Find Motivated Sellers Before Investing in Rental Property

Finding motivated sellers will make the biggest difference between your success and failure. Real estate is not a liquid investment like stocks or bonds. It has medium to poor liquidity. Even if you find a buyer today it takes time to prepare the paperwork to comply with real estate contract law. So, if someone is in a desperate situation to sell they have limited levers to use to get their money out of their property. Of course, on the good side, this makes real estate a relatively safe investment.

The more motivated the seller is the better deal you will get. Most people have an inflated perception of how much their property is worth these days. Generally, if a seller does not get an offer in the first 90 days the property is on the market, their price is too high. Many sellers do not have to sell right away and so real estate values tend to fall rather slowly.

On the other hand there are a number of reasons that there are many motivated sellers with houses to sell quickly.

Here's some examples of motivated sellers:

• A home owner that has already purchased a second house and has two mortgage payments to make


• Children of a deceased parent or one in a nursing home who don't have time or money to take care of a house - especially if the house is at a distance


• Some one facing the mortagage foreclosure process


• Bank owned real estate - bank that has too many foreclosed houses on its books


• A house owned by a divorcing couple


• A house owned by someone who has lost their job


• When owners do not know how to be a landlord and are sick and tired of dealing with tenants

There are many more situations that occur frequently and create sellers that are really motivated. The first question I ask a Realtor about a property I am interested in is "Why are they selling?" If there is no urgency, I won't even look at the property.

How can you find out if a property is going into foreclosure? Study the pre foreclosure sale guide. Learn about "lis pendens", which simply means law suit pending. This is what banks must do to start the foreclosure process. Some Realtors specialize in bank owned properties (often called REO) and you might be able to find one by attending your local Real Estate Investment Club meeting.

Once you find sellers motivated to get rid of their property there are many ways to structure an offer. We will discuss this more in the section on Creative Real Estate Investing. You will need a really flexible Realtor if you are using one - many Realtors are not creative and worry that they will not get their commission.

While you might be really excited to invest in rental property, don't just go making retail offers. Take your time to find motivated sellers and buy the property at a discount.

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