It is mandatory to have a continuous flow of good deals in order to remain profitable in real estate investing. What this means is that you must buy your houses low enough so you can make a profit.
So where do you find these houses at below the market prices?
1) Motivated sellers
This is my most favorite method of getting great deals. It still remains the most profitable way of getting the best deals that never find their way into the open market.
A motivated seller is the one that really needs to sell their house. In most cases they are behind on their mortgage, facing foreclosure, divorced, burned by bad tenants, have inherited property, and so on. The properties have become a thorn in the flesh to them, and they can do anything to get rid of them.
So how do you find motivated sellers?
Just market your services to people who are in legal trouble who own real estate. In my market, I am able to get a listing of all county court filings every day. Out of these, I check to find of they own any real estate and if they do, they get into my mailing list.
These people are ready to do business once they call.
If you do not have time to market to motivated sellers, then you can buy houses at wholesale prices from other real estate investors.
I usually have a lot of good deals, most of which I cannot pursue. I just wholesale them to other real estate investors who then put them back in the market.
When you buy a wholesale deal, you can buy the house in a simultaneous closing or take over the contract to buy the house. The details of these deals are discussed in a separate article.
3) Local REI meetings
I can bet there is a group of real estate investors who meet near where you live. These are like minded people that buy and sell houses in your local market.
This is a place where you can find good deals.
4) REOs and the MLS
Unfortunately these are not the best deals you can find. The asking price is usually too high for most real estate investors even though thousands of properties are sitting out there with no buyers.
Do not forget this is the most over-shopped source of real estate deals and the price breaks may not be that high.
These deals are the least recommended for investment purposes.
5) Courthouse auctions
A lot of home work is needed in order to get good deals from court house auctions. Unless you are well polished in this kind of research, I would not recommend this route.
6) Craigslist and other online sources
Again this is too over-shopped and most FSBO owners and realtors market here. Getting a good deal from Craigslist is therefore not easy.