What do you want your next investment to accomplish for your financial situation? Do you want to save money or get a large return on your investment? If the answer is “I need both,” it’s possible that commercial real estate investing is the way to go.
Rental property, commercial real estate, and real estate syndications can all generate a substantial sum of money while also keeping you financially stable. However, if you don’t live in a region where the market real estate deals are flourishing or don’t want to acquire rental property nearby, you might be feeling frustrated.
By researching off-market properties, savvy real estate investors can locate lucrative commercial real estate investments outside of their area, with less competition from other buyers.
If you take the initiative to seek commercial real estate outside of your local region’s offered properties, you’ll find: there’s less competition, deal negotiations should be simpler, and most likely be able to obtain the property you want with better terms than if you pursued a typical listing. For these reasons, it appears like a no-brainer: you need to locate off-market commercial real estate deals!
You’re starting to come to the conclusion that finding off-market homes might enhance your competitive advantage, and that with it, you may readily modify and improve your investment technique by using real estate outside your local market. However, before you begin playing the real estate market or putting cash aside for real estate investing, it’s critical to understand how investment properties operate and where to look for great off-market deals with a great sales price on the appropriate property type.
Here’s how to look past the multiple listing service (MLS) and find the greatest off-market deals if you’re looking for a rental house, commercial real estate, or anything else.
What Are Off-Market Properties?
The term “off-market property” is applicable to any property currently unlisted for sale. In fact, the sellers of these properties are not actively trying to market their properties on alternative such websites as Craigslist, Zillow, or Facebook. They may not have even thought about selling their property.
However, since you know making money from real estate investing is all about finding the property with the most financial impact and finding the owner who’s ready to sell, it becomes your job to figure out which off-market properties are actually prospects.
The sellers of off-market properties, or pocket listings, are usually willing to sell their real estate if the right deal is presented with the right numbers at the right time. Now, it’s up to you to think outside the box and find off-market properties and unlisted commercial real estate and generate a transaction that will be beneficial to all involved.
Why Would A Property Sell Off Market Or Without A Real Estate Agent?
One big reason is to save money. There are lower commissions paid to brokers and zero fees to listing agents (because there probably isn’t a listing agent thus the property being an off-market listing) on off-market real estate, which means a lot more income to the seller and a lower purchase price for the buyer. For rental property, owners experience lower “sales” risk since tenants never see marketing or for-sale signs as a risk to their occupancy or business.
Off-market properties can be bought and sold just like those listed for sale, the difference is that off-market listings aren’t advertised on multiple listing services. Some property owners might have concerns that sticking a sign out front will affect decisions by property management, influence asset operations, or attract lowball offers and time-wasting tours from unsophisticated buyers. In this case, ownership might consider it a strategy and only discuss the asset as an off-market listing with a local broker.
Other times, ownership simply hasn’t considered selling, has no idea what a “good” market value would be, and doesn’t realize how to market commercial real estate. This is where dedicated real estate investors get a chance to pounce on the opportunity to find off-market properties.
Benefits of Pursuing Off-Market Properties
Off-market listings are not usually promoted and remain out of the spotlight. This gives investing professionals the opportunity to buy a great asset at a mutually beneficial price before the public ever gets a chance to see the property listed.
Of course with this comes decreased selling costs and fees, increased efficiency of capital, and an increased chance the investor gains ownership of properties in markets they want.
Some off-market real estate deals can be caused by unfortunate circumstances for the seller. As in the case of short-sale properties, there may be a financial problem or they might need the ability to have a quick and serene departure from their residential real estate. These situations can be mutually advantageous for both buyer and seller and provide attractive contracts and profit margins. In such situations, the lack of time is usually compensated through a lower purchase price.
The 7 Steps To Find Off-Market Properties:
Below, you’ll find seven outside-the-box ways to uncover off-market real estate deals, whether you’re interested in residential rental property or commercial, big or small, this article will help guide you toward finding your groove in real estate investing outside your current market.
Make Friends With Fellow Investors
While most folks will immediately turn to online websites for real estate properties that are listed for sale, you want to buy off-market properties. So, it’s important to approach things differently.
First, you want to get to know and make friends with other real estate investors. While at first, this might seem counterintuitive because you might think they are your competition, there’s actually a TON of value in having relationships with people who share your interests.
Commercial real estate investors, especially those who are more experienced than you, often already have contacts and connections to investment opportunities that aren’t listed elsewhere. Many investors already know and work with real estate brokers, have already dabbled in direct mail marketing, and can already guide you toward or warn you against certain locations or strategies.
Whether you are looking for a great deal, or you want to discuss market analysis or exit strategies, rubbing elbows with fellow real estate investors and real estate professionals will help you gain the connections and knowledge you need.
By forming a relationship, you can gain insight into their strategy, willingness to sell, and real estate approach. When you are selling and buying within a respected investor network, you are working within a form of “house hacking”. This often can pay high dividends in your favor.
If you want the most out of your existing or future real estate investments, surrounding yourself with fellow flippers and investors helps you realize the highest value from your investment property or a renovation. This demographic of people understand what it takes to profitably flip or BRRRR distressed houses. With the assistance of this encouraging group of potential buyers and sellers, it will be considerably simpler to generate passive income, discover off-market homes and commercial property, and meet your financial objectives.
If you’ve already built a network of real estate professionals, lean into it!
And, if not, it’s time to start. This is the #1 way you can expand your reach as a real estate investor and find your groove in off-market property.
Real Estate Agents Have The “In” On Off Market Property
Real estate agents are frequently thought of as focusing only on their buyers. However, experienced realtors understand that potential buyers are only half the battle, and keep seller lists as well. A real estate agent may reach out to people who have previously expressed interest in or asked questions about selling if a market is advantageous. Sometimes, homeowners who valued their homes previously become potential sellers rapidly as a result of the market value increasing substantially.
