Despite the uncertainty of the economy in 2020, real estate markets are thriving thanks to historically low interest rates, high buyer demand and limited inventory. Unfortunately, it can be difficult for investors to find acquisition opportunities in such a hot market.
Smart investors are getting a jump on new properties before they ever hit the market by contacting the owners of off-market properties directly. Of course, you don’t want to spin your wheels contacting owners who are unlikely to make a move. So you need to know the signs that indicate a property owner may be looking to sell. Here are the five we see most often.
1. Liens Against the Property
If an owner has failed to pay liabilities related to the property (like taxes or fees due to contractors for work completed), liens will likely be placed against the property. These liens may indicate that the seller is not in a financial position to pay the liabilities, which could indicate that they are unable to maintain ownership of the property. And if they can’t afford to keep the property, they may be looking to sell in the near future.
It’s difficult to cover mortgages and property maintenance when you have poor occupancy. Owners who are unable to achieve acceptable vacancy rates may be taking a financial hit each month and may be interested in off-loading the asset. This is good news for investors with the resources to improve occupancy and increase rental income. To find vacancies, simply filter vacant listings on PropStream.
Missed mortgage payments typically place a property into pre-foreclosure, which is a strong indicator that the owner is unable to afford the property. It may be in the owner’s best interest to sell the property (even below market value) in order to avoid foreclosure, which would remain on the owner’s credit report for the next seven years. PropStream allows you to view mortgage information so you’ll be able to see if an owner is behind on payments.
4. Other Financial Stressors for the Owner
Other financial stressors, such as bankruptcy or divorce, also make a property owner more likely to sell. Most owners in this type of financial distress liquidate their assets to cover existing liabilities and future living expenses. And yes, PropStream provides this information for you as well. Simply use the distressed properties search function.
5. High Equity
While most signs of a willing seller are due to negatives like financial problems or vacancy issues, we finally have a purely positive reason for an owner to sell: high equity. If the owner has built substantial equity in the property by buying low, holding the asset for an extended period, or making significant improvements to the property, they may be interested in cashing in that equity for capital to fund other projects. The same mortgage information tool in PropStream that helped you find pre-foreclosures can help you find owners with high equity.
Don’t wait for investment properties to hit the market. Seek out these property owners to find off-market deals, and expand your real estate portfolio today.