In real estate wholesaling, there are two kinds of houses that can make you money: ones owned by motivated sellers and distressed properties. Houses owned by motivated sellers are relatively easy to find. You can search public records, talk to real estate agents, and use real estate lead generation platforms. But to find distressed properties, you’ll need a different approach.
That approach is driving for dollars, also known as d4d, and it’s one of the only ways to locate, qualify, and pursue distressed property leads. So we’ve put together a short guide that will show you how driving for dollars works and how you can leverage it to establish and build a thriving real estate investing business.
What is a distressed property?
A distressed property is a home that’s been damaged and/or neglected. The indicators that a property is distressed can range in severity from an overgrown, trash-covered yard to a damaged roof and fallen-in structures.
However, not all distressed properties are the result of neglect. Some homes are damaged by a fire. Others are damaged in natural disasters like flooding, earthquakes, hurricanes, and tornadoes. Another classic example of a distressed property is a home that has a foundation issue.
The one factor that all distressed property leads share in common is that some level of damage has lowered the property’s value and the owner would prefer to sell instead of fix the issues. In some cases, this means that the owner is living in a property they can’t or don’t want to maintain. In other cases, this means that the damage is too great and the owners would prefer to simply move on with their lives.
What is driving for dollars?
Unlike homes owned by motivated sellers, distressed properties are fairly easy to spot. However, they’re often more difficult to locate because they don’t always have financial distress factors tied to them. So while you can quickly generate lists of pre-foreclosed homes with lead generation software, finding distressed property leads takes a different approach.
The solution is driving for dollars – the systematic approach of picking neighborhoods and carefully driving through them to find investment-worthy properties with signs of distress.
Once you find a property you like, you can add it to a list or go knock on the door and connect with the owner. However, if you’re using a real estate app with a driving for dollars module, you can save the house directly to a list, find more property and owner information, and even skip trace it to find the owner’s phone numbers and email addresses.
A variation of driving for dollars that’s quickly becoming popular is virtual driving for dollars. It follows the same premise, but instead of visiting neighborhoods in person, you use a d4d app with street view to canvass neighborhoods virtually. It’s a great way to learn more about specific properties that you can’t reach in person, whether you’re expanding into a new market or you’re checking out a local property from the comfort of your own home.
The benefits of driving for dollars
One of the major benefits of driving for dollars is the ability to find real estate investment opportunities you can’t find any other way. But there are several other perks that make this approach a must-have in any wholesaler’s tool belt.
Driving for dollars is highly efficient
Many investors spend a significant amount of money marketing to large lead lists. However, just because the numbers suggest a homeowner is motivated to sell, that doesn’t mean they’ll jump on your offer. In fact, most real estate investors consider themselves lucky when they close one deal out of every thousand mailers they send in a real estate direct mail campaign.
But when you drive around and see the state of a property with your own eyes, you can quickly disqualify leads that don’t match your criteria. Then you can launch targeted marketing campaigns or simply knock on doors. This approach is highly efficient. You can usually count on closing one deal out of every two hundred properties you find while canvassing.
It’s a great way to start wholesaling real estate
Not only is canvassing neighborhoods cost-effective, it’s also a great way to learn about real estate. When you visit a large number of properties in person, you’ll learn what makes a house attractive and what doesn’t. You’ll also learn about the neighborhoods in your market, including local sales trends, arteries of traffic, and population changes.
For example, if you visit a neighborhood and see an abundance of for sale signs, you’ve discovered a clue that something is happening in the area, and it might not make a cash buyer excited to buy there. But if you visit an area and you see signs of upcoming construction, you can assume new attractions and business opportunities are coming to that specific neighborhood.
One of the greatest benefits of driving for dollars is the fact that it lets you witness economic development trends in real-time. If you can learn how to spot these trends early in your wholesaling career, you’ll set yourself up to find and capitalize on massively profitable opportunities in the future.
Driving for dollars is scalable
If you plan on transforming your real estate business from a side hustle into a full-time career, you’ll eventually need to hire team members. There are a lot of ways that team members can help you generate leads and market to property owners, but sending them out to drive for dollars is one of the most effective.
For starters, canvassing doesn’t require much training or skill. All you need is a collection of good drivers who are detail-oriented. Give them examples of what to look for and send them out.
Secondly, canvassing is a numbers game. The more people you have driving through neighborhoods, the more likely you are to land deals on diamonds in the rough. Finally, the right tools make it easy to set expectations and hold team members accountable. With the right driving for dollars app, you can track team member routes and easily compile all of the properties they discover.
Conclusion
Using driving for dollars to discover distressed properties is one of the oldest ways to find deals. Real estate investors have been doing it for decades, and it’s only growing more effective with the introduction of real estate technology. It may not help you build the massive lead lists that other strategies will, but it will help you focus your efforts on properties and owners that need your help.
Of course, just because driving for dollars is effective, that doesn’t mean you should ignore other strategies. Real estate lead generation is a numbers game. The more leads you find and market to, the more deals you’ll land. That same logic extends to the way you find leads. The more methods you use, the most deals you’ll find. Just don’t forget that driving for dollars is a great approach to wholesaling whether you’re completely new or you’re an industry veteran.
