What is driving for dollars and how can it help you grow your real estate investing business?
That’s what we’re talking about in this article!
Let’s dive in.
What Is Driving for Dollars?
Driving for dollars is a strategy that real estate investors use to find off-market deals — that is, properties that are not listed or advertised as being for sale. It consists of driving (or running, walking, or biking) around target investing neighborhoods, looking for distressed properties, writing down their addresses, researching them, and then marketing to the owners.
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How Driving for Dollars Works (An Example)
Okay — that was our formal definition.
But let’s look at an example.
Imagine that I’m a real estate investor in a very competitive market. Maybe I’ve been struggling to secure deals by just pulling data from PropStream and sending mail. Or maybe I’m doing well and I simply want access to more deals that my competitors don’t have access to.
Whatever the case, I will benefit from finding off-market deals.
So I choose a neighborhood where I’ve done deals before — one that seems to be profitable for my wholesaling business — and I start driving around that area for 30 minutes every week.
As I do, I write down the addresses of homes that look like they’re in distress — I look for tell-tale signs such as broken windows, unkempt lawns, or seeming abandonment.
Then, at the end of every driving-for-dollars session, I go back to my computer and research the properties. I check to see if they’re already on my marketing list, and I check the county’s public records to find the history of the home and determine the homeowner’s address. If things seem promising, maybe I even skip trace the property to find the homeowner’s phone number.
Finally, I add the property to my marketing cycle — maybe that means calling the homeowner, maybe it means sending them mail, or maybe it means sending a text message.
Whatever the case, I’ve now added off-market properties to my marketing cycle that other investors in the area likely aren’t even aware of.
Real-Life Example of Driving for Dollars [Video]
Prefer to watch someone drive for dollars?
Here’s a YouTube vlog of a real estate investor going through the process — he finds more than 200 properties in just 45 minutes!
The Benefits of Driving for Dollars
Obviously, driving for dollars is a more tedious method for finding potential deals than, say, pulling data from PropStream.
So you might be wondering to yourself, why would anyone do it?
The answer is simple: because it gives you access to potential deals that other real estate investors aren’t paying attention to — many of the properties you find won’t be listed or advertised as for-sale and they won’t be a part of common lists pulled through PropStream or other data gushers.
Even though it’s time-consuming, it can be a great way for new and experienced real estate investors to find motivated sellers and decrease the competitiveness of their deals.
Now let’s talk about how to do it.
How To Drive for Dollars: 6 Steps
Maybe you’re thinking that you’d like to try driving for dollars.
Here are the 6 steps involved in the process.
Step 1. Choose an Area
The first step to driving for dollars is to choose where you’re going to drive.
On the one hand, it’s a good idea to get in the habit of looking for distressed homes whenever you’re driving anywhere — to the office, to the gym, or even when you’re going for an evening walk.
(Just write down the address in your phone whenever you find a distressed property)
On the other hand, people schedule time for what’s important.
So if driving for dollars is a mission-critical tactic for your business, then you’ll want to be more intentional about it. Choose an area where you’ve found a lot of deals before and schedule 30 minutes in the next week to do nothing but drive for dollars in that area.
Pro Tip: Make it fun by letting your friends and/or family join you to see how many houses you can find!
Step 2. Drive/Walk/Bike
The next step is, well, to go for a drive!
But to be clear, you could also bike, walk, or job… driving is just the most efficient way since it’s faster and it’ll allow you to cover a bigger area in less time.
Now we’ve already mentioned that you’re looking for “distressed properties”…
But how do you know what a distressed property looks like?
Here are some signs to look for according to Realtor.com:
- Properties that stand out from other homes on the block because they are in a state of neglect
- Properties where the lights are not turned on at night
- Homes with yards overgrown with weeds
- Broken windows and shutters in need of repair
- Faded and peeling paint
- Notices post on doors or windows
- Uncollected newspapers and junk mail
And err on the side of writing the address down if you’re unsure — that’s what the research phase is for later.
