Successful real estate investors and home flippers have a knack for finding off-market properties and buying them at a fair price before their competition finds those homes.

Sometimes, though, this process takes a little extra work. The most effective investors must become masters in skip tracing.

What Is Skip Tracing?

Some of these properties become available because the owner can no longer pay the mortgage, so they "skip out," leaving town with no forwarding address. Identifying them and making them an attractive offer that solves their debt problem can be a win-win for real estate investors and owners.

A whopping 4.3 million people were unable to make their full mortgage payment in May 2020, the highest level since 2011. Although some of these homeowners will downsize, move or work out payment terms with their lenders, others will go missing. But savvy investors have an effective way to find them and provide financial relief.

Plus, homes that have fallen into disrepair can be eyesores and have an impact on an entire community's property values, so investors who buy and repair these houses or multi-family buildings are ultimately helping neighborhoods.

A 5-Step Process for Effective Skip Tracing

You could spend hours knocking on doors, researching public records and searching for individuals online. Remember, however, that these homeowners do not want to be found, and every minute you spend manually tracing is one you can't be buying and selling. There are better ways to do your skip tracing.

  1. Identify the neighborhoods or specific properties you are considering for investment. COVID-19 and the work-from-home imperative is leading to market shifts, so look for those hidden gems with growth potential. These areas have had the highest foreclosure rates, but be on the lookout for the next wave.
  2. Use an automated system, designed specifically for the real estate industry. A few thoughtful click-throughs using an up-to-date system like this from PropStream will result in leads almost instantly. The advantage of our skip tracing tool is that you get multiple opportunities for investments in an area, including properties you may not have discovered otherwise.
  3. Supplement the data with targeted homework. Although skip tracing lead generation systems like ours can deliver up to 80% accuracy in finding homeowners, you may want to do some research on specific properties to better understand the owner's needs, motivations, and history of moves and property ownership.
  4. Reach out to homeowners via email, text message, voice message and/or mail. Our skip tracing system "talks" directly to our marketing platform, enabling you to send multiple messages quickly and easily. However, you'll also want to use the contact's data you get in step 3 to make personal contact with the owners, and learn their motivations and needs. Remember that these homeowners may be highly emotional and scared, so tread lightly and reassure them that you want to help.
  5. Structure a deal that works for everyone. Buying a pre-foreclosure property can be a lengthy and complicated process. Put your financing in place before negotiating and work with a lawyer who specializes in these types of transactions, which can involve multiple entities. Once you've closed on the property, change the locks immediately, transfer the utilities to your name and map out your plan for remodeling and marketing/sales.

Although foreclosures may be leveling off in 2020, skipping and skip-tracing is a trend that will always have an impact on the real estate market. By using best-of-class and simple all-in-one technology, you can stay one step ahead in investing so you can efficiently build your investment portfolio and help homeowners and neighborhoods at the same time.

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