1. Classified Advertisement
The most easily overlooked source is simply the small column classified advertisements in the local newspaper. These are not the big display ads put in by the large real estate companies, but rather three-or four-line, single-column ads. The main reason why these may be a great way to find properties is that often this is the advertising method of choice used by owner-sellers who are not using a real estate agent.
Why do I like it when no real estate firm is involved? Because the chances are that the owner used his or her own resources to try to figure out the value of their property. Often they will be way above the market value, but by the same token, they will often be way below. That is an opportunity for you, assuming you know how to evaluate these properties.
2. Real estate magazines
Real estate maganizes are a preperred source of listings, as these days they nearly all have color photos included with each listing, and therefore the advertiser cannot skillfully use words to hoodwink you into believing that a dump is a fabulous mansion. You can very quickly look through many properties, and based on your knowledge of the area the property is in, the stated number of rooms, the asking price, and the general look of it in the photo, you can make a decision as to whether it is worth looking at in more detail.
"Looking at in more detail" may simply mean phoning the real estate firm involved. A couple of questions can soon let you know whether to abandon this property and move on to another one, or whether to continue the research into this property. Valid questions could be:"Why are the sellers quitting?""What are rental levels in that area?""How have property values shifted in this area in recent times?"and "What is the population growth here?"
3. Real Estate Agents
If classified advertisements and real estate maganizes give you a huge pool of properties to consider and the occasional phenomenal bargain from publicly available sources, then real estate agents offer you an ongoing stream of good recommendations that are not always our in the open yet. A real estate agent worth his salt know what you are looking for, and not waste your time with properties that you would turn down in a hurry.
That brings us to the question of how you should go about choosing real estate agent.
One: Never stick to just one agent. Why would you? One lone agent does not have access to every property on the market, and he or she does not get to hear on the grapevine about every deal that is coming up.
Two: Work with agents who are themselves investors.
So how do you find a good real estate agent? The simple answer is to interview them. You may receive a recommendation from someone, but if not, you can always try some at random. Just as looking at properties is a numbers game, so is finding a good real estate agent that you are happy to work with. You might interview fifty to find four or five that you can work with regularly for a long time.
One exercise I get the mentoring students to do is go to a real estate office where they have never been before(any office picked at random in an area there they have determined they want to invest), and ask:"Who would be the best agent to deal with concerning investment properties?" If there is a lof of foot-shuffling and blank stares, go to another office. But if someone volunteers or is volunteered, ask him or her the simple question:"What is the best investment property that you have on your books at present?"
If he identifies one, then you are 10% on your way to finding a good agent. I say only 10%, because you still have to ask the following qualifying question:"Why?" In other words, why does he think that the property he has just pointed our is the best investment property on his books.
If he says:"Because the decor is so tastefully done" or "The neighbors are so lovely," then you have to move on. But if he says:"Well, this property sold five years ago for $328,000 or about the same as similar properties at the time. Today it is on the market at $415,000, but other comparable properties have been selling for over $500,000. What is more, the owners have received approbal to pop the top and add another story, and rentals in the area have been strong. Vancancy rates are uniformly low." Then, whether or not the property is a good deal for you, you know you are dealing with an agent who can speak you investor language. This will make life a lot easier for you.
4. Off-market sales