Finding Motivated Sellers with PropStream
If you want to wholesale real estate on your path to financial freedom, finding motivated sellers is the name of the game.
But where should you be looking for them?
Contrary to popular belief, the hardest part of the wholesaling process in my opinion is not finding a cash buyer for your deal but actually finding a motivated seller to begin with.
And good deals are worth more than gold, especially with the market as hot as it is right now.
Today we're going to discuss what makes a seller a good candidate for a wholesale deal and what lists we should be pulling to find them.
On-Market vs. Off-Market Deals
In the wholesaling part of my real estate investing journey, all of my deals have come from on-market listings.
This means that I found these properties using sites like Redfin and Zillow, and one in particular was a “for sale by owner” sign in someone's front yard.
One reason I really enjoy doing on-market deals is because these deals can happen really quickly.
For example, one of my deals took me less than 24 hours to find, make an offer, get that offer accepted, and find a cash buyer.
That all happened within 24 hours because it was an on-market deal, and I ended up making $8,000 in just one day.
But on-market wholesaling is not without its difficulties. There are drawbacks like not having enough leads or having to provide proof of funds letters to real estate agents.
And while there are different ways to get around those things, if you've decided that you want to go off-market and you want to go directly to the homeowners then this is the blog for you.
We'll break down the software I use to find motivated sellers and get their contact information, as well as the specific criteria I use to pull lists that I'm confident I can find deals with.
PropStream Real Estate Data
So the software that I use is called PropStream, and this is a data service that gives you not just a ton of details about individual properties, but also allows you to pull large lists of potentially motivated sellers as well as get their contact information all within the same platform.
Now PropStream is an investment. It costs $97 a month, and by my calculations if it helps me find just one $5,000 deal then it's definitely a good investment for my business.
But I do have a seven-day free trial for you guys, so you can get in there and do everything that we're talking about right now.
So when you log in, you're going to pick your market wherever you're investing.
Whether it's the place that you actually live or you're doing virtual wholesaling, you can use PropStream to pull lists for that area.
So let's start off and we'll just choose Columbus, Ohio as our test market for this example.
So the first thing that we want to notice is that when we choose Columbus, Ohio, PropStream is going to give us some information about this market.
We can see across the top of the map that there are certain categories, and it's telling us how many properties within Columbus, Ohio fit that category.
We see how many are: on the MLS, in pre-foreclosure, coming up for auction, bank-owned, purchased with cash, having liens, vacant, and having high equity.
We could decide to look at all of the high equity properties, but you’ll see there's 186,000 of them and that's going to take us a lot of time and money to market to that many properties.
So what we want to do is get much more specific.
It'll help us find more motivated sellers than just people who happen to have high equity, and it'll also help us to get this number down to a more manageable sized list.
The way we do this is one of my favorite features of PropStream.
So instead of picking one of those categories, we're going to go up to filter.
List #1: Tired Landlords List
So it's showing me all the properties that are in Columbus, Ohio.
We want to stack different features that will build our list, and the question we want to be asking is, “What problem might someone have that a cash offer can solve?”
When we think about it from that perspective, it'll help us get an idea of what list we should be building.
For example, a very popular list that people like to pull is the tired landlord list.
So we're going to use these filters to create the profile of someone who might be a tired landlord, and then it's going to show us all of the properties in Columbus, Ohio that are owned by someone who fits that profile.
So if we're looking for a tired landlord, the first thing we know is that this person doesn't live in the property.
So where it asks if the property is owner-occupied, we want to select “no.”
From there, you have the option to choose occupancy status. Is the property occupied or vacant?
And what I found is that it's easier for someone to sell a property, to wholesale a property, and for your cash buyer to purchase that property if the property is already vacant.
So it's completely up to you if you want to go after properties that are occupied and you're willing to deal with the tenants, or if you want to go after properties that are vacant.
