MIT 3.0: 2.2 Find the Deal Part 2

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MIT 3.0
2.2 Find the Deal – Part 2
Cheat Sheet

1. The Market
  1. Begin by determining whether or not you want to invest in your market or outside of your market somewhere out of state. We recommend starting within your local market.
  2. No matter where you do invest, make sure the property cash flows.
  3. It’s important to get insight into the markets of interest by contacting real estate investors that have closed on properties and ask them about the 3Ms (Money, Model, Market).
  4. Attend networking events to connect and get insight from real estate investors, wholesalers and agents in your area to learn what areas cash flow.
    • For a scientific approach on gaining insight, attend the Economic Board of Development to find out if there’s a five year plan in the making to revitalize the area.
  5. Insight is relevant because it consists of understanding the characteristics of an A,B,C,D neighborhood.
  6. The areas with the most potential for high cash flow in the shortest amount of time would be to start out with “C” areas that are transitioning to “B” areas, especially if you’re anxious to quit your day job as soon as possible. If you prefer a safer investment, then consider “B” areas. Be mindful that it may take longer for you to quit your day job, but it’s worth considering if you’re only interested in having another source of income.
  7. Consider next the cash on cash return to equal 10% or higher
  8. The price per door is the next thing on the list up for consideration. This should come out to $30,000 – $40,000 per unit. However, each market is different. 
  9. Also, when deciding on an area, it’s important to look at what type of jobs are available. Look for factories, plants, and industrial jobs because these types of workers will pay a higher rent since their incomes are typically stable. It’s also good to know if an area has any government/public assistance programs like any housing authority or Section 8 program that pay rent for veterans, single parent households, widows, mental health, etc.
  10. Once you decide on a specific area, the next step is to check the crime rate in that area by calling the police station, asking residents, or by going online and accessing public records. Also ask local real estate investors about their thoughts on the area.
  11. It all sums up to choosing to invest in areas that are safe, affordable with decent returns.
2. Building Relationships
  1. The purpose of networking is to build relationships in the real estate industry. This can be done by:
    • Cold calling listing agents and wholesalers. 
    • Networking at REIAs and Meetups a couple of times a week
    • Contact deal finders listed on bandit signs and ask if they wholesale attractive rental properties
    • Visiting online places like Zillow, Loopnet, Trulia for listing agents, or by googling agents within certain zip codes.
  2. Once you make contact with deal finders, introduce yourself by using our Soft Script: Call Agent and develop a friendly rapport.
  3. Call them after every listing you receive from them. 
  4. If deal finders don’t send you any listings, then schedule in your calendar to reach out to them once a week.
  5. If six weeks go by and you still haven’t received a listing, then it’s time to cross that particular deal finder off your list. Try to have at minimum 20 deal finders in your contacts, and if one drops off, be sure to replace them with another.
  6. The way to stay on top of your game is by being organized. 
    • Create a google spreadsheet or use our Simple Spreadsheet to keep track of contacts and your interactions with them.
    • Columns on the spreadsheet should list:
      1. Agent’s name
      2. Agent’s phone number
      3. Property address 
      4. Next follow up date
      5. Notes for pertinent information
  7. While being organized by documenting your efforts and interactions with agents, it’s also important to:
    • Work with full-time deal finders
    • Organize your time by dedicating 12 part-time hours per week toward your real estate career. Divide those 12 hours based on your personal and work schedule.
3. Direct Mail: D4D
  1. Direct mail is sending out postcards or letters stating that you want to buy someone’s house that’s not listed on the market. 
  2. Driving for Dollars is driving through neighborhoods and writing down addresses that later you look up those properties to find the owner’s contact information. Now, if you decide to do both direct mail and driving for dollars, then you’ll need to increase your hours spent on your business from 12 hours per week to 20 hours per week. Why, because sellers may reach out to you at all hours of the day and you must make yourself available. 
    • Within that 20 hours per week, you’ll also be sending out as many as 1000 postcards to homeowners
    • You will need to keep track of all your activities related to D4D and/or Direct Mail efforts 
    • Continue to follow up with deal finders 
  3. Find property owners by visiting the area’s tax assessor’s website and enter the address in question. From there, you can select the “Owner History” tab to find out who actually owns the property. Or you can use  a skip tracing company to find the property owner of a property you’re interested in buying. 
    • You’ll then need a list that contains the property, property owner, and demographic-based leads. To get a list, you can do one of three things:
      1. Use for they’ll create the list, provide templated messages, and mail out the postcards to the owners on the list on your behalf
      2. Use for they’ll provide you with a list, but it might not be up to date and it might not contain accurate information
      3. Use for they’ll mail out the postcards on your behalf, but first you will have to upload the list to their online platform 
    • You can learn more about direct mail and the resources above in our Wholesaling Real Estate module.
  4. Once you make contact with the owner, there are several ways to solicit them:
    • If the owner is not motivated, then suggest property management
    • If the owner is motivated, then suggest seller financing or a Master Lease Option
  5. Stay persistent!

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