The Lazy Investor’s Guide to Finding Rental Properties

Henry Washington (0:00)

If finding cash flowing rental property deals sounds like a grind, I'm gonna let you in on a little secret. You can be lazy and still succeed in real estate investing. I bought more than 100 houses, and I can tell you this, you do not need to spend your nights and weekends cold calling, or sending direct mail, or knocking on strangers' doors. I've made good chunks of money buying deals where I let someone else do the work instead of me. And yeah, paying someone to find deals cuts into your margins, but it can also help you scale faster and still be profitable. Today, I'm going to show you five ways to find rental properties ranked from the laziest to the most hands-on. Every single one of these methods can work for somebody. Some cost more money, some take more time. But at the end, you'll know exactly which one fits your goals and your lifestyle.

What's going on, everybody? I'm Henry Washington, co-host of BiggerPockets Podcast, and today, we are talking about one of my favorite topics, how to find deals from the very easy methods all the way to the most hands-on.

First on this list is definitely the laziest way to find a deal. But let's keep in mind what I like to call the comfortability versus profitability matrix, and that is the easier it is to find a deal, the less profitable that deal probably will be.

So, top of the list is turnkey providers, right? Turnkey providers are people who are selling rental properties that have already been renovated and they should be producing some sort of cash on cash return. Now, we all know that the game of real estate is a game of adding value and then monetizing the property at its new highest value. And since you are already buying a property where the value has been added and paying somebody else for that property, a lot of your margin and profitability is lost in your purchase price for that profitability. Now, good turnkey providers still leave meat on the bone for the investor. And if they didn't, they wouldn't have a business.

So you can buy profitable deals from turnkey providers. But I say that with a caveat. Turnkey providers are going to give you a sheet, a pro forma, and they're going to tell you that this property is profitable based on the numbers that they have researched and given you. Those numbers may be correct. Those numbers may be vastly incorrect. It is your job as the investor to do your own due diligence to determine if that deal does meet your profitability needs. So if your goal is, I need a ton of cash flow and I need it from day one, this might not be the strategy for you. But if your goal is, I just want a little bit of cash flow, maybe even to break even, and I want to have good tenants in a property that I don't have to manage a renovation in, and I want to be able to just start collecting checks right now, then turnkey can be an option for you. But please be very, very, very conservative and very realistic with your underwriting. And then look at, does this property still perform like I need it to? And if it does, then you may find yourself a pretty easy way to start snagging some rental properties.

Okay, next on the list is one we're all familiar with, and that is working with an investor-friendly real estate agent. An investor-friendly real estate agent is a huge resource for you, and it is a great way to get yourself access to some lazy deals. So how do you get these investor-friendly agents to want to send you leads?

They want to send leads to people who they are confident can close the deal and will take the leads seriously.

So the best way to get agents to send you leads is to either have an existing track record that you can show them or prove to them that you buy deals, you move quickly, you don't bother people to death with overanalyzing everything and never taking action. So a proven track record is a great way. If you don't have a proven track record yet, then you're going to have to build one. And so if someone sends you a lead, analyze it, determine quickly what you can offer for that property, reach back out to that agent, preferably the same day or even within a couple hours and say, hey, thanks for sending that lead over. I ran the numbers.

It looks like it might be a decent deal, but this is the price point I think I would need to be at. Here's why I think I need to be at that price point. Because remember, to them, you're new. You don't have a reputation yet. And so if you're going to send an offer that may be lower than they expect, you better be able to explain to them why your offer is what it is. And so just explain, hey, I saw that you sent 123 Main Street. Deal looks good. I ran the numbers. I'm actually shooting for 10 percent cash on cash return. And if I put those numbers into my calculator, once I subtract the renovations I think this property needs, my offer is going to be about X. OK, that tells that agent several things. A, it tells that agent that you're serious. You took the lead, you analyze the lead, you determine what you could pay. Two, it helps that agent understand what you're looking for. It's one thing for you to tell an agent, this is my buy box, this is what I'd like to buy. It's another thing for them to see how you analyze the lead and how you got to the number that you were coming to so that they can start to take that into account before they send you the next leads. And three, it shows them that you are knowledgeable. It shows them that you know what you're looking for. It shows them that you know how to break the property down and it shows them that you know what you want to pay for deals. All of those things build confidence. The more confidence this agent has in you as an investor, the more leads that they will send you. Now, as you do deals, if you're new, make sure you are documenting the deals that you do. Just create some sort of spreadsheet or PowerPoint that highlights the deal, what you bought it for, what you put into it, and then what you either sold it or rented it for so that you can start to build this packet that is a proof that you are a seasoned investor. So when you meet other agents, you can flip them this packet in an email so they can see that you're serious and they'll want to send you leads. All right, the next on the list is one everybody's aware of, one that almost everybody's used, but I can promise you, you're not using it in the right way if you truly want it to be a valuable, lazy investor lead source. And we're going to jump into what that is right after the break.