For this example, I'm going to select occupancy status as vacant, and what you can see right away with just those two criteria is that we've whittled our list size down to just around 5,000 properties.
So it's getting smaller, but it's still not quite small enough to target or specific enough to really know that this person might be a good candidate for our cash offer.
So let's keep going.
You can hit the drop down arrow for property characteristics, and what I like to do here is select “single-family, multi-family, and multi-family five plus units.”
The reason that I do this is because I know this is what most cash buyers in my market are looking for.
There's not a ton of investing going on in condos and townhouses, and I have not moved into wholesaling things like farms and some of these other things that are listed here.
So that's why I choose the single family, multi-family two to four units, and multifamily five plus units.
The next thing I like to look at with property characteristics is I want this property to have been built before the year 2000.
Having it built before the year 2000 just means that this property probably needs some work at this point.
It's been 20 years and maybe it's outdated or needs a new roof or whatever. But this is going to get me properties that are ideal for wholesaling and that may have been rentals since the time that they were built.
As you can see, our list is down to around 2,300.
Next up, I like to go to ownership info and the first thing I like to select here is that this property is owned by an individual.
There are different reasons that you might look into properties owned by corporations like LLCs or properties that are in trust from different family situations they have going on.
But with this list, I'm looking for individuals. Just landlords who own these properties that I can contact and who I can have a conversation about their house with directly.
So that's why I select individuals.
At this point, we have a pretty good indication of what the person who owns this property looks like.
They do not live in it, it's currently vacant, it's a single family or any other type of residential property, it was built in the year 2000 or earlier, and it's a single individual who owns the property.
This shows us 1,200 properties that are in this range.
So depending how much money you want to spend marketing to these homeowners, whether you're going to skip trace these homeowners and pay for their phone numbers and cold call them, or you're going to send them a postcard or a ringless voicemail, these are all things that you can do within PropStream.
I'll show you that next, but that will determine how much money you want to spend and how large of a list that you want.
The more characteristics you add, the smaller your list is going to be.
If you don't want 1,200 properties in this case to market to, you could also add criteria like this person has to have owned the property for a minimum of five years and see that cuts our list size in half.
Another thing you could do is come down to valuation and equity information and you could put a minimum amount of equity.
So for example you might require this person to have 30 percent of equity at least, and that cut the list size down to about a thousand.
Marketing to your Tired Landlords List
Let's say we're satisfied and we want to contact these 1,043 property owners.
We would select the entire list and then we can hit “add to list” and add it to a marketing list.
Let's say that I want to pay for the phone numbers of these homeowners so that I can call them up.
I would go over to the skip tracing section, select contacts, and then at the top I would select group. That's where I would see my marketing list for the tired landlords.
I would select it and then I would pay.
Right now PropStream has it at 12 cents per phone number, but only for the phone numbers that PropStream could find.
Out of those 1,043 properties, if they could only find a thousand phone numbers, I wouldn't pay for the ones that they didn't find.
I could also have PropStream call those phone numbers and send them a pre-recorded ringless voicemail drop.
Let's say that I don't want to skip trace and cold call my list, but instead I want to maybe send them a postcard.
I could go to the campaigns section on the side and I could select postcard.
I could create a big postcard or a little postcard, using one of propstream's designs or starting from a blank template.
I could set the whole thing up and have those postcards sent out directly from PropStream.
There are a lot of different ways that you could decide to contact these homeowners from the lists that you pull.
List #2: Expired Listing List
Now let's go back and think about another list that a lot of people like to target, and that is the expired listing list.
What this means is that somebody put their property on-market on Redfin on Zillow and they tried to sell the property and it did not sell.
Sometimes this could just be because they wanted way too much for the property and they weren't accepting any of the offers they got and so they let it expire.
But it could also mean that the property was in such bad condition that it just didn't sell.
No one came along to purchase it and it could mean that that homeowner is now more motivated because you know they tried to sell it once and weren't able to.
