Most real estate investors are familiar with the term driving for dollars. If you aren’t, driving for dollars simply means driving through neighborhoods looking for vacant houses or abandoned properties so that you can contact the owner to see if you can make an offer to purchase the property, hopefully at a discount.
Because driving for dollars is available to anyone, this is where many new real estate investors or new wholesalers start when it comes to generating leads. The reason driving for dollars is popular is because in the past, and even now to a certain extent, it actually works for lead generation and it’s about as low-cost as you can get. However, most investors get driving for dollars all wrong.
Driving For Dollars: The Basics
The first part of driving for dollars is actually pretty easy. You Identify an area that you think has good investment potential, get in your car, and drive up and down each street in the neighborhood. While driving, write down the address of each property that appears to be vacant, abandoned, or seriously dilapidated.
Some signs to look for are mail or door hangers that have been piled up over time, driveways with grass so overgrown that you can tell no cars have been parking there in quite some time, and tall yards or red tags from city code enforcement. Another sign of a potential deal or lead might be broken windows, roofs with tarps, and overall disrepair and deferred maintenance.
When driving for dollars, you might be tempted to get out of your and look around A property that looks like has the potential to be vacant or abandoned. While this may be tempting, it’s not a good idea because you never know when people are living in a house even though it looks abandoned. You don’t wanna take any chances because you don’t want to run afoul of the law and you don’t want to put yourself in harm’s way. It’s just not worth it.
What Next? Finding The Homeowners
Once you have your list of properties that you feel are good candidates to make contact with the homeowner, you need to actually find the homeowner. If you are a realtor as I recommend all investors should be, you may have proprietor proprietary resources at your disposal for finding the owners of vacant or abandoned properties. If you aren’t a realtor yet, you may need to use your County appraisal district website to look up the homeowner this is the first step in the easiest and free. The drawback to this is that often a second address is not listed for the homeowner and even if it is, you’re not sure if it’s accurate up-to-date or how to actually reach the homeowner. Additionally, if the homeowner’s second address is listed on the appraisal district website, that means it is also readily available to other investors as well.
The best leads typically are the ones that are the hardest to find so this is considered low hanging fruit and may not produce the best results.
If you strike out with the account county appraisal district, the next step is an online skip trace search. Skip traces are readily available online and they are affordable for almost any budget.
A skip trace will provide you with multiple addresses for a property owner and the bonus is they likely come with several phone numbers and email addresses for you to try as well. You want to keep in mind any do not call registry list since these people have not opted into being contacted by you. Make sure you follow best practices because you do not want to be perceived as a spammer or scammer.
Many times skip traces will come up with family members’ contact information. Don’t be afraid to reach out to these people as well as they may know where the homeowner lives or how they can be contacted. Handle these calls with delicacy because you never know the situation you may be inserting yourself into.
Why The Mailer Matters
Most people I come across think that they should mail a postcard to the homeowners who they find driving for dollars. This is a mistake to be avoided. You have to craft your message specifically for this homeowner and their unique situation. They are unlikely to respond to impersonal messages that they likely receive in bulk from investors mailing to shotgun style lists. Here is your opportunity to stand out. Because your list is highly filtered, fresh, and unique to you, you have the opportunity to get creative.
Handwritten letters work well in this niche. The first step to getting your letter Red is getting your envelope opened. Too many people overlook this step. You have 50 to 100 letters to mail out, you may be tempted to fire up your printer and print addressed envelopes. In my opinion on a mailing this size and this niche, you are better off going with handwritten envelopes or using urgent delivery envelopes or unique envelopes such as the ones found at xpressenvelopes.com. These can be effective tools when trying to get your letters opened and read. Skip this step at your own risk.
Where The Real Money Is Made
If you follow the steps up till now, you were going to be beating most wholesalers and investors looking for deals driving for dollars. Mix in some consistency, multiple mailings to the same target, and envelope and message testing, and you will most certainly be getting deals soon.
However, this isn’t where the real money is made. The real money is made on the letters that get sent back to you because they can’t be delivered, the address is wrong, or the forwarding address has expired. How can this be you might wonder. Well, the answer is these are those homeowners that are truly difficult to find.
Most investors stop here and throw these letters away and don’t think about them again. However, the savvy investor takes these letters and treats them like a brand new lead. This is the hidden honey pot of returned letters! The way you handle these is the way you handle the sellers whose addresses you initially can’t find. You start with skip tracing and reaching out to everyone and every address associated with this homeowner. You may wind up having to skip trace people who show up on the original skip trace report. Any way you can possibly find the homeowner through the skip trace reports you should do.
Here’s the thing, other investors aren’t going this far. Here’s where you can stand out. Follow this relentlessly and you understand that this really is the pot of gold at the end of the rainbow when it comes to driving for dollars.
What Are You Waiting For? Start Driving For Dollars The Right Way Today!
Now you know how to drive for dollars, how to locate the homeowners of the houses you find, and how to properly handle the mailings, the envelopes, and the message delivery so that you can make lots of offers. You also know how to maximize driving for dollars by Recognizing the pot of gold that is return letters. Don’t make the same mistake as other investors who are out there driving for dollars. Take this blueprint and get out there and close more deals.
Written by Colby Hager of Capstone Homebuyers