How to Drive for Dollars
Driving for dollars has been something that my wife, Melissa, and I look forward to. We really do enjoy driving neighborhoods, looking for vacant, distressed houses! It's very relaxing.
In this primer, I am going to show you how to make driving for dollars more productive and enjoyable. Here's what you'll get:
- When To Drive For Dollars
- Where To Drive For Dollars
- How To Drive For Dollars
- What To Do After You Drive For Dollars
- What To Do With The Addresses You Collect
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When To Drive For Dollars
So when should you drive for dollars? Anytime, really. But there are times that are better than others. A great time to drive a neighborhood is on trash day, in the morning before the garbageman has arrived. It's much faster to single out the houses with no cans at the curb to further inspect. You are looking for signs of being vacant, of course.
Another one is at least a week after the phone book goes out. The houses with the phone book still laying on the porch are likely vacant (not always though).
A great time of day is when the mailman is delivering mail. Stop and ask him/her which houses are vacant. It's important to tell them what you do so that they don't think you are looking to rob or vandalize the houses (not that you look like you would). This would be a good time to give them a couple of your business cards and tell them that you pay for referrals (if you buy the house).
If you work a job and can't go until after or before work, take the family along. Make a game out of it. Have the kids see who can spot the most vacant houses or who can spot them first. You will be able to spend more time gathering addresses if it is fun for everyone. I've had a lot of people tell me they didn't have time because they wanted to spend time with their families after work. Now, they don't have an excuse. You should incorporate your family in your business wherever and whenever you can. NOTE: I'm not talking about partnering with families members. I'm talking about spending time with your family while you work on your business.
Where To Drive For Dollars
This is very important. You are not likely to find a lot of vacant houses in the higher end neighborhoods. Do not waste your time driving through super nice neighborhoods. The opposite end of the spectrum is driving for dollars in a war zone. Don't do it. Sure, you'll find tons of vacant houses quickly. But, unless you have an exit strategy for these dumps, it's pointless.
The neighborhoods that are best are the ones where other investors are actively rehabbing. Typically, these are the working class neighborhoods that usually sell for near the median price for your area. These will usually be in areas closer to downtown and sometimes bordering the bad areas (not in the bad areas - make sure the neighborhood is trending up and not becoming a war zone).
In the beginning, it is best to choose several neighborhoods to check out with a quick drive through. You will probably go into parts of town you have never been and learn more about the city in which you live. I was amazed at how many cool, diverse neighborhoods San Antonio had. There was never a reason before to go to other parts of town. Have fun exploring. But, as they say, "Don't go rollin' through a war zone, driving a fancy car, wearing lots of jewelry." You shouldn't be in a war zone anyway, so you're covered :).
How To Drive For Dollars
As you drive a neighborhood, first and foremost, be careful. Don't be so focused on looking at the houses that you run down kids playing in the street or hit parked cars. I've almost done the latter, which is why I bring this up. Take someone with you so that you can focus on one side of the street while they focus on the other.
Drive slow and look for signs of neglect. Vacant houses are usually easy to spot, especially in spring. Overgrown grass can be a sign. If a house looks vacant, but you just aren't sure, check to see if the electric meter is visible and look for a red tag (the city red tags a house when the power is cut off in my area - I'm not sure if this is the case everywhere). Look for broken windows or lots of door hangers left on the front porch. Ask a neighbor. If you speak to a neighbor, ask if they have a way to contact the owner. Remember to give them a card and ask that they give it to the owner if they see them. One of my favorites is to look at the grass that grows in the cracks of the driveway. If it is not mashed down where the tires go, someone likely hasn't parked there in a while. Maybe I am taking it too far.
When you determine a house is likely vacant, write down the address and leave a door hanger, flyer, or even just a quick note mentioning that you are interested in buying the house with your name and phone number. An alternative to writing down the addresses is to have a voice recorder (a lot of cell phones do this now).
While driving for dollars, it is a good idea to keep a lookout for rehabs. Stop and talk to the workers, get their business cards, look at their work, see what kind of materials and finishing touches are being used, ask if they work for an investor, ask for his/her number, give them your card, and don't hesitate to ask for what all they did to the house and how much they charged for it. You should also write down the phone numbers on any 'For Rent' signs. This is a good way to find landlords that may be interested in buying properties from you.
What To Do After You Drive For Dollars
Take the family to get some ice cream. When you get home, take a map and highlight the area you drove and the date you drove it. You want to keep track of the areas you already hit. You will want to drive the area again but not right away.
Analyze how many addresses you found. If you drove for 2 hours and only got 3 addresses, you probably should find a different target neighborhood. You really should find about 20 or more per hour. It's not a hard and fast rule, but that's what I shoot for.
What To Do With The Addresses You Collect
Now that you have some addresses, you need to find the owners. The first place to look is your local tax assessor. Most appraisal districts are online now. Just do a google search for '[Your County] Appraisal District'. There should be a page on the site that will let you enter an address and will give you the name and address of the person they send the tax bill to. This is not always the owner, but usually is.
Now that you have the owner's name and address, send a letter simply stating that you saw their house while driving the neighborhood and are interested in buying it. Make sure to mention the benefits for them of you buying their house. Always ask yourself when writing these marketing pieces, "what's in it for them?" Handwritten letters pull much better than printed, and, no matter what you do, hand address the envelope and use a stamp. Metered mail is almost always assumed to be junk mail.
Don't stop with just one letter. You should set up a system to mail to the addresses several times. Send different mail pieces each time (alternate postcards and letters for example).
You will get some of the letters back for several reasons. Don't just throw them away. Become a detective and hunt down that elusive owner. Try some of the online phone directories to search with the name and or address. There are some paid services like Accurint and skip tracers that will usually be able to find them. Many investors, myself included, get busy and don't chase these people down. These can be the best deals, spend the time to go the extra mile and track down that owner.