So when you call them asking if they're wanting to sell, now they may be in a position where their motivation has increased a little bit.
Let's put together this list.
We're going to go back up to filter and we're going to hit reset.
The first thing I'm going to specify is that I want it to be a single-family, small multi-family, or large multi-family property.
From here I'm going to actually put 2015 as the year it needs to be built before.
That’s because I don't want to see new build properties that didn't sell and were taken off the market. I don't necessarily need the property to be built earlier than the year 2000 like the last one because it's very possible that a property was built 10 years ago in 2010 and someone is ready and willing to sell that.
So I don't want to take away too many options, but I do want to be a little bit specific to cut out those brand new build properties.
Then the big one here that PropStream is going to help us out with is when we go to MLS status and we can hit “failed.”
This is going to show us all the properties that have failed on the market that were built in the year 2015 or earlier.
You can see we still have 2,700 properties which is a really big list. So something I like to do is put a minimum days on-market of 60 days, meaning this property sat on the market for 60 days without selling before it expired.
That has cut us down to about 1,600 properties, which is getting better.
The final two things that I like to put here is I like to go down to ownership info and I like to say that this person has owned the property for a minimum of five years.
That’s because I don't want to run into someone who was maybe wholesaling or trying to wholetail this property where they purchased it, put it on the market, and couldn't find a cash buyer so they took it off and did something else.
I want somebody who's owned the property for a minimum of five years.
You can see that's cut my list down to about 567.
I like to do lists anywhere between about 600 and 1,000 properties, but it's up to you on how many homes you want to be contacting based on your marketing budget.
In this situation I could also come down to valuation and equity info and look for properties that have at least 30% equity so that I know there's some room to wholesale the property.
Here’s a bit of a golden nugget: it doesn't actually matter if the property has enough equity.
If it doesn't have enough equity for a traditional wholesale deal, you could always get creative and use something like the “subject to” creative financing strategy.
This is where an investor will buy a property "subject to" the existing mortgage instead of making a cash purchase on a property.
This means the investor will make the mortgage payments on behalf of the original homeowner.
This option is one reason why I don't necessarily care how much equity is in the property.
Because I know that if I have a motivated seller on my hands, I'll figure out a strategy to help them out, and get this property off their hands, and make it work for myself and my investors as well.
So at this point, say we've got a thousand properties and we'd select it, create a list, and do the same thing as we did before.
You might be thinking that if everyone who's wholesaling or investing in Columbus, Ohio is pulling this exact same list and calling these property owners, aren't they going to get fed up with getting these calls and isn't there too much competition?
That is one downside to wholesaling.
When there's competition out there, things get a little bit harder, but I don't think that should discourage you.
List #3: Driving For Dollars List
This third list is one that is going to be uniquely your own and that's your driving for dollars list.
If you're not sure what driving for dollars is, it's when you get in your car and you go out and you take note of all of the vacant or possibly distressed properties that you see.
One of the great things about PropStream is they also have a driving for dollars app that is included with your monthly subscription.
So with this app, you can create a list that is unique to the streets you drove down and the properties that you specifically recognized as potential deals.
When you come home, PropStream is going to automatically create a list for you.
If you go over to “my properties” you're going to have this section that says “mobile,” and down there you'll see all the properties that you selected while out driving for dollars.
Then you could do the exact same thing as before and select the entire list, hit actions, add it to a marketing list, and then skip trace it and get the contact information of the homeowners that way.
Don't forget to get your free 7-day trial of PropStream.
Until next time, happy investing and thanks for reading!
START YOUR REAL ESTATE INVESTING JOURNEY TODAY!
So, now that you've gotten an intro to finding motivated sellers, are you ready to get started?
If so, you can use my Free Resource Pack to help get your real estate investing journey off the ground. It includes:
- My Offer Sheet Template
- My Phone Scripts for Calling Real Estate Agents
- The Wholesaling Deal Tracker
So what are you waiting for?
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