Real estate investing is a great way to create opportunities for profit or cash flow if you know the art of identifying and making deals. Unfortunately, the process is rarely as straightforward as seeing a “for sale” sign and making an offer. Finding the properties that will make you money usually requires some digging.
But that digging doesn’t have to be time intensive or difficult. In this blog, we’ll look at how easy it can be to target off-market properties and use tools like skip tracing to be the first one to contact property owners.
How to create an off-market property list
The first step to a great real estate investment is finding a great opportunity. As we’ve discussed, the best investment properties rarely have for sale signs in their front yards, so you’ll need a way to find the most promising off-market properties.
There are two options to choose from. First, you can drive for dollars to find distressed properties. Driving for dollars is the process of exploring neighborhoods, looking for damaged or neglected properties that you can buy for below-market value. The second option is to look for properties owned by motivated sellers.
A motivated seller is a property owner who’s facing financial difficulties that can only be solved by selling their property. There’s a range of scenarios that can create a motivated seller, but they all share one thing in common: they’re forcing the property owner to sell within a strict time frame. This means that motivated sellers will usually accept a below-market value offer in exchange for a quick, cash sale.
The best way to identify and locate these sellers and their properties is to use a real estate lead generation platform. With the right platform, you can filter properties in your target market by their distress factors at the click of a button. With this software, you can quickly create a quality off-market property list and use it to easily uncover the properties that are a good fit for your investment strategy!
How to skip trace a property list
Once you have a property list and you’ve narrowed it down to the most promising opportunities, you need to connect with the owners in order to make offers. To start marketing, you’ll need phone numbers and email addresses. However, like great investments, this information is usually hidden and takes some digging to find.
Skip tracing is the process of uncovering this information. It uses the data you have to find the information you don’t. In the past, it was a manual process that debt collectors, bounty hunters, and private investigators used to find people who had “skipped town.”
Today, skip tracing refers to using public records to find contact information for properties you’re interested in. One skip tracing technique is to see if any property deeds or liens have a name attached to them or direct you to a new address.
You can also do an online search and see if you can find people’s criminal background check records or their social media accounts. The ultimate goal is to uncover email addresses or phone numbers so you can contact them and make an offer on their property.
However, there are a few problems with this skip tracing technique. For starters, the information you’re looking for is rarely publicly available. Even if it is, tracking it down can be very time-consuming. And even if you do find the information you need, it’s very rarely accurate.
In fact, only 6% of the contact information available on the web is accurate. If your business is relying on this data to connect with property owners, you’re going to have a hard time landing deals.
Thankfully, modern technology and data mean that skip tracing doesn’t have to be a manual or unreliable process. If you’re using a quality real estate lead generation software, then you’ll have a built-in skip tracing service. However, if the data you get from that service isn’t accurate, it may be cutting into your revenue.
Why data quality matters
As you can see, generating leads and then doing the skip tracing work yourself is not an ideal way to invest in real estate. However, many real estate investors believe they can split the difference by using a low-to-mid-tier data provider to cut costs.
The problem is that even mid-tier skip tracing software doesn’t provide the results you need to work effectively. While they have better accuracy rates than the 6% of low-tier data providers, mid-tier providers’ accuracy rates cap out at around 40%.
As the charts below illustrate, these low accuracy rates have a grave impact on your profits. Even if you save a significant amount of money on skip tracing, you’re still paying for data that won’t put you in contact with the right people. These missed opportunities will cost you far more money than they’ll save you. And that doesn’t even account for employee turnover, carrier flagging, and much more that come with constantly calling wrong and disconnected numbers.
While low-cost skip tracing may seem like a money-saver, it will actually cost your business a significant amount of money.
However, with a quality data provider, you’re getting information that’s been cleaned and enriched by an internal data science team. Not only is this information more accurate, but it’s also deeper. You’ll have access to number verification reports, Federal DNC scrubbing, and known litigator removal. In short, low-quality data will hamper your business, but high-quality data will enable you to connect more effectively in ways you never imagined were possible.
Discover just how much low-quality data is really costing your business.
Key takeaways
As a real estate investor, you want to take advantage of every opportunity. Skip tracing is a vital part of doing so. By uncovering contact information and connecting with more property owners, you’ll open up a new world of potential investments for yourself.
However, you need quality data if you plan on putting your time, energy, and money to good use. Digging into public records or working with low-quality skip tracers will lead you to spend more time calling wrong or disconnected numbers. However, when you arm your business with quality contact information, you’ll have a tremendous competitive edge in a constantly evolving market.
