calling efforts. Of course, if you’re new to this real estate investment strategy, you are probably wondering how you go about doing it effectively.
How do you drive dollars?
If you are going to drive dollars effectively, there are some basic steps that you need to follow. Of course, the first thing you do is pick out a geographic area or neighborhood to focus your efforts. Next, you will need to look for distressed properties. Some signs that a property might be either “distressed” or vacant would include such things as boarded up or broken windows, overgrown grass, a deteriorating exterior, and even bank or code enforcement notices on the front door. One of the main reasons why you want to find properties like this is because you are more likely to get a good deal on the property.
Once you have found a few targeted properties, the next step is to do more research on it. You would want to find out information on the following:
* The name of the homeowner and their contact information
* The general information of the property
* Whether the property is due for a tax sale or a foreclosure
* When the property was last purchased and what amount it was purchased for
Finally, you keep the given address in mind and do some cold calling or marketing to that given property later. Of course, if the property is vacant, you might have to do some extra leg work in order to contact the owner.
What are the benefits of this strategy?
One of the best benefits of the dollar driving strategy is that you are looking at off-market properties. This is because the one thing that all successful investors realize is that the best deals are often those that are not listed. Moreover, yet another benefit of driving for dollars is that the owners are more likely to sell since they realize that they may not get another deal for their property.
All in all, for real estate investors it is a win-win situation!