Real estate agents will often make phone calls, send postcards, and use other means of communication with property managers, landlords, and tenants to share the purchase price of properties sold in the local area. This alone could be a big persuasion to a property owner, especially if they’ve thought about selling before.
If you’re new to the investing game and want to purchase your first property, a real estate agent could help you establish a long-term real estate investment strategy.
Connections With Contractors Pay Off In Finding Off-Market Deals
For individuals looking to invest, collaborating with contractors in the sector may be a smart option. Because they know which renovations they’ve offered and which homeowners have been considering change, contractors frequently can assist you in finding unlisted real estate. You might even consider partnering with a contractor to help you buy a distressed property and hit your investment goals.
Contractors can help in different capacities and with many types of real estate investing. Working with a “pro” contractor can really help you develop your real estate investment strategy because as they are renovating properties and working with real estate developers, they might share off-market property details with you. You never know when the relationship might be mutually beneficial.
Direct Mail Marketing Might Be Your New Friend
A lot of real estate investors use direct mail to find off-market real estate. Direct mail marketing does not require a lot of money and you can help generate off-market leads for years to come.
Whether you’re a novice real estate investor or have some experience, direct mail marketing is a must-have because it’s a simple approach to get your name out there in front of your target audience.
Your first step in starting a direct mail campaign is to figure out your audience. This way you can craft a very well thought out targeted campaign. After you have created your mailing list, send out the mail to residential real estate, apartment building owners, and other types of properties that you’d like to have in your portfolio.
Find Off-Market Deals At Auction
You can find great deals at an auction or on auction websites as the properties up for auction may be distressed properties at a low price point. It’s likely there are regularly occurring real estate auctions in or near any zip code, and this makes it really easy to connect to excellent off-market commercial real estate deals in any area!
Browse auction websites to find off-market deals from all over the country, in every market, of every real estate type, residential and commercial. Many properties often wind up at auction because property owners are unable to pay taxes, the mortgage, or both, and have fallen delinquent.
Auction properties generally need some type of rehab, so be ready for that. Always perform proper due diligence on the properties, investigate the parties involved and pull public records so that you can know as much as possible about the off-market listings presented at auction.
Depending on the auction’s location, you can buy property off-market just by paying the back taxes or any past-due utility taxes the property has.
Connect with Wholesalers to Find Off-Market Properties
Wholesalers can help you grow your taxable income, add to your net worth, or develop rental income because they often have a lot of information on, strategy around, and insider knowledge about off-market opportunities.
Wholesalers can find the deals, flip the right to purchase, and then turn it over to the buyer for a commission fee. If you are looking at rental income or commercial property, there are a couple of cons. These can range from bottom-line effects to property depreciation.
Wholesalers normally work with properties that need some work. You want to make sure you check how much work the property needs by surveying public records, looking at on-market properties nearby (for contrast), and talking to fellow investors. You do not want to have to invest more cash into a property than you have or than what it’s worth.
When you know how much work a property needs, and you still think it’s a great deal and you can profit, you can find the correct lender and interest rate to cover those costs.
Driving For Off-Market Deals
The last, perhaps most labor-intense way to find off-market properties is to literally drive around and look yourself. While this might be tough if you’re out of state, you can take a weekend trip to an area whose market passes your due diligence requirements and get to know the area as a tourist or resident while looking for off-market properties that might need a new owner.
Most off-market deals are found because property owners just haven’t had the time or haven’t explored what it would look like to sell. The tell-tale sign of a great value-add off-market deal is one may be partially or entirely vacant or visibly distressed.
Keep an eye out for overgrown yard areas or boarded windows. As you search for potential leads on pocket listings, take notes. Then, you can use addresses and the information about the properties you drove by to search county records to locate contact information for the off-market property owners.
Finding the property owner gives you an opportunity to speak and inquire about the property status. Contact them, show compassion, and ask good questions about the off-market real estate to show the owner you’re the solution they were hoping for!
How Do I Make An Offer On Off-Market Commercial Properties?
If you’ve already put any of these tactics in place and now have a property or two on which you want to make an offer, the next step is finding the owner’s contact information so you can communicate you want to buy the property.
To do that, it’s time to get down and dirty with research. You can start by looking for the owner in county records or other public lists of owners (like property assessment records). Or, you might need help from a real estate agent who specializes in off-market properties so they can assist you on how to find commercial real estate owned by a specific person.
To write an offer, you need to know how much the property is worth and how much it will cost you in renovations before rental income can be achieved. Then, include those numbers as well as your desired purchase terms (including closing date) into the initial letter or email that introduces yourself as an interested buyer with strict confidentiality. Be sure to mention how much you love the property and how it fits into your portfolio.
Make an offer that is realistic, but also shows how motivated you are to make a deal happen!
How to Find Off-Market Commercial Properties for a Steal
There are so many real estate investment opportunities out there that it’s easy to forget that not all of them are on the market. Finding off-market properties has never been easier, thanks to this article!
It’s a lot easier to diversify your real estate portfolio, invest in properties that pay regular dividends, and generate rental revenue from your commercial holdings when you know where to look for the greatest off-market property bargains.
Whether you’re on the hunt for single-family homes, multifamily housing, storage units, or even hotels, off-market opportunities exist around every corner in every real estate market across the US!
In pursuing the marketing campaigns and strategies listed herein to find off-market real estate, you’ll discover less competition, meet new fellow investors, gain insight and expertise that leads to personal growth, and quickly boost your negotiating abilities. All of these will positively impact your competitive edge, cash flow, diversification strategy, and investment portfolio!