Step 3. Leave Hangers (Optional)
This next step is optional.
If you want, you can leave a flyer on the front door handle of the distressed homes you find advertising your services. Ballpoint Marketing has hand-written door-hangers that get awesome response rates…
And that’s a great low-cost way to try and get in touch with sellers. It’s not 100% guaranteed and it might bug some people with “No Soliciting” signs on their porch. But you might want to bring some of these along so you can hang them when there’s an opportunity.
Step 4. Research Property
Once you’ve finished driving for dollars and you’ve got a list of distressed properties, it’s time to go back to your computer and do some research.
You can check public records to learn about the history of the home, check to see if the property is already on your marketing list, and skip trace to find the owner’s address and/or phone number.
Step 5. Add to Marketing Cycle
From there, it’s simply a matter of adding properties to your marketing cycle.
Maybe that means cold calling the homeowner, maybe it means sending direct mail, or maybe it means sending a text message.
Whatever the case, it’s not rocket science. Just add the addresses to your typical marketing cycle and you’ll start getting access to deals that your competitors don’t have access to.
Step 6. Create a Routine
Ultimately, if you want to be successful with driving for dollars, then you’ll want to create a schedule, delegate some of the work, and track your routes.
The more that you systematize the process, the easier it’ll be.
Can You Drive for Dollars Virtually?
Traditional driving for dollars means getting in your car and driving around neighborhoods in search of distressed homes.
But technology today is pretty amazing — so can you do that virtually… from the comfort of your sofa?
Yep. You can.
The easiest way to do this is to get DealMachine’s app and chrome extension. It allows users to “walk” neighborhoods via Google Street View.
The biggest downside to this is that you’re not seeing properties in real-time — you’re seeing them as they are when Google’s minions last drove around that neighborhood, which could be as much as a year ago.
Still, it’s 20% of the work for 80% of the results.
If you want an even easier way of “driving for dollars”, then DealMachine’s virtual chrome extension might be exactly what you’re looking for.
Scaling Driving for Dollars
The biggest downside to driving for dollars is that it’s tedious.
But the good news is that you — the business owner — don’t need to be the one driving for dollars. It’s a pretty simple deal-finding technique and so it’s ripe for outsourcing.
You can pay people $15 per hour (or a little over minimum wage) to drive for dollars for your business. Or maybe you simply give those people a commission for each deal that they bring your way.
Heck, you could even try to enlist mailmen and mailwomen — they’re already driving around… why not offer them a bit of money for each deal they find you?
But driving for dollars is scalable if you are willing to create the necessary processes.
The Best 3 Driving for Dollars Apps
Fortunately, there are a lot of great mobile apps that make driving for dollars a lot easier.
These apps allow you to mark houses in real-time, track your routes, collaborate with a driving-for-dollars team, and even research property owners and send mailers with a single click.
Here are our three favorites!
Common Pitfalls to Driving for Dollars
Are there any pitfalls or downsides to driving for dollars?
Well — the first thing to know is that driving for dollars will be more effective or less effective depending on your market. It’s really just something you have to try for yourself to see if it’s worth it.
Additionally, one potential pitfall — and we don’t know how else to say this — is, well, being creepy.
When you’re driving for dollars, it’s important to be respectful of other people’s property and their personal space. If you stay parked in front of a home for a long time, or residents (or neighbors) see you taking pictures of their house, then you’re probably going to raise some eyebrows… and maybe even get the cops called on you.
So try to be discreet.
Write down the addresses — or better yet, use an app like DealMachine so you can just mark the properties — and then be on your way. The research phase can happen later after you’ve opened a discussion with the homeowner.
Final Thoughts on Driving for Dollars
Driving for dollars might not solve all of your business’ deal-finding woes.
But it’s certainly a great way to find off-market deals with lower competition.
AND if you’re willing to create the necessary processes, it can be both scalable and virtual.
But don’t take our word for it.
Give a try for yourself and see how it goes!