To most people, abandoned properties are nothing more than an eyesore on a neighborhood’s facade.
But to the savvy real estate investor, abandoned properties are an opportunity. An opportunity to buy a property for cheap because it’s unwanted and uncared for by its owners. They can then repair the property and sell it on the market for a profit (flipping), hold it and get tenants to create cashflow (buy-and-hold), or push it to another real estate investor for a quick commission (wholesaling).
Whatever the case, learning to find and buy abandoned properties is a valuable skill for every real estate investor.
In this guide, we’ll show you how to find and buy abandoned properties systematically — these strategies are backed by decades of boots-on-the-ground experience from real estate investors.
Let’s dive right in.
What is an abandoned property?
An abandoned property is one that is vacant and unoccupied by its owners. The abandonment could be due to a variety of reasons — foreclosure, unpaid taxes, legal issues, or relocation.
This represents a great opportunity for real estate investors because the owner is often motivated to sell.
Because the longer the property stays in its current condition, the more of a financial burden it becomes.
Things like taxes, insurance, and general upkeep can add up quickly, so an owner may be willing to accept a lower offer if it means they can get rid of their problem quickly.
How to Find Abandoned Properties
To buy abandoned properties, you first need to know how to find them.
The good news is that finding abandoned properties isn’t rocket science. Anyone can take the below advice and, in the next hour or two, create a legitimate list of abandoned properties.
The bad news is as expected. You’re not the only real estate investor looking for abandoned properties. The easier and simpler the method you use to find abandoned properties, the more competition you’re going to have.
On the other hand, if you’re willing to put in some work then you’ll be able to find abandoned properties with far less competition.
Let’s walk through all of your options.
This is by far the easiest way to find abandoned properties.
All you need is a Propstream account (which costs about $99 per month).
They are one of the most trusted providers of real estate data — many of our members here at Call Porter use them.
Pulling a list of several thousand abandoned properties in your market is super easy with their software. Just log-in and enter your target zip code. Then click on “Filter” and select “Vacant” for “Occupancy Status” and “No” for “Owner Occupied.”
To make sure you’re only targeting abandoned properties where the owners have a lot of equity, you can enter a minimum estimated equity of 70% under “Valuation & Equity Info.”
Then just save your search and you can easily export that entire list of owners — it will also give you the name, address, and possible phone numbers for the owners.
Now you have a list of hundreds or thousands of absentee owners who’s properties are vacant and have a good bit of equity. This means they’re probably not paying much attention to their property and they very well might be motivated to sell.
Wholesalers are people who find deals, get them under contract, and then flip the purchase agreement (not the property itself) to a cash buyer for a commission (or assignment fee) — usually around $5,000 to $15,000.
If you want to find deals through wholesalers, beware…
A big portion of wholesalers are new to real estate investing and have no idea how to correctly run comps on a property. This means you won’t want to take the wholesalers word for the value of the property… you’ll want to due your own due diligence.
But if you’re a buy-and-hold investor who has good access to cash and is more worried about finding deals than getting the absolute best price for the properties you’re buying, then wholesalers can be a useful resource.
To find wholesalers in your market, a quick Google search for “sell my house fast in [city]” should populate with wholesaler websites in your market. Just call them and ask to be added to their list of cash buyers.
Driving For Dollars
Earlier I said that the easier the method you use to find abandoned properties, the more competition you’re going to have. Conversely, the harder the method, the less competition you’re going to have.
This is what makes driving for dollars one of the best ways to find abandoned properties.
Here’s how it works.
You drive around your target neighborhoods (i.e. the areas where you want to buy property) and look at the houses. See a property with broken windows? An unkempt yard? A battered roof? Or maybe one that simply looks abandoned? Write down the address and a few quick notes indicating what’s wrong with the property.
1234 Example Ave. — Broken windows. No cars in driveway. Looks abandoned.
After a few hours, you’ll have a sizeable list of properties that might be abandoned and might turn into good deals — most importantly, deals that other investors might well have no idea exist.
It’s your own list.
We recommend using an app like Deal Machine to track your routes and get more information about each property on your list.
You can also order some hand-written door hangers from Ballpoint Marketing and put them on the front doors of each property you find while driving for dollars.
