The Cheaper You Buy, the Better Your Return is Going to Be, Regardless of Your investment Strategy

Smart real estate investors know that the secret to true success is finding deals with great numbers. So as a house flipper, in order to increase my profit margins, reduce my risk and allow myself several “outs,” I buy as far below market value as I can.

Almost everybody underestimates what it will cost to fix up a house. Almost everybody underestimates how long it will take to rehab a house. But if you buy right, your chances of incurring a loss are much lower.

I typically buy at 70 percent of market value, less the cost of repairs to get the house in sellable condition. Buying with these margins allows me to make some mistakes here and there and still make good money.

If you flip enough houses, you will run into surprises. Those surprises could run in the thousands of dollars to remedy. If you buy right, these surprises just mean you are not going to make as much on the deal as you’d hoped. This is much better than losing money.

Nothing is worse than taking on all that risk, dealing with headaches and problems and then finding out you paid to do it.

So How Do You Find These Great Deals?

Most investors turn to the MLS and agents to find deals. These properties are usually bank-owned or estate-owned and are for sale on the open market.

Yes, you can get these deals, but they are going to be much harder to buy due to the level of competition. That’s because thousands of other investors—including many who are far more experienced than you—are right out there with you trying to find those same deals from properties currently for sale and on the market.

The easier it is to find the deals, the more investors are going to be jockeying to buy them, which means you’re going to pay more.

There Are Thousands of Houses For sale That Are Not Advertised As Being For Sale

I prefer to buy off-market deals. You find those off-market deals by beating the streets and finding owners of houses who want to sell fast to avoid the hassles of going through an agent or For Sale By Owner.

There are two approaches to finding what are typically called “motivated sellers,” though I find most of the people who sell to me are not motivated, per se. They just feel the speed and ease of the transaction is worth the equity they are giving up.

The first approach is to do general marketing that gets seen by a lot of people in hopes that the would-be seller will see your message and contact you. Typically, investors will put up signs with wording such as “We Buy Houses Fast” and their phone number.

The other approach is direct-response marketing. This is where you target people based on their situation. The situations you are targeting are the ones that would generate motivation to sell real estate.

Focusing your energy on the people more likely to need your house-buying service will allow you to avoid the tire-kicker homeowners who will call on a sign just because they think you might be willing to pay full market value for their house.

5 Efficient Ways to Find Off-Market, Motivated Seller Deals

These five methods for finding off-market deals are a combination of what’s commonly referred to as inbound marketing (signage, websites, etc.) and outbound, direct-response marketing where you are targeting people with specific situations. I offer them in descending order, down to my favorite.


When someone complains about a house because it needs a lot of repairs, is vacant and has a very overgrown yard, the city will issue a code compliance violation and tell the homeowner to fix the problem. The city will keep a list of these violations, and sometimes the violations can be gathered online or in a print publication that is used for legal notices in your area.

My advice is to get in touch with neighborhood services or a specific code compliance office and ask if you could get a list of the addresses for these houses that have violations.

The response you get is usually dependent on the person to whom you are talking. For this reason, I recommend contacting more than one person. The first three might say they can’t give you that information, but the fourth might say, “Sure.”

Once you get the list, filter it for the most serious violations first and start looking up each owner’s name and address. This can be done by looking up the data from the tax assessor or tax collector in your area. You can Google “(your county) tax assessor” and find that most offices are online. You might be able to do searches from the comfort of your own home. Many counties will show the name and address where the tax bill is sent every year.

Armed with the name and address of the owner, you can send that person a postcard or letter that says you are interested in buying the house. You don’t have to specify that you got their information because of the violation—that might upset them. I would suggest instead that you just make it clear that you buy houses that need repairs, regardless of how serious.


Probate leads are those for houses owned by estates. When someone dies and leaves a will, the executor (or executrix, if female) of the estate will have the will probated at the county courthouse. The county courthouse keeps these probate cases in files that are public record.

These situations can be touchy, for obvious reasons, so I don’t recommend mentioning the death. It’s better to just state that you buy houses, and if the estate has a house to sell as is, regardless of repairs, to contact you to discuss it further.

Bonus tip: Contact the probate attorneys connected to each probate case, and let them know you are interested in buying houses as is. The benefit to them and their clients is they can quickly settle an estate by having you buy the house fast.


This is where you drive neighborhoods looking for run-down, vacant properties. I enjoy spending an hour on a nice day driving through neighborhoods where other investors are fixing up and selling houses.

The neighborhood you choose is important because you want one where there are vacant or run-down houses. If you drive a neighborhood that was built within the last 10 years, that’s probably not likely to happen.

Choose a neighborhood that is at least 20 or 30 years old and drive every single street. Be on the lookout for houses with very overgrown yards and newspapers and door hangers piled up on the porch. Look for broken windows and peeling paint.

Drive neighborhoods on trash day in the morning. Look for houses that don’t have a trash can put out. This will alert you to the houses to which you should pay closer attention.

Also, be sure to stop by houses that are being fixed up because you just might find a great contractor to work on your own investment properties.


These are the plastic corrugated signs that you see nailed to telephone poles all over the place. You see them everywhere because they work. I recommend 18×24 white or yellow with black, blocky, bold text stating “We Buy Houses—CASH. 222-2222.”

Make sure to get horizontal flutes if you are going to be nailing them to telephone poles (so that they don’t bend in the wind) and vertical flutes if you are going to use wire stakes to stick them in the ground.

Also, be aware that in most places these are illegal and you can get fined—some investors just see that as a cost of doing business.

Many times I notice the authorities crack down on signs in cycles. Wait for a cycle where you see signs staying up for more than three days and put some out.


This one is my favorite. Websites give credibility, allow people another way to find out more about you and what you do, ask the right questions of sellers in the right order so that you get all the information you need to determine whether a deal is possible … and the list goes on and on.

As I detail in my book “Flipping Houses Exposed,” which is available from Amazon, the majority of my leads have come from my website. Over the 34 weeks that I documented my marketing and the off-market leads that were generated, 277 leads were from my website.

Websites do take some time to get going, and simply building one does not guarantee that motivated sellers will come.

Ways to generate immediate leads from your website include having your Web address on all of your other marketing, using pay-per-click advertising on Google and Bing, using Facebook advertising and posting ads on Craigslist.

I created to address the issue of real estate investors not having a easy way to have a professional Web presence. If you are interested in learning more, please visit


It’s really an easy decision: You can either pay a lot more for deals by having to outbid your competition for listed properties, or you could do some marketing yourself to find people who are willing to trade equity for ease of transaction.

I know I will continue doing things the easier and more profitable way. •

  • Danny Johnson

    Danny Johnson has flipped hundreds of houses over the last 11+ years in San Antonio, Texas. He blogs about flipping houses at and is the author of "Flipping Houses Exposed: 34 Weeks in the Life of a Successful House Flipper," a best-selling book on Amazon. He also provides real estate investor websites at

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