When we say that the real estate investing arena is an ocean of opportunities, we are not exaggerating. Stick around to explore one of the best opportunities in the real estate market: off market real estate properties.
As a real estate investor, you make money when you are buying an investment property and not the other way around. Hence, you want to buy one that is below market value to bring about real profit. One of the ways, as we have mentioned, is to invest in off market real estate properties.
Related: Are Off Market Properties a Good Real Estate Investment?
This post will discuss the three main aspects of this particular investment strategy:
- To start off, we are going to discuss what off market real estate properties are.
- Then we are going to tell you how to find off market properties in the real estate market.
- Finally, the main focus of this post will be about the advantages and disadvantages of such an investment property. Thus, we are going to address it from a buyer’s perspective.
Let us begin!
What are off market real estate properties?
Off market properties are those that are not put out there in the open market. In other terms, they are not being marketed in an open way to the public. A lot of the times a property seller decides, for whatever reason, not to list the property on public listing websites. Therefore, this leaves the deal between two parties (the seller and the buyer). Sometimes, though, three parties are involved: the seller, the real estate agent, and the buyer.
How to find off market properties?
We are pretty sure that you are wondering how in the world are you supposed to find such properties for sale when they are not even on the market. Luckily, there are a few ways that we can recommend to go about finding off market real estate properties. Here are our suggestions:
#1. Direct mail:
One of the ways you can find off market properties for sale is by directly mailing the owner of the property you are interested in. One of the indicators of an owner’s willingness to sell is if they have multiple investment properties. The major benefit of this particular approach is that if you get a positive response, you get to work with the seller one on one without the need for real estate agents or realtors. This eventually means that you have a better chance of getting your hands on one of the best real estate investments without competing with other real estate investors. Plus, you get to stick to a lower budget.
Related: Is the Current Housing Market Favorable for Real Estate Investments?
#2. Real estate wholesalers:
Another way to find off market real estate properties is through real estate wholesalers. A property wholesaler is someone who sells real estate investors investment deals that are below the original property price. So, how is it an off market opportunity?
Real estate wholesalers always try to advertise their deals in a way that does not provide maximum exposure to cut on fees and costs. They usually have a list of contacts that they stay in touch with when they have deals on their hands. Therefore, it would be a great choice to get a list of property wholesalers in the desired location. Only then can you proceed with contacting them to check if they have anything to offer.
#3. Join a real estate investment club or network:
An outstanding way to approach finding off market real estate properties is by joining a real estate investment club or network. Such associations will expose you to connections with other real estate investors who might have properties for sale. It is always in their best interest to close on a low-budget deal and cut off on expenses that add up to the property price.
Now that you know what off market real estate properties are and how to find them, let’s see how you benefit from them and what downfalls to expect:
The pros and cons of off market real estate properties
The pros of buying off market real estate properties:
One of the major benefits of off market properties for a buyer is cutting off on the expenses. When you are looking for off market real estate properties, you can actually skip hiring a real estate agent. As you know, a real estate agent gets paid for every deal he/she helps with. Moreover, there are also other expenses that an off market property spares you of. For example, you can also go about not hiring experts for home appraisal which also costs money.
Another aspect that is an advantage in this situation is that you get more time to perform an analysis. A real estate market analysis, as well as the investment property analysis, are crucial in finding the best real estate deals in the market. These types of analysis take some time to perform while you are gathering all the data necessary for that purpose.
Finally, in terms of the benefits of off market real estate properties, they are a great approach towards growing your real estate investment portfolio. The greater and cheaper deals you get to close, the more properties you get to acquire due to the good rates of return.
The cons of off market real estate properties:
In our viewpoint, there are two major downfalls to this particular investment strategy. The first one is concerning beginner real estate investors. A beginner investor is someone who probably has either no knowledge or no experience in the field. Sometimes, they have neither one of them. This makes it hard for a beginner investor to perform such transactions without the help of experts such as property agents or realtors or even home appraisers. Therefore, we do not see an opportunity for beginner investors to really save up on property expenses. Sure enough, this does not mean that they cannot engage in such investment opportunity by themselves. This just means that as far as the first off market property transaction, we suggest that they work with real estate professionals.
The second concern about off market real estate properties is not being able to perform a comparative market analysis. Because the seller doesn’t advertise the property to the public, it is hard for an investor to find real estate comparables to which he/she should compare his/her property. Therefore, making it hard to know exactly what the property price is in comparison to other similar properties in the real estate market.
Related: When and Why Do You Need a Home Appraisal?
Now that you have an idea about off market real estate properties, it leaves the choice up to you. As a real estate investor, you must weigh the advantages and disadvantages. This helps you decide if you can work out the disadvantages for yourself.
The most successful real estate investors know that in order for them to make the best real estate investments, they must study the real estate market. That is especially the case with the current housing market. However, one tip that we can give you is to check out Mashvisor to learn all about real estate investing. You also get to work with our real estate professionals who are always available to help aspiring property investors just like you!