If you want to see the D4D process in action, check out the video below…
How to Reach Out To The Owners of Abandoned Properties
You might be able to get a list of abandoned properties.
But how you reach out to the owners is just as important as the quality of the data. The same rule applies: the easier it is… the more competitive it is.
Below we’ll give you some tips for reaching out to owners so you stand out from your competitors.
Cold calling is one of those strategies that a lot of real estate investors don’t do because… well, it’s uncomfortable.
But if you’re willing to cold call regularly and get good at something that many people are afraid to try even once, then a lot of opportunity waits on the other side.
The idea is simple.
You call owner phone numbers (after you skip trace the records… more on that in a minute) and see if they’re interesting in selling their abandoned property.
Here’s an example of what this looks likes in action…
But how are you going to get all of those phone numbers to cold call?
Propstream will provide you with some basic information — you may or may not get the phone number depending on the record. And that phone number may or may not be correct. You can use skip tracing to get phone numbers from owner addresses. This is a system originally used by bounty hunters to find their suspects, and it’s made available to real estate investors for finding motivated sellers.
Hand-Written Direct Mail
Cold calling is great… but it’s tedious.
Direct mail is more expensive but it also gets the phone ringing better than any other method. You can send thousands of mailers to abandoned property owners overnight and the phone could be ringing within a week or two.
Only problem is… pretty much all real estate investors are sending direct mail.
How do you stand out from the crowd?
There’s only one proven way we know of that works really well in today’s market — by sending hand-written direct mail.
And we’re not talking about printed fonts that are made to look like they’re hand-written (we all can tell that they’re not). We’re talking about actually hand-written letters. This makes it feel like you are reaching out directly to the homeowner and it makes them much more likely to give you a call.
Of course… how are you supposed to handwrite thousands of mailers per month?
Use Ballpoint Marketing and their robots will do it for you.
How to Buy Abandoned Property…
So you’ve found some abandoned properties and you’ve reached out to the owners.
Now you’ve got to actually try and buy the property for a fair price and close the deal. If you want help with the math, check out guide to estimating rehab costs over here.
Here are some different options when it comes to actually getting the funds to buy the abandoned property.
… As a Wholesaler
If you’re a wholesaler, then you don’t have to worry about acquiring cash for the abandoned property. You just need to find a cash buyer.
You can use Craigslist, bandit signs, foreclosure auctions, and more.
Here’s our complete guide to finding cash buyers to close your next real estate deal.
… With Private Money
The next option is to use private money. This is a great option because it’s fast and you don’t have to worry about getting approved by the bank.
Private money is when you borrow money from an individual or group of individuals. This could be friends or family. They can either provide the funds for the entire purchase price or they can provide a loan to cover part of it and you can use your own capital to cover the rest.
The interest rates with private money are whatever you and the lender agree upon (typically 8% to 12%). Here’s our full guide to finding private money lenders.
… With Bank Loans
Another option is to get a traditional bank loan. This involves going through the long process of getting approved for the loan and then having the funds wired over when you close on the property.
The interest rates with bank loans are usually lower than private money (4% to 6%) but it can take weeks or even months for the bank to approve your loan. And they’re pretty restrictive about how many loans you can have at once. The most popular type of bank loans for real estate investors are conventional, FHA, and VA.
… With Hard Money
You could also use hard money. This is a type of loan that comes from private lenders who specialize in loaning money for real estate investments. Not from friends or family, but from a company.
The interest rates with hard money can be quite high (up to 20% sometimes) but they are much easier and faster to get approved for than banks or credit unions. Just be careful which company you work with and read the contract carefully. You want to make sure you fully understand what you’re getting into.
Closing The Deal
Maybe you’re just getting started.
Or maybe you’ve done quite a few deals.
Either way, successful real estate investors don’t just want to do one deal… they want to do deals every month. They want to create systems that generate lead flow and attract deals while they sleep.
Problem is, the more you market, the more the phone starts to ring off the hook… and it’s hard to know which calls are actually worth answering.
Call Porter is the solution for thousands of investors around the U.S.
We are the only U.S.-based inbound call answering service specifically designed for real estate investors. All of our reps are trained to speak with motivated sellers. We’ll take your calls, schedule follow-up appointments on your calendar with you or your acquisitions manager… and you can keep working to grow your business.
And happy investing.